FRAUD

Fraud

Fraud

Case Scenario

Alice had a credit card account with Visa which was used heavily for the business expenses of Acme Corp. Cards were issued to Alice for this purpose. Acme Corp had authorized Alice to incur these charges on her card as its agent and was obligated to reimburse her for these business expenses. When a credit card statement was received Acme Corp issued its check in the amount of the business expenses contained in the statement, with Alice paying the personal expenses by her check.

Issue

Adam Smith, an employee of Acme Corp Inc. (“Acme Corp”), used his position to fraudulently obtain a Visa credit card in his name upon the account of Alice. Adam Smith was Alice's executive assistant during the period in question. His responsibilities included reviewing the credit card statements, allocating the expenses between the Acme Corp business expenses and personal expenses and arranging for their payment. Smith used his position to hide the substantial personal charges he made on his Visa card from Acme Corp and Alice.

Facts

The fastest growing type of credit card fraud is the counterfeiting of Visa and MasterCards. New technology has aided criminals like Adam Smith, with relative ease, in the production of existing credit cards and the creation of fictitious cards. Fictitious cards are more advantageous because there is no person truly responsible for the account. The credit card companies will notice that the account is not being paid and they will attempt to contact the account holder, but no one will exist.

The internet has helped this scheme to grow and some organized criminal groups are becoming very efficient at this activity. (Elbaz, Smek and Williams, 1997) Counterfeiters sell the magnetic strips or the technology to duplicate the information from a valid credit card. These magnetic strips contain all the information a fraudster ...