The Moneychangers (7 page)

Both Alex Vandervoort and Nolan Wainwright had accepted headsets so they could listen to exchanges between callers and operators.

The security chief touched Alex's arm and pointed, then changed headset plugs for both of them. The console Wainwright indicated was carrying a flashi
ng message from the computer "STOLE
N CARD."

The operator, speaking calmly and as trained, answered, "The card presented to you has been reported as stolen. If possible, detain the person presenting it and call your local police. Retain the card. Keycharge will pay you thirty dollars reward for its return."

They could hear a whispered colloquy, then a voice announced, "The bastard just ran out of my store. But I grabbed the mother's plastic. I'll mail it in."

The storekeeper sounded pleased at the prospect of an easy thirty dollars. For the Keycharge system it was also a good deal since the card, left in circulation, could h
ave been used fraudulently for a
much greater total amount.

Wainwright removed his headset; so did Alex Vandervoort. "It works well," Wainwright said, "when we get the information and can program the computer. Unfortunately most of the defrauding happens before a missing card's reported." "But we still get a warning of excessive purchasing?"

"Right. Ten purchases in a day and the computer alerts us."

Few cardholders, as both men were aware, ever made more than six or eight purchases during a single day. Thus a card could be listed as "PROBABLY FRAUDULENT' even though the true owner might be unaware of its loss.

Despite all warning systems, however, a lost or stolen Keycharge card, if used cagily, was still good for twenty thousand dollars' worth of fraudulent purchasing in the week or so during whic
h most stolen cards stayed un
reported. Airline tickets for long-distance flights were favorite buys by credit-card thieves; so were cases of liquor. Both were then resold at bargain prices. Another ploy was to rent a car preferably an expensive one Using a stolen or counterfeit credit card. The car was driven to another city where it received new license plates and forged registration papers, and was then sold or exported. The rental agency never saw car or customer again. One more gimmick was to buy jewelry in Europe on a fraudulent credit card backed up by a forged passport, then smuggle the jewelry into the U.S. for resale. In all such instances the credit-card company bore the eventual loss.

As both Vandervoort and Wainwright knew, there were devices used by criminals to decide whether a credit card in their possession could be used again, or if it was "hot." A favorite was to pay a headwaiter twenty-five dollars to check a card out. He could get the answer easily by consulting a weekly confidential "warning list" issued by the credit-card company to merchants and restaurants. If the card was unreported as hot, it was used for a further round of buying.

"We've been losing a helluva lot of money through fraud lately," Nolan Wainwright said. "Much more than usual. It's one of the reasons I wanted to talk."

They moved into a Keycharge security office which Wainwright had arranged to use this afternoon. He closed the door. The two men were much in contrast physically

Vandervoort, fair, chunky, non-athletic, with a touch of flab; Wainwright, black, tall, trim, hard, and muscular. Their personalities differed, too, though their relationship was good.

"This is a contest without a prize," Nolan Wainwright told the executive vice-president. He placed on the office desk eight plastic Keycharge credit cards, snapping them down like a poker dealer, one by one.

"Four of those credit cards are counterfeit," the security chief announced. "Can you separate the good ones from the bad?" "Certainly. It's easy. The counterfeits always use different typefaces for embossing the cardholder's name and…" Vandervoort stopped, peering down at the group of cards. "By God! These don't. The typeface is the same on every card."

"Almost the same. If you know what to look for, you can detect slight divergences with a magnifier." Wainwright produced one. Dividing the cards into two groups, he pointed to variations between the embossing on the four genuine cards and the others.

Vandervoort said, "I see the difference, though I wouldn't have without the glass. How do the counterfeits look under ultraviolet?" "Exactly the same as real ones." "That's bad."

Several months earlier, following an example set by American Express, a hidden insignia had been imprinted on the face of all authentic Keycharge
credit cards. It became visible
only under ultraviolet light. The intention was to provide a quick, simple check of any card's genuineness. Now that safeguard, too, had been outflanked.

"It's bad, all right," Nolan Wainwright agreed. "And these are only samples. I've four dozen more, intercepted after they'd been used successfully in retail outlets, restaurants, for airline tickets, liquor, other things. And all of them are the best counterfeits which have ever shown up." "Arrests?"

"None so far. When people sense a phony card is being queried they walk out of a store, away from an airline counter, or whatever, just as happened a few minutes ago." He motioned toward the authorization room. "Besides, even when we do arrest some users it doesn't follow we'll be near the source of the cards; usually they're sold and resold carefully enough to cover a trail."

Alex V
andervoort picked up one of the fraudulent blue, green, and gold cards and turned it over. "The plastic seems an exact match too."

"They're made from authentic plastic blanks that are stolen. They have to be, to be that good." The security chief went on, "We think we've traced the source of the
cards themselves. Four months ago one of our suppliers had a break-in. The thieves got into the strong room where finished plastic sheets are stored. Three hundred sheets were missing."

Vandervoort whistled softly. A single plastic sheet would produce sixty-six Keycharge credit cards. That meant, potentially, almost twenty thousand fraudulent cards.

Wainwright said, "I did the arithmetic too." He motioned to the counterfeits on the desk. "This is the tip of an iceberg. Okay, so the phony cards we know about, or think we do, can mean ten million dollars' loss in charges before we pull them out of circulation. But what about others we haven't heard of yet? There could be ten times as many more." "I get the picture."

Alex Vandervoort paced the small office as his thoughts took shape.

He reflected: Ever since bank credit cards were introduced, all banks issuing them had been plagued by heavy loss through fraud. At first, entire mailbags of cards were stolen, their contents used for spending sprees by thieves at bank expense. Some mail shipments were hijacked and held for ransom. Banks paid the ransom money, knowing the cost would be far greater if cards were distributed through the underworld, and used. Ironically, in 1974 Pan American Airways was castigated by press and public after admitting it paid money to criminals for the return of large quantities of stolen ticket blanks. The airline's objective was to avoid enormous losses through misuse of the tickets. Yet unknown to Pan Am's critics, some of the nation's biggest banks had quietly been d
oing the same thing for years.

Eventually, mail theft of credit cards was reduced, but by then criminals had moved on to other, more ingenious schemes. Counterfeiting was one. The early counterfeit cards were crude and easily recognizable, but quality improved until now as Wainwright had shown it took an expert to detect the difference.

As fast as any credit card security measure was devised, criminal cleverness would circumvent it or attack a vulnerability elsewhere. As an example, a new type credit card now being marketed used a "scrambled" photograph of the cardholder. To ordinary eyes the photo was an indistinguishable blur, but placed in a descrambling device it could be viewed clearly and the cardholder identified. At the
moment the scheme looked promis
sing, but Alex had not the least doubt that organized crime would soon find a way to duplicate the scrambled photos.

Periodically, arrests and convictions of those using stolen or bogus credit cards were made, but these represented a small portion only of the total traffic. The main so far as banks were concerned, was a lack of investigative and enforcement people. There simply were not enough. Alex ceased his pacing.

"These latest counterfeits," he queried, "is it likely that there's some kind of ring behind them?"

"It's not only likely, it's a certainty. For the end product to be this good there has to be an organization. And it's got money behind it, machinery, specialist knowhow, a distribution system. Besides, there are other signs pointing the same way." "Such as?"

"As you know," Wainwright said, "I keep in touch with law agencies. Recently there's been a big increase through the whole Midwest in counterfeit currency, travelers checks, credit cards other cards as well as our own. There's also a lot more traffic than usual in stolen and counterfeit securities, stolen and forged checks."

"And you believe all this, and our Keycharge fraud losses, are linked?" "Let's say it's possible." "What's Security doing?"

"As much as we can. Every lost or missing Keycharge card that turns fraudulent is being checked out and, where possible, tracked down. Recovered cards and fraud prosecutions have increased every month this year; you've
had the figures in reports. But something like this needs a full-scale investigation and I don't have either staff or budget to handle it."

Alex Vandervoort smiled ruefully. "I thought we'd get around to budget."

He surmised what was coming next. He knew of the problems under which Nolan Wainwright labored.

Wainwright, as a vice-president of First Mercantile American, was in charge of all security matters in the Headquarters Tower and at branches. lithe credit-card security division was only one of his responsibilities. In recent years the status of Security within the bank had been advanced, its operating funds increased, though the amount of money allotted was still inadequate. Everyone in management knew it. Yet because Security was a nonrevenue produ
cing function, its. position on
the priority list for additional funds was low.

"You've g
ot proposals and figures, I presume. You always have, Nolan."

Wainwright produced a manila folder which he had brought with him. '1t's all there. The most urgent need is two more full-time investigators for the credit-card division. I'm also asking for funds for an undercover agent whose assignment would be to locate the source of these counterfeit cards, also to find out where the leakage is occurring inside the bank."

Vandervoort looked surprised. "You think you can get someone!"

This time Wainwright smiled. "Well, you don't begin by advertising in 'help wanted' columns. But I'm willing to try."

"I'll look carefully at what you've suggested and do my best. That's all I can promise. May I keep these cards?" The security chief nodded. "Anything else on your mind?"

"Only this: I don't think anyone around here, including you, Alex, is taking this whole credit card fraud problem seriously. Okay, so we congratulate ourselves that we've held losses down to three quarters of one percent of total business, but business has grown enormously while the
percentage has stayed steady, even increased. As I understand it, Keycharge billings next year are expected to be three billion dollars." "That's what we're hoping for."

"Then at the same percentage fraud losses could be more than twenty-two million."

Vandervoort said drily, "We prefer to speak of it in percentages. That way it doesn't sound as much, and the directors don't get alarmed." "That's pretty cynical." "Yes, I suppose it is."

And yet, Alex reasoned, it was an attitude which banks all banks took. They played down, deliberately, credit
-
card crime, accepting such losses as a cost of doing business. If any
other bank department showed a
seven
and-a-half million dollar loss in a single year, all hell would erupt before the board. But where credit cards were concerned' "three quarters of one percent" for criminality was accepted or conveniently ignored. The alternative an all-out fight against crime would be more costly by far. It could be said, of course, that the bankers' attitude was indefensible because in the end it was customers credit-card holders who paid for fraud through increased charges. But, from a financial point of view, the attitude made business sense.

"There are times," Alex said, "when the credit-card system sticks in my gullet, or rather parts of it do. But I live within the limits of what I think I can accomplish in the way of change, and what I know I can't. The same goes for budget priorities." He touched the manila folder which Wainwright had put down. "Leave it with me. I've already promised I'll do what I can." "If I don't hear, I'll be along to pound the desk."

Alex Vandervoort left but Nolan Wainwright was delayed by a message. It asked the security chief to contact Mrs. D'Orsey, manager of the main downtown branch,
at once. I
've
spoken to the FBI,
" Nolan Wainwright informed Edw
ina D'Orsey. "They'll have two special agents here tomorrow." "Why not today?"

He grinned. "We've no dead body; there wasn't even any shooting. Besides, they have a problem over there. A thing called manpower shortage." "Don't we all?" "Then can I let the staff go home?" asked Miles Mastic.