The Carbon-Paper Crime Wave

Instead of stealing credit cards, thieves just go by the numbers

American Express's 14 million charge card holders have been surprised this fall to find a new kind of admonition on their monthly statement: "Warning--Thieves can misuse your card number. Don't give account data to strangers." Enclosed with each bill was another cautionary note, telling of crooks who pose on the telephone as American Express representastives or police officers and ask for card numbers and expiration dates. Warned James IF. Calvano, head of is the company's Consumer Financial Services Group-USA:"You should guard this information as carefully as you do your money."

For some unlucky cardholders, such warnings come too late. Even if their plastic has not been stolen, they have been victims of a fraud. Lately thieves have begun getting account information by pilfering the carbon paper that is found between the pages of individual charge slips, either by combing through the trash behind elegant shops and restaurants or colluding with dishonest employees working inside. Once the account information is in hand, it is no trick to order merchandise over the phone, since this requires the presentation of neither an actual card nor a valid signature. One band of California criminals stole $250,000 in a carbon-paper caper last year, according to an official of California's Crocker National Bank.

Some thieves go to the extra effort of counterfeiting credit cards and embossing the stolen information onto them. A few of these are sold on the street at prices ranging between $100 and $300. More often they are used by the counterfeiters in cahoots with a dishonest merchant, who rings up phony charges that in the end are paid by the the card company. In this fashion, thieves run little risk of getting caught, at least for a while.

Losses from counterfeit cards alone are running about $30 million annually, but that is only a fraction of the roughly $400 million that will be taken this year in spurious credit-card transactions. Thanks to a 1971 federal law, a consumer's liability in theft or fraud is limited to $50 per card; the cost is usually absorbed by either the bank or the company issuing the card. Eventually, however, the losses drive up the cost of goods and consumer credit.

So pervasive has credit-card fraud become that law-enforcement officials have identified several illegal organizations operating throughout the U.S. One is known as the Nigerian Credit Card Ring because most of its members come from that nation. They do not use other people's credit, but rather specialize in getting then-own by using phony information, even phony references, and mail drops.

Belatedly, card issuers and merchants are organizing. Tens of thousands of stores are displaying black and red stop-sign decals with "fraud" printed on them, warning potential perpetrators that the business has been visited by a traveling team of anticrime experts. Visa, which has 65 million U.S. cardholders, hired former San Francisco FBI Division Chief William Newman in June to organize a professional security team.

Some thieves have even begun targeting the cash funds established by brokerage houses for wealthy customers. Merrill Lynch has been forced to establish its own antifraud unit to combat crooks using phony cards who try to tap the billions of dollars held in the company's Cash Management Accounts.

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