What Types of Criminals Use Prepaid Cards?A variety of criminals are using stolen credit, debit and prepaid cards to move billions of dollars in, out, and around the country.
Drug CartelsPayment cards are skyrocketing in popularity with drug cartels moving massive amounts of money. Unlike cash, it's not about the number of cards—it's about how much money is stored on each card. Because there's virtually no operational limit to the amount of money that can be loaded on a prepaid card, any one piece of plastic could have hundreds or even thousands of dollars on it.
Organized CrimeAccording to the FBI, transnational organized crime groups continue to pose a serious threat to the national and economic security of the United States. Because handling bulk cash is often far too risky, these groups are increasingly using plastic cards as safer and easier way to move funds.
TerroristsFrance recently announced it would target prepaid debit cards, which were used in the Paris attacks. “We will regulate more strictly the use of prepaid cards, which were used in the November 13 attacks, in order to make it harder to remain anonymous.” - Finance Minister Michel Sapin.
Gang ActivityThe FBI estimates there are 33,000 violent street gangs, motorcycle gangs and prison gangs with about 1.4 million members active across the U.S. and Puerto Rico today. Many of these gangs are well-organized and sophisticated, and use plastic cards as their primary currency.
Human TraffickersAccording to some estimates, more than billions of dollars are loaded on prepaid cards from criminal activities, including human trafficking. Human traffickers are drawn to plastic cards because they are a safe, easy and low-risk way to move funds in and out of the country.
Sex TraffickersOne of world’s fastest growing criminal enterprises, sex trafficking is a lucrative industry, raking in approximately $99 billion a year. The International Labor Organization estimates there are 4.5 million people trapped in forced sexual exploitation across the globe. Like other criminals, sex traffickers are increasingly relying on plastic cards to move funds in and out of the United States.
How Criminals Use Prepaid CardsWhen it comes to plastic cards, what you see isn’t always what you get.
When it comes to plastic cards, looks can be deceiving. In many cases, these seemingly harmless-looking cards are being used to launder money tied to illegal or illicit activities. Criminals are increasingly using stolen credit and debit cards and prepaid cards to move funds in, out and around the country.
How Criminals Acquire Prepaid Cards
Many criminals purchase stolen debit and credit card numbers on the Dark Web or skim them at merchant locations. Once in their possession, they can then be used to purchase prepaid and gift cards.
How Criminals Use Prepaid Cards
First, criminal organizations will contact a complicit supplier of prepaid cards. In some cases, the supplier loads the cards with illicit funds in any currency. Next, the supplier ships the prepaid cards, loaded or unloaded, via mail or courier. In the destination country, the recipient withdraws the cash at an ATM, which is then converted into local currency. As soon as the cards are “unloaded,” they can be used for subsequent illegal transactions.
About Prepaid Cash Cards
Often referred to as “open loop” cards, these global cash cards are branded by Visa, MC, Amex, Discover and globally issued by financial institutions. The prepaid card works like other debit cards, allowing users to buy goods and services anywhere in the world—making these true “global cash cards.” They can also withdraw cash from branded ATMs with the correct PIN.
Although some are used only once, prepaid cards can be re-loaded with cash at more than 150,000 merchant locations in the U.S., or through online transfers from bank accounts or other payment cards. Funds can be transferred to other prepaid cards anywhere in the world in a matter of seconds using online applications or mobile phones.
About Retailer Gift Cards
Also known as “closed loop” cards, these gift cards are branded by retailers for use only at their stores. Consumers can use the cards like cash to buy goods and services at certain merchant locations. Retailer gift cards are purchased for a specific amount and can only be re-loaded by the merchant. Funds cannot be transferred from these cards to other payment cards.
Cashing Out and/or Buying Gift Cards In pawn shops, gift cards are often sold for cash at 50 to 70% of the face value. Home Depot, Target, Best Buy and Walmart cards are among the most popular gift card brands used for money laundering. With more than 2,200 Walmart stores in Mexico, buying a Walmart gift card is fast and easy for criminals looking to move illegal funds.
Card Cloning 101Criminals can quickly create counterfeit payment cards, which are bought and sold online.
Last year alone, more than 32 million Americans were victims of credit card theft. Criminals skim card information from unknowing consumers or buy stolen credit and debit card numbers on the Dark Web. In many cases, criminals illegally clone valid payment cards onto non-descriptive pieces of plastic, like hotel room keys and subway cards, making detection and interrogation nearly impossible. Virtually any plastic card with a magnetic stripe can be re-purposed as a credit, debit or prepaid card. Unlike capturing bulk cash, when officers confiscate plastic cards, determining the identity and value of the card is critical to your investigation.
How Card Cloning Works
Criminals use easily accessible re-coding devices to copy stolen personal identity and financial information and transfer it to any card with a magnetic stripe. For just dollars an account, offenders can buy credit, debit and prepaid card information on the Dark Web. Some use “table top” embossing machines to alter the face of the card to match information on the magnetic strip. The bottom line is any plastic card with a magnetic stripe can contain cloned credit, debit or prepaid card information.
IRS, Last Updated August 3, 2017 The following examples of Identity Theft Investigations are written from public record documents on file in the courts within the judicial district where the cases ...
“Illegitimate cards:” Officials recover bundle of 1,300 gift cards; 700+ bought with stolen information
POSTED 10:15 PM, APRIL 15, 2017, BY DERICA WILLIAMS, UPDATED AT 10:27PM, APRIL 15, 2017 WAUKESHA COUNTY — Instead of a brick of drugs, stacks of gift cards possibly worth just as much were found...
POSTED 6:52 AM, APRIL 11, 2017, BY TRISHA BEE WAUKESHA — Waukesha authorities are investigating after 1,300 Walmart gift cards containing stolen credit card information were recovered. In Februa...
Carol Robinson, AL.com, March 2016 Three Cuban Nationals are in custody in connection with a credit card skimming/cloning scheme, Hoover police said today. The men were arrested March 21, said Hoov...
Department of Homeland Security, August 2015 During arrests of criminal couriers, law enforcement officers rarely find bundles of cash wrapped in rubber bands anymore. Instead, they find stacks of ...
Marc Santora, May 2013 It was a brazen bank heist, but a 21st-century version in which the criminals never wore ski masks, threatened a teller or set foot in a vault. In two precision operations th...
60 Minutes, Sept 2014 Con artists have been filing bogus tax returns and collecting millions. Steve Kroft finds out how far the scam has gone and why the IRS hasn’t been able to stop it. The follow...