[elliottcarlson]

A few years ago, my wife made a mistake and left her purse in her class room as she went out for a smoke break - while it was a pretty poor decision to leave her purse unattended, this was a class of about 10 students that she thought she could trust. As she was driving back home, she realized she didn't have any money for the toll to cross over the bridge - which should not have been the case. Luckily the toll booth clerk let her through and my wife really didn't think much about it other than that she may have just not had money on her after all.

Later that evening we get a call from Chase asking about a string of purchases on her credit card - panic mode sets in and she realizes that one of her credit cards is missing. Luckily, my wife puts the phone on speaker mode so I can hear the full details of the conversation - and the Chase rep goes through the list of locations the card was used that day. I take note of all the locations, times and dollar amounts.

With this information in hand, we both headed to the first store on the list, a GameStop located about 10 minutes from the school, and the first purchase attempt happened 15 minutes after school ended - the culprit wasted no time. We speak to the manager of the GameStop who understands the situation and is eager to help, but only with the presence of the police. We call up the police and are able to explain everything that has happened, that we want to file a report, and that we are on location of one of the stores who has the camera footage already loaded if someone could come out. We waited about 45 minutes and finally a patrol car shows up.

We start the process of explaining what has happened so far, that we have the full list of locations and times - and just need their help to be able to positively identify the thief on camera. They agree and we are able to access the back video room to attempt to identify the person. Sadly, GameStop (at least this location) had really poor recordings and it was hard to have a 100% confirmation - it could've been one of two classmates and we weren't certain. The next location was a Target, literally around the corner. We went over there, with the two police officers, who went to speak to their security office. Unlike GameStop, we had to wait outside until they had loaded the exact time - I guess to prevent us from seeing any other information/transactions. It turns out that Target had a security system that can take the credit card number used, automatically go to not only the right time, but right checkout aisle and show close ups of the person AND the card being used. One press of a button and the video was burnt to a DVD for the police officers to take back as evidence.

In the end the class mate was trying to buy Playstation 3s to be able to sell, so she could pay off the fines that she received for committing identity theft when she was a minor.... She received 6 months in one county for the theft of the card, then another 8 months for using the card in a different county. Additionally her mom was arrested since they noticed that she had a warrant out for her arrest so they just took care of that one as well.

[ISL]

Sounds like Target takes loss prevention as seriously as it does advertising. Impressive.

[schiffern]

http://www.forbes.com/forbes/2008/0421/102.html

[wamatt]

Curious, but why would Target care too much if the credit card was stolen? My understanding (which could be wrong) was the credit card companies or end users absorb the losses (depending on circumstances).

[1337Coder]

You would think so but no. Visa etc and the banks don't want that kind of trouble. To charge cards you need a special bank account called a merchant account.

A condition of this merchant account is that if someone issues a charge-back on their creditcard, if the merchant can't prove that the card owner brought the service/product then the funds are taken directly form their merchant account by the bank and then given back to the card-holder.

This is why anti-fraud systems are so important to merchants.

Case: I steal your creditcard, I buy a tv worth $10, 000. You notice this, and chargeback the merchant. The merchant has to pay you $10, 000 and he lost teh cost price of the tv he sold me (say $7, 000).

So by accepting your stolen card as payment, the merchant just lost $17, 000!

Source: I build payment gateways.

[pigou]

Aren't you double-counting here? On net the merchant only loses the merchandise. The net debit to the merchant's account is zero.

[solnyshok]

correct maths are: merchant gets 10000 then returns 10000 and still has to pay 7000 to vendor for the goods. net loss is 7K, not 17K

[dougk16]

You could also say the total loss is 10K to the merchant, assuming he has a reasonable expectation of making that 3K profit...that is getting a little abstract about it though.

[1337Coder]

Oh yes you are correct.

In this case the merchant only loses the cost to the vendor ($7,000). Good catch.

[dminor]

Typically there's also a fee imposed by the bank for having a chargeback.

[ceol]

I think they're counting the loss of the merchandise. So a chargeback for a $10,000 TV would be like losing $10,000 plus whatever the cost of the TV was for the store.

[kelnos]

But it's not. Getting paid $10k and giving it back is net zero.

[brass9]

$17,000 figure is correct:

1) Store buys TV (COGS = $7K): -$7K

2) Sold TV for $10K. Realized P/L: $3K

3) $10K refunded (chargeback): -$7K

4) TV is gone as well. Inventory: -$7K

5) Potential profit loss: -$3K

Total loss: (7+7+3) = $17K

[sokoloff]

1. Store buys TV. -$7000

2. Store sells TV. +$10000, subtotal: +$3000

3. Store pays chargeback. -$10000' subtotal: -$7000

You can't double count the TV, and IMO, you can't count the potential profit loss either, as that's covered once the store buys a replacement TV for inventory. There are fees on top of the above, but the store is out the COGS and fees, not double the COGS, plus the margin.

[jlgreco]

The liability for the card holder is limited by law to something like $50. Whether the credit card company eats the loss or wether the merchant gives them the money back depends I believe on how much information the merchant collected about the transaction. My impression is that usually the merchant eats the loss.

[gonzo]

it is almost always the merchant that 'eats' the loss.

edit: the credit card companies and merchant banks have the ability to 'reach back' for a number of months.

[frogpelt]

Target enjoys solving crimes. They have their own forensic lab in Minnesota.

[solnyshok]

As former manager of a hypermarket with 170 people team, I need to remind that shop is filming cash registers for many reasons. E.g. to resolve disputes about counting mistakes at the checkout, theft by cashiers, theft by customers.

[drusenko]

The merchant is 100% responsible for these losses, which is why they care so much.

[tatsuke95]

It's the merchant's duty to ensure that the person who is charging the purchase owns the credit card, which is why they'll often ask for ID along with the CC.

A stolen CC is useless if no merchant accepts it.

[1123581321]

Target also keeps Segway-ish ATVs at their stores for chasing down shoplifters. They supposedly have a top speed around 60mph.

[zerr]

What about other classmates who didn't tell what they saw? I think they're not quite guilt-free as well, in case they really saw of course.

I didn't quite get for what her mom was arrested ("warrant out for her arrest").

Btw, was your wife able to receive the stolen amount? (And maybe something on top of it, for compensation....)

[elliottcarlson]

This all happened around her lunch break - so it is very possible that no one was in the room to see it, or the few people remaining didn't notice it. This girl who stole the card was the one sitting right next to her - so it was pretty easy to lean down unnoticed.

Honestly - I don't know what her moms charges were - all I know is that the detective on the case mentioned that when he followed up with us post the girls arrest.

Luckily there were no successful charges made - the first three attempts were all for PS3s at GameStop, Target and BestBuy - then it seems she went to the grocery store and attempted to buy a small purchase of gum and soda (according to the police, this is to test if the card is working). We did get a payment of the stolen cash which we valued at $10 (it probably was closer to $8, but we weren't certain and we were told to round it to $10 then). No additional compensation though on top of that.

[zerr]

Hm, interesting. The place where I live, one is required to enter a PIN code when you buy something in the physical shop. Shops have terminals for that.

[elliottcarlson]

Unfortunately the personal security measures on credit cards are very poor in America - I remember even little things like having a persons picture on bank cards in Belgium was a huge step up compared to the cards here. Even online banking here is pretty bad - so many banks still only allow 4 digit pins (often with "safety measures" in place to restrict your options, like reusing numbers, or disallowing years - thus making the available pin pool significantly smaller), and for online banking the security options are often a joke too, such as low maximum character lengths, not allowing anything but a restricted set of characters and simply converting your password to lowercase.

I don't know if this is to keep things "convenient" to the consumer, but I never feel secure in the way my money is handled.

[rmc]

Are you in Europe (like me)? Chip and Pin credit cards are common here. But they are not common in USA. It causes no end of problems for American tourists who come here, since their cards don't work in many shops.

[zerr]

Yup, in Georgia.

[ZoFreX]

Where do you live? I keep hearing comments saying we are "required" to enter a pin in the UK, but we're not. If the chip fails you can swipe and sign.

[zerr]

Georgia, eastern Europe. Never had a chance to experience a failing of a chip though.

[switch007]

"In the end the class mate was trying to buy Playstation 3s to be able to sell, so she could pay off the fines that she received for committing identity theft when she was a minor"

Sounds like jail time was going to put her back on the right track in life. I wonder how she wound up after jail?

[elliottcarlson]

Not sure - we received notice of her pending release and that was about it. As for her past - yeah, it was astonishing that she was going to commit the same types of crimes to pay off the fines from her past - it was perfect though that she had that in her written confession with the detective, normally her case from when she was underage would have been sealed, but since she brought it up, it was now knowledge that the court could use.