Card Sharks

Fraud on the phone

With one son living in France and another in the Philippines, Jane Landenberger is used to making long-distance phone calls. She was wholly unprepared, however, for her latest bill. So large that it arrived by United Parcel Service truck, the 2,578-page statement listed some 17,000 U.S. and international calls and totaled $109,504.86.

The 56-year-old Bedford, N.Y., woman was a victim of an increasingly common scam: telephone credit card fraud. Last week such cases seemed to grow larger and more outlandish by the day. Philip Rubin, 71, of Boca Raton, Fla., received a statement demanding $176,983. Said he: "I was more than a little surprised." Even that was topped by a bill presented to the Michigan Association of Governmental Employees for calls charged to its new, but not yet distributed, credit cards. It came to $320,984.26.

Some 50 million Americans carry telephone credit cards. More than 47 million have been issued by American Telephone & Telegraph, which operates the long-distance lines that used to be part of the Bell system. The rest have been put out by competitors like MCI. Each AT&T card is supposed to be protected from abuse by a four-digit personal identification number that only the user and the company know. Someone using the card must give both his phone and the identification numbers. But anyone who finds or steals a card, or overhears the numbers being read to an operator, can make illegal calls.

Those most likely to spread the numbers, says Larry Mixon, the Florida spokesman for Atlanta-based Southern Bell, include college students and military base personnel. Both groups contain large numbers of young people living away from home and making frequent long-distance calls. Once a number is obtained, hundreds of people may end up using it. "Students have been known to take out ads announcing the numbers and the fact that free calls can be made from them," Mixon said. In California stolen numbers bring from $2 to $10 each on the black market.

The boom in phony card charges is partly due to a crackdown on another type of telephone abuse. For years operators seldom asked questions when travelers charged long-distance calls to their home phones. But so many calls were being billed to unwary customers that operators now usually phone a person at the number given to get approval. Says Scott Smith, a spokesman for San Francisco-based Pacific Bell: "Credit cards are becoming the sole source of telephone fraud."

Bogus billings cost AT&T $70 million in 1982 and $74 million during the first nine months of last year. Such sums are minuscule, however, when compared with the company's revenues (1983: $69.8 billion). AT&T deducts the fraudulent charges from its taxable income as a cost of doing business.

Telephone officials recommend various ways to avoid a credit ripoff. For example, they advise cardholders to give their numbers to operators in a voice that cannot be overheard and, when possible, to use pushbutton phones that allow the codes to be entered without being spoken.

Phone companies are taking measures to stop the card sharks. New York Telephone now issues a card that lists the customer's identification code but omits his name and phone number. AT&T is installing public phones equipped with slots that automatically scan and read cards so that people do not have to give out the numbers. It plans to have such phones in 5,000 hotels, airports and convention centers by the end of the year.

While computers have been programmed to spot an unusual increase of charges to a customer's account, the phony phone calls can mushroom before they are stopped. The phone company knows where the calls are made to, but it is still hard to track down the caller. Nonetheless Jack Dille, an A T & T security and claims manager, says, "We're very hopeful that some of the things that we'll do will give us the ability to detect fraud immediately and apprehend and prosecute those responsible for it."

The victims of telephone fraud usually do not suffer financially. If they can prove that someone else was using the card, the phone company charges them only for long-distance calls actually made. Jane Landenberger had to pay just $47.03 of her $109,504.86 bill.