Card Cracking

In card-cracking scams, young adults (primarily students, newly-enlisted military, or single parents) are recruited to facilitate fraud against the bank. The perpetrators typically target consumers via social media and convince them to share their checking account information  in exchange for some type of a kickback – usually in the form of a counterfeit check remotely deposited into their account of which, the consumer is allowed to keep a portion of the funds. However, the fraudster often removes all of the funds before the bank determines that the check is counterfeit.  Fraudsters may also convince the student to provide them with their debit card, along with their PIN. The consumer is instructed to report the card as lost or stolen, thereby receiving protection via Reg E, while the fraudster withdraws the funds.

Card-cracking is a national problem, with incidents reported in several states including Georgia, Ohio, Washington, and most notably, Illinois. In Chicago alone, a group of 29 are facing charges for stealing about $6.5 million through this scheme1. A survey conducted by the ABA between July – August, 2014, found that survey respondents experienced more than $18 million in card cracking attempts (successful and unsuccessful) since January 2013, and experienced more than $6 million in actual dollar loss from more than 2,600 card cracking cases.

Many of the “victims” do not understand they are facilitating a crime in which they could receive up to 30 years in prison for their participation. In addition to being charged as an accomplice to a crime, they are also at risk of having their own money stolen from their accounts and having unauthorized purchases made with their debit cards. Because they consented to provide scammers access to their bank accounts, it is difficult for them to prove that any withdrawals or purchases made were unauthorized. For victims who claim that their debit cards were lost or stolen, the burden falls on the banks who are then held accountable for reimbursing the looted funds.

Banks must protect themselves by increasing internal awareness of this fraud, enhancing the ability to monitor for and detect it, and developing a response plan to address it. Banks must also work to educate their clients of the risks and consequences of this scheme in order to mitigate the risk of their customers becoming willing participants.

To help consumers avoid involvement in this scam, ABA is offering the following tips:

  • Do not respond to online solicitations for "easy money." Card cracking advertisements will suggest that this is a quick, safe way to earn extra cash. Keep in mind that easy money is rarely legal money.
  • Never share your account and PIN number. Keep this information private at all times. By sharing it with others, you expose yourself to potential fraud.
  • Do not file false fraud claims with your bank. By filing a false claim, you are a co-conspirator to fraud. Banks' detection techniques for card cracking are constantly improving and suspicious claims will be investigated.
  • Report suspicious posts linked with scams. If you notice postings that appear to be linked with a possible scam, report them to the social media site. There is usually a drop down menu near the post to allow for easy reporting.

1 Cracking the “Krackin’ Kards” Scheme, FIMSI Newsletter, January 2015

​Questions? Please contact June Fredericks for additional information.