Professional Documents
Culture Documents
Green Dot Fraud
Green Dot Fraud
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Prepaid and Stored Value Cards
AAA
American Express
Blackhawk PayPower
netSpend
MoneyGram
Travelex
Target
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reloaded with value. If they’re “branded” cards —
if they come with the Visa or MasterCard logo
— they can be used to withdraw money directly
through ATMs.
Thieves are favoring Green Dot and other 32 years of law enforcement experience before
prepaid cards because MoneyGram, which coming to Green Dot in 2008. He was a money
settled charges with the Federal Trade Com- laundering expert at the Department of Treasury
mission in 2009 regarding oversight of tele- after serving 19 years in the US DOJ Criminal Di-
marketing fraud, and Western Union now have vision specializing in counter-money-laundering
sophisticated fraud detection programs and policies. He noted that law enforcement can sub-
electronic transaction flagging systems, said poena all details of card activity from Green Dot,
Steven Baker, a fraud expert with the FTC. not a single transaction detail is excluded. Turn-
around time for a request is usually the same day.
Green Dot prepaid debit cards are available at
approximately 60,000 retail outlets throughout Prepaid cards function like traditional check-
the U.S. and are reloadable through the purchase ing account debit cards, without the checks. A
of MoneyPaks, which carry a unique authoriza- MoneyPak comes with a scratch-off 14-digit
tion number. These cards are not associated with serial number. To transfer funds to a prepaid
any personal bank account. Users of these Green debit card, holders call or visit the MoneyPak or
Dot MoneyPak cards are reminded to never give Green Dot websites and reveal the number. Once
anyone those numbers associated with those fraudsters have the code, they can then transfer
cards – doing so gives them instant access to the the funds to their own prepaid debit cards, typi-
money on those cards. cally opened under stolen identities, to make
purchases or withdrawals from ATMs.
Green Dot Corporation, headquartered in Pasa-
dena, Calif., works closely with law enforcement Customers can load up to $1,000 a day on
in combatting fraud (see page 15 for details), MoneyPaks for $5.95 per transaction, and get
stated Senior Vice President Jeff Ross, who had cards with a number on the back. The cash is
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held by Green Dot’s partner banks and accessed 16, 2013 warning consumers of Green Dot
through the number, similar to a bank account’s MoneyPak scams in Georgia. These scams
routing number. Green Dot cards are not sold were conducted in the same manner.
outside the U.S. and cannot be reloaded from
abroad. MoneyPaks are often used to fund PayPal On Sept. 12, 2013, ten retail stores in Savan-
accounts, which are used to make payments on nah, Ga., each received telephonic bomb threats.
the Internet. In each case, the caller asked to speak to the
store manager, demanding that ten Green Dot
Scammers calling in bomb threats MoneyPak cards be activated and loaded with
The FBI and the St. Charles Parish, La. Sheriff ’s $500 and that the card numbers be read aloud
Office are investigating a series of telephonic over the phone. The caller threatened to blow up
threats that occurred Sept. 17, 2013, from an the stores if the managers did not comply and
unidentified Asian male who called CVS stores also threatened the store employees’ homes and
in Destrehan, Pontchatoula, Covington, and families.
Mandeville, all in Louisiana.
The managers of all the stores described the caller
The caller demanded Green Dot cards be activat- as a male between 20 to 30 years of age and with
ed, loaded with $500 and the security number on a foreign accent. No manager complied with the
the back provided to him or he would detonate demands, and no explosive devices were found.
an explosive device previously placed inside the
store. Subsequent investigation has determined that
these calls mirrored a number of similar tele-
Similar incidents occurred Sept. 16, 2013 in the phonic threats made to various drug stores and
Lafayette, La. area. Calls were placed to CVS and retail outlets nationwide. One such call placed
Walgreens stores in New Iberia, St. Martinville, to a discount department store in Snellville, Ga.,
Youngsville, and two calls in Lafayette, all in was identified as an overseas Voiceover IP (VoIP)
Louisiana. No explosive devices were found in telephone number. To date, no explosive devices
any of the incidents. have been found anywhere in the country linked
to this type of threat.
A similar scam was reported at Kmart, Walgreens,
and CVS stores in Virginia and New Jersey. On Ross of Green Dot said many of the phone threats
Aug. 31, 2013, a subject with a Middle Eastern have been traced to major phone numbers in
accent stated his name (unintelligible) and said, India (Indians in the U.S. are also targeted).
“I’m calling from Pakistan and I need to speak
to your manager.” Once the manager was on the Stolen cards altered, replaced at store
phone, the male subject stated, “This is (unintel- In December 2013 in Atlanta, Ga. a group of
ligible) there is a bomb in your state. I know the thieves perpetrated a new scheme involving
address of your family so do as I say. It has to stay Green Dot cards, according to the FBI. They
between you and me. Go grab three Green Dot would steal the cards at the store, remove the seal
cards and put $500 on each of them.” on the back to reveal the account number, and
link the account number to a debit card. They
The FBI Atlanta Division issued an alert on Sept. (Continued on Page 6)
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How Do Green Dot Prepaid Cards Work?
If the customer passes Green Dot’s customer verifi- Source: “An Investigator’s Reference Manual to Green Dot Op-
cation process, Green Dot will then send a personal- erations and Record Processes,” Financial Crimes Enforcement
Network (FinCEN), 2010.
ized reloadable card in the mail embossed with the
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replace the seal on the card to make it appear tric company. He claims that the victim
unblemished and return it to the store. Once a owes money ($1,400 to $1,500) and immedi-
customer purchases the card, the money is then ate payment must be made to continue service.
wired to the debit card account. The perpetrator The suspect instructs the victim to buy Green
will continually check the stolen cards’ account Dot cards or MoneyPaks in increments of $500
balance by phone or computer to identify chang- at CVS, Walgreens, or similar stores. The victim
es on the stolen cards. As this scam became prev- calls Johnston back with the account numbers
alent in the metro Atlanta area, stores began to and the money is transferred out of the account.
place the cards behind the counter to limit access.
The suspects then moved their operation outside Phone fraudsters are using the threat of arrest
of Atlanta into areas unfamiliar with this scheme, warrants to pressure people into forking over
including Athens, Ga. The suspects would often hundreds, sometimes thousands, of dollars. In
use the money from the scheme to buy illegal August 2013, police in Florida, Georgia, Kansas,
narcotics and would resell them to make a larger and Oregon investigated phone scams in which a
profit. caller impersonates a local police officer. The call-
ers, manipulating caller ID to make the number
Ross of Green Dot called this scheme “really in- appear to come from the local sheriff ’s office or
sidious.” If alerted, Green Dot can monitor the jail, tell potential victims they have an outstand-
card number to see if fraudsters are pinging on it ing warrant for an unpaid debt, missed jury duty
(to determine when it is activated) and then de- or some minor infraction and that a fine is due.
activate it, if necessary. The callers convince people to make the pay-
ments by wiring it through Western Union or
Counterfeit receipt used for refunds buying a prepaid credit card like Green Dot and
In May 2013 at a Walmart in Naples, Fla., a registering it online.
white female used a counterfeit receipt to obtain
refunds totaling $887 on Green Dot cards, Police don’t notify people about arrest warrants
according to the Collier County Sheriff ’s by phone, and they don’t accept money to clear
Office. Numerous Walmart locations throughout them, the Collier County, Fla., sheriff ’s office
the U.S. have experienced this scam, with losses stated.
totaling $395,764.
“They try to make this as convincing and as
Scammers only need a number frightening as possible,” says Kati Daffan, a staff
In January 2013, an employee at the CVS phar- attorney with the Federal Trade Commission’s
macy in Auburn, Ala. complied with a caller Bureau of Consumer Protection.
claiming to be a CVS corporate executive in-
vestigating a virus threat. The night-shift em- In Georgia’s Floyd County, a 31-year-old woman
ployee was persuaded to run a transaction to paid $1,550 to clear a non-existent arrest war-
reload prepaid cards that resulted in a loss ex- rant related to a payday loan she never had. She
ceeding $10,000. received a call saying she owed $495 for a loan. She
says she checked with her creditors and found no
An unidentified suspect using the name Bobby record of the loan. She had previous debt disputes
Johnston called at least five Herndon, Va. resi- after another person of the same name failed to
dents claiming to be with Dominion Power elec- pay off a loan, she said, so she brushed it off and
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told the caller to email proof. But after a second “If you are going to run a scam, you need a
call from a so-called police officer threatening to way to collect the money,” said Steven Baker
arrest her, she gave in. of the FTC.
“He said, ‘In our eyes, you’re just refusing to pay Thieves impersonate officials
the debt’,” she recalled. “We’re just going to have In April 2013 in Sioux Falls, S.D., a female sus-
to proceed forward and have you arrested.” pect went to Walmart and requested six Green
Dot cards be loaded with $1,000 each, then left
Her husband checked the number; it was the the store without paying. She claimed to be from
sheriff ’s office. She paid the $495, along with a the main office and was running a test to see how
$500 fine and several “litigation fees” — a total of long it took to load the cards, according to the
$1,550. Only after she sent the money through a South Dakota Fusion Center. The suspect, along
prepaid credit card did she call the sheriff ’s office with a white female accomplice, have hit several
and learn there was no warrant. Walmart stores in Arkansas, Kansas, Missouri,
Nebraska, Minnesota, and South Dakota. The
In Tuscaloosa, Ala., elderly residents have been Green Dot scams started in September 2012 and
called by a fraudster claiming to be a lieutenant continue to be reported.
with the local police department. He persuades
the victim to purchase a $498 Green Dot card to Beware the crooked tax man
pay off a red-light camera traffic ticket. Once the Crooks posing as IRS agents, and who somehow
suspect gets the card number, he can download know the last four digits of your Social Security
the money to his own card. The suspect calls the number, claim you owe back taxes that must be
victims by name and in one case correctly identi- immediately paid via a Green Dot MoneyPak.
fied their vehicle and tag number.
If you refuse to cooperate, you’re threatened with
A resident of Coconut Creek, Fla. became sus- arrest, deportation or suspension of a business or
picious when a caller claiming to be from Pub- driver’s license. The scammers also spoof an IRS
lishers Clearinghouse sweepstakes told him he toll-free phone number on your Caller ID, give
had just won $50,000, but he first needed to pay IRS badge numbers, and follow up their calls
$191 in processing fees through a prepaid card with emails purporting to be from the agency.
he could buy at Walmart. When he hesitated, the The scammers may become hostile, and then
caller “gave me a hard time, and told me to think hang up – and another person quickly calls back
of all the things I could do for other people with claiming to be from the local police or Depart-
the money,” he said. “That’s when I hung up.” ment of Motor Vehicles office.
The Better Business Bureau in St. Louis, Mo. is- “If someone unexpectedly calls claiming to be
sued an alert when more than 40 unsuspect- from the IRS and threatens police arrest, depor-
ing borrowers lost tens of thousands of dol- tation or license revocation if you don’t pay im-
lars when they sent financing charges on mediately, that is a sign that it really isn’t the IRS
MoneyPaks. The FTC said thieves running calling,” said an IRS official.
lottery and sweepstakes scams, where more than
40 percent of the victims are over age 70, now of- In 2011, the U.S. Secret Service conducted Oper-
ten ask for MoneyPak payments. ation Rainmaker in Tampa, Fla. and busted sus-
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pects who were using laptop computers to steal
taxpayer identities and claim tax refunds from the TARGETING THE ELDERLY
IRS and have the funds directly deposited onto Scammers know what we want: to feel secure,
prepaid debit cards. Classes, often thrown as par- loved and valued. And they know that the older
ties, were held to teach street-level offenders how we get, the more we need peace of mind. To pro-
to work the scheme. Defendants told authorities vide it, some use sweet talk, promising a solution
that the computer scheme was much more conve- to a problem: money for our shrinking nest eggs,
nient and safer for them than working scams and companionship for our lonely hearts, a chance
to show we matter. Others feign a problem that
thefts on the streets.
needs quick solving, perhaps with some warning
about a potential danger.
Internet scam locks up computers
“We’re getting inundated with complaints,” said “The scammer’s goal is to get you to not think
Donna Gregory of the Internet Crime Complaint rationally, to operate on an emotional level,” says
Center (IC3), referring to the virus known as Jean Mathisen, director of AARP’s Fraud Fighter
hotline (800-646-2283), which provides counsel-
Reveton ransomware, which is designed to extort
ing, education and victim advocacy. “To put you
money via prepaid cards from its victims.
‘under the ether,’ as it’s called.”
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Reveton can even turn on computer webcams and
display the victim’s picture on the frozen screen. MONEY LAUNDERING
allows criminals to infuse illegal money into the
“We are getting dozens of complaints every day,” stream of commerce, thus manipulating financial
Gregory said, noting that there is no easy fix if institutions to facilitate the concealing of crimi-
your computer becomes infected. “Unlike other nal proceeds; this provides the criminals with
viruses,” she explained, “Reveton freezes your unwarranted economic power. The FBI investi-
computer and stops it in its tracks. And the av- gates money laundering cases by identifying the
process by which criminals conceal or disguise
erage user will not be able to easily remove the
the proceeds of their crimes or convert those
malware.”
proceeds into goods and services. The major
threats in this area stem from emerging technolo-
Be aware that even if you are able to unfreeze gies, such as stored value devices, as well as from
your computer on your own, the malware may shell corporations, which are used to conceal
still operate in the background. Certain types of the ownership of funds being moved through
malware have been known to capture personal financial institutions and international commerce.
information such as user names, passwords, and Recent money laundering investigations have
credit card numbers through embedded key- revealed a trend on the part of criminals to use
stroke logging programs. stored value devices, such as prepaid gift cards
and reloadable debit cards, in order to move
criminal proceeds. This has created a “shadow”
Money laundering concerns banking system, allowing criminals to exploit
The U.S. would seem to be especially vulnerable, existing vulnerabilities in the reporting require-
because it’s the world’s biggest user of prepaid ments that are imposed on financial institutions
cards; the FATF report projected that by 2017, the and international travelers. This has impacted
U.S. will account for 53 percent of the worldwide our ability to gather real time financial intelli-
market. gence, which is ordinarily available through Bank
Secrecy Act filings. Law enforcement relies on this
In congressional testimony last year, FBI Director intelligence to identify potential money launder-
ers and terrorist financiers by spotting patterns
Robert Mueller called the use of prepaid cards a
in the transactions conducted by them. The void
“shadow banking system” that had “impacted our
caused by the largely unregulated stored-value
ability to gather real-time financial intelligence.” card industry deprives us of the means to col-
lect this vital intelligence. Moreover, stored value
The Financial Crimes Enforcement Network cards are often used to facilitate identity theft. For
(FinCEN) of the U.S. Treasury Department is example, a criminal who successfully infiltrates
tasked with combatting money laundering and a bank account can easily purchase stored-value
promoting the security of financial institutions cards and then spend or sell them. This readily
and transactions. It is responsible for enforcing available outlet makes it much more unlikely that
the Bank Secrecy Act, for example. the stolen funds will ever be recovered, thus cost-
ing financial institutions and their insurers billions
of dollars each year.
The FinCEN Director told Congress in June 2012:
“Under FinCEN’s regulation, non-bank provid- —Excerpt from Statement by FBI Director Robert S. Mueller III be-
fore the House Committee on Appropriations, Subcommittee on
ers of prepaid access are now subject to compre- Commerce, Justice, Science, and Related Agencies, Washington,
hensive requirements similar to depository in- D.C., March 17, 2010.
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stitutions. The final regulation reflects FinCEN’s in retail stores.
attempts to achieve the right balance. FinCEN
believes that certain prepaid programs operate in Conclusion
such a way as to reduce potential money launder- Educating the public about the proper use of pre-
ing threats and are therefore generally not subject paid cards and the various types of scams being
to the provisions of the regulation. Such products perpetrated by fraudsters may be the most effec-
include payroll cards, government benefits cards, tive strategy for defeating such schemes but law
health care access cards, closed loop cards, and enforcement should be alert to the indicators and
low dollar products with strong safeguards in how to recognize such offenses in progress.
place.”
If the thought of consumers getting ripped off by
In an examination of the threat, the Financial Ac- fraudsters via use of prepaid cash cards doesn’t
tion Task Force, an international agency estab- raise any red flags for you, consider this scenario,
lished by the G-7 in 1989, said such an operation as posed by a Treasury Department assessment
typically works like this: of financial security threats in 2005:
A criminal organization repeatedly loads a pre- The money men behind the Sept. 11,
paid card in increments just below the amount 2001, hijackers would never have been
that would trigger a report to the government.
(In the U.S., that threshold is $10,000, so if it were identified had they not been lousy
based here, the organization might regularly re- bankers. The 9/11 hijackers opened
load a card with $9,900.) Green Dot limits trans- U.S. bank accounts, had face-to-face
actions on cards to $2,000. In December 2013 dealings with bank employees, signed
alone, Green Dot filed 943 Suspicious Activity signature cards and received wire
Reports (SAR) involving $10.7 million.
transfers, all of which left financial
The card, or a second card linked to the same footprints. Law enforcement was able
account, is sent to an associate, perhaps in an- to follow the trail, identify the hijack-
other country, who withdraws the funds through ers and trace them back to their terror
ATMs. In one such operation based in Australia, cells and confederates abroad. Had the
more than $100,000 was laundered this way, the
FATF reported. 9/11 terrorists used prepaid … cards
to cover their expenses, none of these
That’s how the Black Guerrilla Family, a Balti- financial footprints would have been
more street gang, worked, according to a federal available.
racketeering indictment. For more than a decade,
gang members locked up in Maryland’s prisons
blackmailed fellow inmates and sold narcotics
and other contraband, the FBI said. They then
“laundered the proceeds of their illicit activities
through the use of prepaid debit cards” sold by
Green Dot, the nation’s largest seller of the cards
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Common Consumer Scams Using Prepaid Cards
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Common Consumer Scams Using Prepaid Cards
Job Scams
You have been applying for many jobs, and you finally get an
offer. The company wants you to send money in advance to
pay for a background check, uniform, or equipment. You are
instructed to purchase MoneyPak cards to pay, and you pro-
vide the required numbers, but the job never materializes.
Romance Scams
You have been communicating with someone, and things
start getting serious. You feel good about the relationship,
and your significant other tells you that he or she needs
money by way of a MoneyPak card to visit you, to move for
a new job, or some other “legitimate” expense. You send the
money, and either you do not hear from that person again,
or you hear more about other urgent needs.
Utility Scams
A caller claims to be from a utility provider, and the caller-
ID verifies the source of the call. The caller threatens cus-
tomers with disconnecting service to their home or busi-
ness if they fail to make an immediate payment using a
MoneyPak card. The caller-ID is falsified, and any payments
made will not go to the utility provider and cannot be traced.
If you receive a suspicious call that claims to be from a utility
provider, end the call and contact the utility provider at the
number listed on your bill. Utilities have a variety of pay-
ment options available for customers, including the ability to
pay over a secure Internet site; by U.S. mail; in person at an
authorized pay agent location; or by Visa, MasterCard, or an
eCheck using an authorized utility agent.
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7 Consumer Tips to Prevent Fraud:
• Refuse any offer that asks you to buy a MoneyPak and share the
number or receipt information by email or phone.
Please keep these tips in mind when using MoneyPak. Green Dot is
not responsible for the quality or non-receipt of any goods or ser-
vices you buy using your MoneyPak.
Source: https://www.moneypak.com/ProtectYourMoney.aspx
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Sources of Information • Resources • Contacts
“Prepaid Debit Cards Overview,” by T. Jack Williams, Paymentcard Services, Inc., Sept. 22, 2009. (PDF; 1Mb; 21 pages)
http://www.ice.gov/doclib/aml/pdf/2009/williams.pdf
“Misuse of Open Loop Prepaid Cards,” by David Murray, U.S. Treasury, Sept. 2009. (PDF;600Kb; 22 pages)
http://www.ice.gov/doclib/aml/pdf/2009/murray.pdf
Telephone interview, Jeff Ross, Chief Compliance Office, Green Dot Corp., Monrovia, Calif., Jan. 17, 2014.
Telephone interview, Kevin Bleckley, Senior Intelligence Research Specialist, Financial Crimes Enforcement Network, Jan. 22, 2014.
“The End of Cash: The Rise of Prepaid Cards, Their Potential, and Their Pitfalls,” by Joe Valenti, Center for American Progress,
April 4, 2013. (PDF; 162Kb; 14 pages)
http://www.americanprogress.org/wp-content/uploads/2013/04/EndofCashBrief-21.pdf
“New Internet Scam: ‘Ransomware’ Locks Computers, Demands Payment,” Aug. 9, 2012
http://www.fbi.gov/news/stories/2012/august/new-internet-scam
“Scam: Caller threatens arrest if you don’t pay,” by Steph Solis, USA Today, Aug. 8, 2013
http://www.usatoday.com/story/money/business/2013/08/08/arrest-warrant-scams/2619187/
“Con artists opt for Green Dot cards over money wires,” by Diane C. Lade, Sun Sentinel, July 9, 2012
http://articles.sun-sentinel.com/2012-07-09/business/fl-green-dot-fraud-20120709_1_green-dot-debit-cards-con-artists
“U.S. aims to track ‘untraceable’ prepaid cash cards,” by M. Alex Johnson, Reporting: NBC News.com, Sept. 1, 2011
http://investigations.nbcnews.com/_news/2011/09/01/7526748-us-aims-to-track-untraceable-prepaid-cash-cards?lite
“Statement by Robert S. Mueller III, Director, Federal Bureau of Investigation, before the House Committee on Appropriations,
Subcommittee on Commerce, Justice, Science, and Related Agencies, Washington, DC, March 17, 2010”
http://www.fbi.gov/news/testimony/the-fbi-budget-for-fiscal-year-2011
“IRS Warns of Sophisticated Phone Scam,” AARP, by Sid Kirchheimer, Nov. 4, 2013
http://blog.aarp.org/2013/11/04/irs-warns-of-sophisticated-phone-scam/
“The Psychology of a Con Job : An inside look at the worst frauds and how scammers target their victims,” by Sid Kirchheimer,
AARP Bulletin, January/February 2014
http://www.aarp.org/money/scams-fraud/info-12-2013/worst-scam-artists-exposed.3.html
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