Debit card accounts stolen in a recent hacker break-in at card processor Global Payments have been showing up in fraud incidents at retailers in Las Vegas and elsewhere, according to officials from one bank impacted by the fraud.
At the beginning of March 2012, Danbury, Conn. based Union Savings Bank began seeing an unusual pattern of fraud on a dozen or so debit cards it had issued, noting that most of the cards had recently been used in the same cafe at a nearby private school. When the bank determined that the school was a customer of Global Payments, it contacted Visa to alert the card association of a possible breach at the Atlanta-based processor, according to Doug Fuller, Union Savings Bank’s chief risk officer.
That’s when USB heard from Tony Higgins, then a fraud investigator at Vons, a grocery chain in Southern California and Nevada owned by Safeway Inc.
According to Fuller, Higgins said the fraudsters were coming to the stores to buy low-denomination Safeway branded prepaid cards, and then encoding debit card accounts issued by USB onto the magnetic stripe on the backs of the prepaid cards. The thieves then used those cards to purchase additional prepaid cards with much higher values, which were then used to buy electronics and other high-priced goods from other retailers.
“Higgins said, ‘You have a problem,'” Fuller recalled, of a phone conversation the bank had with Higgins in early March. “He said he had a slew of these people going through their Vons and Safeway stores exchanging cards. He had them on surveillance tape, knew where they were from and everything.”