By Sandra Parsons
While Cardi B is topping the charts, "Card Cracking" is ruining some music fans' lives. Rapper Young Ash and five others were recently indicted for running a card cracking ring that recruited accomplices through her Snapchat channel. Learn how card cracking works and how you can avoid falling victim to such a scam.
What is card cracking?
Card cracking is a type of financial fraud in which the fraudster promises easy money to entice regular people into sharing their debit card, PIN, and online banking credentials. The fraudster deposits bad checks (often online) and then quickly withdraws them from the ATM. They instruct their victim/accomplice to report the activity to their bank as unauthorized to get reimbursed for the loss once the checks bounce. The fraudster walks away with the withdrawn cash, and the accomplice gets a cut of the profits.
However, it doesn't usually play out the way the accomplice thinks. Stephen Hart, CEO at Cardswitcher says, "Card cracking scammers target people who are most in need of extra cash — the unemployed, underemployed, students, and so on. I can see the appeal — all you do is give someone access to your account and they pay you a chunk of their earnings.
"However, like most things there is one simple rule you should remember: if it seems too good to be true, it probably is.
"Is this mystery stranger really going to give you a chunk of money with no strings attached? Ask yourself the same thing: would you do it? Almost certainly not."
What are the Consequences?
If you choose to participate in card cracking, you'll face serious consequences.
The first thing you need to understand is that participating in a card cracking scam is a crime.
Cautions Jennifer McDermott, Consumer Advocate for personal finance comparison website finder.com, "Voluntarily participating in card cracking is a felony, whether you are the mastermind or an accomplice. Those behind these schemes will target people unaware that what they are doing is against the law."
You also need to keep in mind is that these scams benefit only one person: the fraudster. Not you.
Scammers might promise your bank will reimburse you for the charges, but that may not happen. Banks have sophisticated fraud detection systems, and if they suspect you broke your client agreement by sharing your information, they may hold you responsible.
Explains John Buzzard, Industry Fraud Specialist for CO-OP Financial Services, "A typical $600 fake deposit will result in a $600 negative balance, plus service fees that have to be paid back in full once the fraudster withdraws funds against the bogus deposit. That $100 bonus you were promised for providing access to your online banking login just cost you real money, credit worthiness, and potential issues in background checks with future employers if you don't make good on the damage."
A Ruined Reputation
Did you know that even if you never face criminal charges, your bank could still close your account? They could also put a note on your credit report saying they closed your account because of your involvement in fraud. As a result, other banks might refuse to do business with you. As you can imagine, that would make a lot of everyday things challenging.
You don't want to be flagged as a fraudster. After all, what would a prospective employer conducting a background check think?
How to Protect Yourself from Card Cracking Scams
Now that you know for sure that card cracking is bad news, it pays to learn how to protect yourself.
Don't be Naïve
Nobody is going to give you something for nothing. There's no such thing as fast and easy money. If you see an ad recruiting people to make easy money, it's probably a scam. If they want your financial information, it's definitely a scam!
Never Share Your Financial Information
Sharing your financial information online or over the phone is a big no-no. Not only does it open you up to being victimized, it violates the agreement you made with your bank to protect your account information and PIN. That means you might be liable if you're the victim of fraud.
Financial services veteran and owner of ExBanker Blog Joseph Dillard warns, "Never ever give your personal information to anyone, especially someone you do not know, over the phone or the Internet! Reputable financial institutions and organizations will not contact you and request personal information."
Report Suspected Card Cracking
Monitor your bank accounts regularly to see if there are amounts being withdrawn that you didn't authorize. If you encounter something you think might be a card cracking scam, report it. Similarly, if you see a sketchy ad on social media, report the post – it might protect an unsuspecting person from getting roped in.
What if you're scared you've already been roped in? Buzzard says you should report it to your bank right away:
"If you feel as though you have been communicating with someone who is requesting access to your accounts in exchange for money, you should exert extreme caution. Discontinue communications with the initiator of the communication and immediately contact your financial institution. If you have already provided your account credentials to a fraudster, it is still possible to prevent personal disaster by working closely and honestly with your financial institution to change your online banking credentials, PIN, and any additional personal information that could be used to harm your credit in the near future."
Don't participate in card cracking unless you're prepared to face the music.
If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, check out the free Identity Protector by MoneyTips.