Blog: David Loshin

I work for a large company, who sells online merchandise. We had/have huge problems with CC fraud and were suffering from loss for a while due to it.

The problem is that the bank does not care. When a CC holder complains, the a chargeback is performed on the merchant. The merchant pays the full amount back AND a fine of 14 dollars or so. So you have lost the service you provided and have to pay fees to others, you pay back the money you got and you pay a fine. It will reverse your cashflow really fast.

Merchant accounts beware: Cardservice International flicks a switch, and you’re business could be dead!

On August 30, 2005, our credit card terminal rejected the routine close-out of our batch at the end of the day, which totals the day’s sales and eventually transfers the funds to our bank account. We called the center at Cardservice International and were told that we had been terminated as a merchant account client. When we asked why, we were told that Cardservice International is not required to provide an explanation.
Cardservice International has processed our merchant account for several years, and we have never had a problem with transactions or with the company itself, other then their unhelpful manner in doing business. We have received virtually no charge back over the years, and none at all during the last year. In other words, we are a stable company that has a good customer base and an excellent record for resolving disputes.
We were told that the decision to cut us off from our clients was made by Nester in “upper management.” Our effort to contact Nester who “flicked the switch” without notice or cause, stopping the lifeblood to our business (our cash flow), was ignored. Several telephone calls to that man whose answering machine identifies Nester, in the “Lost and Found Dept.” were not returned. We still have no idea what caused this decision, why we were not given reasonable notification, or how we could have reconciled any concern they may have entertained about our account. We were simply left scrambling to find another company and a new merchant account, which involved time, research, and submission of many, many applications.
As president of my company, I was devastated. Seeing my many years of hard work, my employees, my customers, my business clients, all sabotaged by this one person who would not even give us a minute of his time, is unpardonable.
We have decided to not let this go unnoticed or unpunished, as we were told by several other credit card processing services that they also believe they can cut off their clients without notice, or cause. We think this is not acceptable and have decided to pursue litigation against Cardservice International.
If other businesses have had similar experiences, and wish to do something about it, please let me know, and we may be able to combine efforts to restrict these companies’ power to just “flick a switch.” Email bernloibl@msn.com.

David, Very interesting topic. I've looked into things like this before, and I've found a couple of things to take note of:

1. Pre-Paid Legal, often bundled with Pre-Paid fraud or Identity Theft Detection plans. There is one group on the East Coast called: KROLL that provides corporations, protection for their employees. Their board of directors is a very interesting read.
2. Small businesses can subscribe to Merchant-911 at http://www.merchant911.org/ - a very good source of helping the small business combat fraud and even goes to bat for them with congress and credit card industries.

This is the little protection we have as citizens, short of going to fight (in court) with the credit card tracking companies like TRW, and Experian.

Hope this helps,
Dan L

Dave:
First I would like to give a little background on myself. I manage the credit card fraud investigators for one of the largest banks and credit card issuer/acquirers in the U.S. I also own and operate a consulting firm for medium size banks and businesses on matters of loss prevention and physical security. My comments are mine and do not reflect the opinion of my employer. I have been in financial fraud investigations for over 30 years. Prior to that I was a Special Agent with the FBI for ten years. In 1994 I initiated the inkless fingerprint check, cashing applications that are seen in many banks across the US as well as check cashing stores. The reason I did this in 1994 was simple. I wanted to prove to Executive Management that U.S. Consumers were ready for anything that would assist in prevention of fraud and identity theft. Identity theft was greatly under-reported in 1994 and I predicted we would soon see it to be the epidemic that it really is. I have been championing three basic points to executive management for twenty years.

1) Use overall customer purchase profiles to secure early detection of fraud when anomalies occur.
2) Use biometrics to get away from easily counterfeited or stolen identification processes (i.e. driver's license number, SSAN number, date of birth, mother's maiden name.)
3) Use your customers for early detection. Train them to examine statements, to not fall prey to phishing attacks...and listen to them when they call to the customer service lines.

Now to your problem. Nothing is certain, but I would most likely suspect your credit card was not “skimmed” and then counterfeited. Most skimming operations want higher return on their expense than small gas purchases ( they have to pay the clerks to skim the cards and it does cost to engineer the cloned card and then distribute it). It is more likely that the card was stolen from the mail. Were you due to receive a replacement card for one that was about to expire? Banks usually mail these out 30 days before the other card expires. Often customer service representatives or fraud setup departments at issuers do not do a good job placing fraud losses in the right category.

We are seeing instances where NRI (stolen from the mail) credit cards are being used for large scale gas purchases. Gasoline, at current prices, is liquid gold. The groups are lining up customers to come to various gas stations and the stolen cards are used to pay for gas purchases. If the gas station acquirer does not have velocity checks in place the bad boys can use the same card to activate numerous pumps, at the same station, and all pumping at the same time. The fraudsters get cash and the cabby or trucker gets filled up for ½ the normal cost. We see very little of such purchase patterns related to counterfeit cards. Counterfeit cards are used more for cash advances, large item electronics and other items that can be fenced or shipped overseas for sale in stores.

The dedication of investigative resources is a business decision of any bank or company. In your case, although the loss may have been small and written off, the bank most likely took the purchase pattern data and other factors and added them to their crime analysis programs. One card does little to impact decisioning. Take more cards with similar patterns and activities and it will lead you the locations where cards are being skimmed and/or the predictable use footprints left by the fraudsters. So please keep faith that, although your particular loss may not receive an investigative response due to low dollar activity, it does add to the pile of data that may lead to a full investigation of linked losses.

For “LV”
The risks associated in E-commerce are great. The ability for any keyed transaction to be charged back are very very high. I have many such companies complain to me “what can I do…we are at the mercy of the card issuing banks” There are a number of things the merchant can do. AVS (Address Verification Service) is an opportunity. Although the merchant pays a small fee for each transaction at least you know the property is going to be sent to the true cardholder’s address of record. This is a great item in order to dispute a customer’s claim that they did not do the transaction. Use the CVV 2 code on the back of the card. Ask for it. Make it a part of your customer contact script. Another safety net for merchants is “Verified By Visa” Every merchant should contact their merchant representative at their acquirer and secure the most current information on security protection plans they can use. Some are virtually cost free.

Belong to merchant networks that provide known fraud ship to addresses. You guys need to be sharing this data, particularly the merchants that ship high dollar items. And, why oh why would anyone ship items to Nigeria and Indonesia without very strong verification steps? Look at the nature of your business and if it involves large amounts of international sales you had better be wondering why the card is issued by a U.S. bank, the customer lives in the US, and wants property sent outside? Some of the really well organized fraud rings are having merchandise sent to U.S. addresses where they have conned the address holder in to re-shipping the item outside the US for a fee. This can be curtailed a great deal with the use of AVS.

As to Bernard J. Loibl:
Bernard:
Without knowing the nature of your commerce and the software you are using to manage your transactions I would not be able to comment. I am certain your contract with your old acquirer clearly states that either party can terminate the contract at any time. The issue may be related to sudden surges in your velocity (usually this is discussed with the merchant before any plugs are pulled) Again, it depends upon the nature of your commerce, velocities, customer complaints, etc.

I have also been the victim of credit card fraud, but of a different variety. I ordered some product from the company, The Chocolate Bear, located in Benicia California (www.chocolatebear.com) a couple of years ago. In the past 6 months they have charged my credit card twice... even though I haven't purchased from them again! Trying to call them, their phone number did not work and I received no answer from my emails! I learned that I could reverse the charges on my credit card and change my credit card number, but there was nothing I do to alert anyone else who might be a victim! There are many people, who unlike David, don't even check their credit card bills... or do so only infrequently. You can also report to the Better Business Bureau (look one up in your area. For this one, it was http://www.goldengatebbb.org ) and that I could also file a report for internet fraud (go to http://www.ifccfbi.gov/index.asp ). If you are a victim of this or any company, make sure to (1) place a report witht he IFCC (as they can shut down the website, which they will apparently do if they get enough complaints), (2) don't just cancel your credit card but alert them to what has happened, and (3) place a report with the BBB (does little good, but give it a try), it can't hurt.

Yes that is correct. I liked your comment. I too belong to the same profile and this was of great help.

Adam Butler
http://www.bankcreditcard4u.com

Yes, this fraud is a growing problem. What is someone left to do when it ends up on their credit report. I have found this site helpful in cleaning the credit reports of the errors...

http://www.brokencredit.com

Keep up the great work on your blog. Best wishes WaltDe

I found this blog by looking for the Chocolate Bear in Benicia, CA, a division of American Confections Corp (as said on their website www.chocolatebear.com), as I had problems with illicit charging.

I noticed Robert's comment about credit card fraud, but what's to be done about fraud committed by the company? This company, Chocolate Bear, continues to accept credit cards, when it is obvious that I'm not the only one who's had problems with them. I reported a complaint at the Better Business Bureau per Geri's suggestion, and discovered numerous complaints against them... and yet they accept credit cards, so they haven't been shut down. They charged my credit card, and wouldn't reverse the charges when I reached them, when I owed them nothing!

How does this happen? How can this company Chocolate Bear continue to take credit cards when they've obviously had numerous chargebacks and complaints from people who have purchased from them ligitimately, but later been slammed with mysterious charges... months later?

In my case, I didn't even receive the product I'd ordered, they promised me it and promised and promised...

Yet I had difficulty in going back to my credit card company, who said they'd reverse it, but it was a long drawn-out process of 6 months (needless to say, I don't bank with that bank anymore).

Thanks, Geri for your posting! Beware people, who you give your credit card to! At least it's worthwhile to check the Better Business Bureau --it seems like not everyone is on there, but it's a good litmus test against illicit operations.

But when you come across a situation like this, what can be done to get the company shut down? Robert, anyone, any suggestions?

Dave, very interesting article on credit card theft. I myself have experienced a few instances of credit card theft. I just happen to read something on bills.com about identifying theft relating to credit cards. I would like to share the same with you as well.
Please visit (http://www.bills.com/identitytheftarticlebills/) and do let me know if it was useful to you.

Regards,

Steven

It seems that this is a great forum for learning about the activity of thechocolatebear.com, who I was doing a web search because they owe me LOTS of money and haven't paid. It turns out the owner, Julian Marx and Mary Eastily, have a dark background, and Marx has been in prison for fraud. Yet they are able to take credit cards through their website and process them... isn't this illegal?

So here's the big question: don't credit card companies look into the background of the company owners and block criminals from access?

Sorry, I meant chocolatebear.com (The Chocolate Bear is the name of the company!)

Hey, I can give several advices how to avoid credit card fraud.
You often need to have your account closed and a new one opened, which can leave you without a card for a week or more. That’s inconvenient, and it can mess up any automatic payments charged to that card.
That’s if all goes well. Sometimes card issuers balk at removing charges or closing a bogus account.
So, better safe than sorry. Fortunately there’s plenty you can do to reduce the odds of becoming a victim.
Guard your card online
Beware of “phishing” e-mails. These are made to look as if they’re coming from your bank or credit card issuer and usually urge you to take “immediate action” so that your card isn’t deactivated. The link in the e-mail takes you to a criminal’s Web site, where you’re encouraged to input your credit card account number and other personal financial details. If you get an e-mail purporting to be from your card issuer, use the toll-free number on your card to call and ask what’s up.
Be cautious shopping with unknown Web sites. A quick trip to an evaluation site like Bizrate.com or the Better Business Bureau online could save you money. Also make sure you have multiple ways to contact the merchant, including a phone number, fax number, street address (not just a post office box) and e-mail address.
Make sure the transaction is secure. Don’t enter your card number unless the little padlock is showing on the lower part of your browser, and the Web site address starts with “https” rather than just “http.”
Don’t let Web sites “store” your cards. The encryption technology used for transactions -- the information zipping back and forth between your computer and the merchant’s -- may well be better than the security used to protect information stored in the merchant’s databases. Besides, a big database of credit card numbers is a juicy target for hackers.
Guard your card offline
This is really basic, but: Don’t forget your card. You might be rushed, or distracted by your kids, or involved in an interesting little chat with the clerk. Whatever. Keep an eye on your card and make sure it goes back in your wallet. I typically leave my wallet on the counter or restaurant table, with my hand on top of it, until the card goes back in. This can be a little awkward sometimes, but it helps remind me not to leave the store without my plastic. The one time I forgot is the time, of course, someone swiped my card.
Shield your card. Think how many people these days carry around camera phones -- and think how easy it would be to snap a picture of your card if it were left in plain view.
Don’t give your number out to solicitors. This includes telemarketers who contact you by phone to offer you a “great deal” on magazine subscriptions, vacations or any other purchase. If you ever get anything, you’re likely to pay a lot more for it than agreed, and some of these scamsters fight tooth and nail against your attempts to have the charges removed.
Consider carrying fewer cards. Reduce your exposure by limiting the number of cards a thief could potentially steal.
Copy what you carry. Every once in a while, empty your wallet onto a copier and zap an image of the front and back of your cards. Keep this info in a secure place (not in your purse or wallet) so you know which issuers to call to report stolen cards.
Watch your statements
Know when your statements should arrive. Missing statements could indicate that someone has stolen your mail or redirected it to a new address. Check your most recent statements for the account closing dates; most close around the same time each month, and should land in your mailbox a week or so later.
Review the charges. The more fastidious among you can compare your statement with receipts you’ve collected during the month. The rest of us should, at the very least, scan each charge to make sure we recognize the merchant and the amount and have some recollection of making the purchase.
Report suspicious or unauthorized charges. Call the issuer promptly and follow up in writing. Yes, sometimes you’ll make a donkey of yourself, as I did in the sleep-deprived days after our daughter was born. I insisted to the customer service rep that I couldn’t possibly have made a certain charge -- only to realize after her gentle questioning that, yep, I actually had. The rep was very gracious. I suspect such things happen all the time.
Police your paperwork
Beware of “mistakes.” If a merchant makes an error processing your card, tear up the incorrect receipt or at least write “void” all over it. When presented with a receipt that has blank lines before the total, draw a line through them so that additional charges can’t be added.
Collect, collect, collect. Gather up your “flimsies” -- credit card receipts -- rather than leaving them where any thief could copy down your account number and expiration date. (In a few years, merchants will be required by federal law to truncate numbers on receipts, but it’s not the law yet in most places.)
Shred, shred, shred. Cross-cut shredders are the best, but even a $20 version will do the job. Feed it all your old credit card receipts, applications and anything else that includes sensitive financial information, such as your Social Security number.
Secure your mail
Opt out of credit card solicitations. Reduce the volume of pre-approved credit card offers (which can be swiped and used by thieves) by calling 1-888-5OPT OUT, which will take your name off marketing lists sold by the credit bureaus. You’ll need to input your Social Security number as an identifier. Signing up for this service didn’t eliminate but did significantly reduce the number of offers coming into our home.Ask your issuers not to send “convenience checks.” Good luck with this one. Some issuers will abide by your wishes (although it may take a while -- often these things are printed up months in advance). Others will ignore you. Be persistent.Get a locking mailbox. And don’t leave your outgoing mail where it can be swiped by anyone passing by; drop it off at the post office.

THIS IN REGARDS TO CARDSERVICE INTERNATIONAL.I SIGNED UP ON FEB 6TH 2007 USING THERE LINK POINT INERNET SERVICE AND SHOPPING CART FOR EBAY.ONE GUY TRIED GETTING HIS CARD TO GO THROUGH 6 TIMES HE EVENTUALLY PAID WITH A WIRE TRANSFER BUT IT RED FLAGGED ME. THEY DECIDED TO HOLD ON TO THE REMAINING SALES AND DEBIED MY ACCOUNT WITH THE 2 SALES I DID FOR $3571.00 WHICH HAD ALREADY BEEN DELIVERED THEY PUT ME AT A NEGATVE BAL. AND SAY THEY ARE GOING TO KEEP THESE FUNDS FOR 6 MONTHS WITH NO REGARD ABOUT WHAT THEY DO TO THE AVERAGE PERSON STAY AWAY FROM CARDSERVICE INTERNATIONAL THE SEEM TO BE A DISHONEST COMPANY WITH REMORSE ABOUT WHAT THEY DO TO ANYONE THEY CLOSED THE ACCOUNT JUST LIKE THAT WITH NO EXPLAINATION EXCEPT THAT IT WAS A BUSINESS DECISION IN THE MEANTIME THE KEEP HITTING MY CHECKING ACCOUNT FOR FEES OR WHAT EVER.
IF THERE IS A LAWSUIT GOING ON WITH THIS COMPANY I WOULD LIKE TO KNOW AND GET ON IT AND MAKE IT A CLASS ACTION THANKS ED

The Chocolate Bear can no longer accept credit cards. They rely on paypal only. Julian Marx has been imprisoned twice for fraud, theft & related charges. They continued to defraud individuals, even while in bankruptcy proceedings, both business and personal. Needless to say, I was also a victim of their crimes, to the tune of many thousands of dollars.
But their website is still up. Isn't that amazing!!

I was just a victim of CC this week. I found about $2500 in fradulent charges at gas station in TWO states. I'm not sure how my card was duplicated. (I never had my card swiped at a gas station. I thought an employee at a Mexican restaurant stole the number when I gave him the number over the phone to purchase food that was catered for a company party - but I'm still not sure how it happened.) Another odd thing is that there were individual charges at gas stations (seemingly at the same time) for over $300 and $400 - basically almost $1,000 was charged on my account per day over this 8-day period. I thought gas stations limited their charges to $75.00 for credit charges...what could possibly be charged at a gas station for $300???

An outfit that appears on my Visa bill named MP3MUSICHQ-COM whoose service phone number is 866-978-4842, has billed me for a number of months for services I never used. I finally called the number which got me a fellow deep in the heart of India. After some language play I had it stopped. I will now wait to see if the charge appears again.
I feel that I have been cheated and that these on line services can reap enormous profits because they have most likely done this to thousands of other suckers like me. I will next contact Visa and ask to be credited for their charges. I do recall filling out the form on that web site but I never used the service. A word of advice, don't give any site your information unless you have checked out that service thoroughly. If you get a charge for something you never used, report it.

Whats nice though is that there is an ever increasing amount of security force out there to help combat the issue. At this point they are even offering online degrees for fraud management and other cool things like that. I myself got a degree at Utica College's online program and am actually part of that security force right now.

Dan,

Thanks for your post. I am an non-resident Indian isiting India. I lost my wallet, along with my US based credit cards, and reported theft immediately. My CC company sent me a new card through regular mail, which I did not receive. I called them and they sent me a replacement, voila, of the same cc number that was previously lost in the mail! When I received my statement, I found out several unauthorized charges to my account and reported immediately. I know that I will be not held liable for these charges, but I am extremely upset at the fraud and am wondering what I can do to track down the defrauder. In particular, I very much worry over (a) whether it is a stranger or someone known to us who could have done this. Our house in India is pretty much at the mercy of a neighbor who holds keys, checks mail etc. (b) that this kind of fraud could be repated with my other credit cards, (c) this will affect my credit rating in US.

Any insights/comments will be much appreciated.

$20,000,000.00+ / Quarter..that's an awful lot of money to just write off, don't you think?

Although what can you really do about it?

I think it's the credit card company, not the merchant who is to be responsible at least partially for CC fraud. Otherwise there will not be enough good security measures and small scale fraud will always exist. Who gains at it?

GOOD News that fraudsters eventually meet their ends! Julian Marx was arrested for attempted murder after stabbing a couple in San Bernardino.

BAD News: He should've been stopped before this had to happen. The law doesn't stop fraudsters and conmen, even when it knows of their existence. Marx was only stopped when he tried to commit murder!

Still in question is Marx's wife, Mary Eastily, who has participated in Marx's numerous scams. The twosome live (lived) in Benicia California and ran the business The Chocolate Bear (www.chocolatebear.com), which provided them a great front to run their scams with. Dozens of people have been scammed by them, that are known thus far.

I saw a posting that anyone who's been scammed should contact Asst. U.S. Attorney Laurel Beeler at (415)436-6765 and to ask for other contacts within the group (though the legal system hasn't done a damn to stop Marx up til the stabbing!)

Also, if you've been scammed, please enter a posting!

I have worked on both the issuing side credit card companies as well as the merchant side. The merchants should be held more responsible on verifing fraudelent activity. If they are able to verify the accountholder, via address, security features, signature, according MasterCard, Visa regulations, then there will much less fraud-counterfeit fraud excluding and the merchant is not held liable. Issuing banks are not the ones who accept the cards, are not the ones who sell the merchandise/service. Instead most banks can hardly keep up with the amount of losses from the latest new scams that are always afflicting the industry. When a merchant or processing company gets hacked into and it is a lot more common than you think, the banks are the one that pay for re-issuing cards, any counterfeit activity, or any other repercussions because some company did not have ample security.
As for Michelle who lost $2500 at gas stations. While she received her money back due to the competitive *Not Responsible for Fraudulent Activity* all banks have today, the bank probably lost no less than $1500 or the entire amount. That is 1 card. Imagine a large bank with 1 million cardholders. And you wonder why fees for merchant services and bank fees are so high?

I have know Mary Eastily about 25 years. She is honest, true blue and marriedJulian Marx because she fell in love withhim.
He stole her money, her inhertiance as well and left her with this mess.. In fact he also tookfrom hisown Mother. Please clear Mary's name as she had no inkling as to what he was doing.

Dolly, I would love to believe that but we all know that this is impossible. She sat in courtrooms, next to him, several years ago after they defrauded businesses. She was quite vocal in her defense of their actions. Maybe she didn't know on day 1 but she caught on quite quickly and "enjoyed" the fruits of their illegal activities as well. May she rot in jail as well.

They got me too! Last December I placed a small order for $50 and was charged 2x (December and February) Sent several emails, calls, etc. but to no avail. Thanks for the info above to pursue for reverse charges, etc.

Dee again, sorry, I forgot to mention my erroneous charges were from The Chocolate Bear, Benicia. Glad they got Julian and hope we all can get some resolve from this. Good luck to all!

I subleased space to Julian Marx and Mary Eastily for there business called the Chocolate Bear. They at first seemed so fun and nice and I thought we were friends. They got me to invest in a bogus Chocolate Coin Machine deal they were scamiing people on and I sold them a boat on payments. All amounting to thousands of Dollars that they currently owe me for and of course have not paid. I was told lie after lie after lie. I have a signed paper by Mary Eastily that shows her awareness of the fake Coin Machine investment I was personally in a court room with Mary and Julian up in Sacramento where they were trying to dispose of their dept by further dishonesty. Mary is not without knowledge, she may have been honest at one time, but that was a time in the past. I'm glad they got Julian and hope charges for fraud etc. are brought against both Julian and Mary soon. Let's get out all the evidence and let a jury decide the truth, then let the price be paid to society.

www.vondar.com says:
Once a security feature was given away online you can not consider this feature as secure anymore.

I found this article looking for "Cardservices International scam" and I'm in a similar boat to LV with a horrible experience with Cardservices International. All merchants should beware to never, ever use this company to process credit cards. Not only is their service horrible, they are thieves and every merchant I've known who has dealt with them will tell you the same. Heck, even the lady I spoke to in their collections department said the same thing. Luckily I have Bank of America as my bank and they reversed over $1400 in false charges CSI stole from my bank account.

This just goes to show there is more to credit card fraud then just having your card swiped and duped. On that subject, I've gotten in the habit of never letting my card leave my hand. I live in the Orlando, FL area and we have so much card duping here (because the tourists are easy targets).

I'm curious about one thing, don't merchants have insurance against credit card fraud?

Do not deal with "card services international". They are a fraud company. They shut down our company by freezing $200,000 of our credit card money that was supposed to go into our bank account. We were unable to buy merchandise to accomodate our orders... and they still take out the fees from our bank account..... They are a scam... big time. And when we started refunding our clients they shut us down completely. What they do is freeze your assests and use that money. They cut of your account so you do not have any knowledge of your accounting and they play with the number... and you never see that money. Card Service International is a scam.

We are in the same boat. Cardservice International is the biggest rip off. They freeze your money and close your account so you have no access to even review the transactions. You'll be calling the account manager all day long and they dont return your phone calls and you never see your money again. Somebody needs to shut them down. They are FRAUD.