Cyber View; August 1999; Scientific American Magazine; by Wallich; 2 Page(s)
It used to be a joke: a computer can make a mistake in a fraction of a second that would take an army of mathematicians working with pencil and paper 100 years to make. For 900,000 people whose credit cards apparently suffered fraudulent charges in a single computer-based scam, this old saw morphed into an unpleasant reality. The Federal Trade Commission (FTC) is trying to recover as much as $45 million from a handful of people who used modern technology to flood outdated security precautions. In late 1998 the group accounted for 4 percent of all the Visa chargebacks (in which a merchant's account is debited for the amount of a transaction) in the world. Victims did not have to use their cards on the Web to be hit with charges. They didn't even have to use their cards at all.
It would have taken about three years for a dishonest restaurant employee or store clerk working 24 hours a day just to fill out and submit the bogus transactions that FTC investigators ascribe to Kenneth H. Taves, his wife, Teresa, and their associates. The group, they say, set up a series of companies that processed Visa charges for adult Web sites and used the card numbers from those transactions plus others made up by a simple computer program to charge people for services that never existed. (At press time, Taves was in jail on contempt-ofcourt charges after disobeying an order to turn over records and to repatriate about $6 million from accounts in the Cayman Islands. His trial is scheduled for September 28.)