Counterfeits and Credit Card Fraud Schemes Term Paper

Credit card fraud and counterfeiting are globally prevalent financial cybercrimes, which continue to grow in sophistication and frequency. In the United States, these criminal activities have risen significantly, with the courts across the country sentencing individuals accused of committing the offense. In 2018, Jorge Consuegra-Rojas, Pedro Lorenzo-Concepcion, and another person pleaded guilty to credit card fraud and counterfeiting by the Western District Court of Wisconsin, leading to their imprisonment. Notably, I chose this case since it significantly reveals how credit card fraud has evolved over the years to become a sophisticated criminal enterprise involving thousands of dollars. Additionally, it demonstrates the severity of the problem and the possibility of the victims failing to discover the use of their credentials promptly. Although credit card fraud and counterfeiting are widespread phenomena, the imposed sentences are not punitive enough to discourage the vice and do not reflect the extremity of the crime.

Case Description

In September 2016, law enforcement officers intercepted the vehicle of Lorenzo-Concepcion, Jorge Consuegra-Rojas, and another person and arrested the trio. The three individuals had just left a grocery outlet in Mauston, Wisconsin, where they had attempted using a counterfeited credit card to make purchases (United States Department of Justice, 2018). After leaving the store, they were stopped by police officers who searched the vehicle. The law enforcers discovered numerous items that the three were using to perpetrate their criminal activities. They included two computers, three flash disks, fake identification documents, multiple mobile phones, counterfeit credit cards, 280 gift cards worth over $23,000, six credit card skimmers, and a rad reader/writer (United States Department of Justice, 2018). Forensic investigations discovered 1,679 stolen credit card numbers, while several of them were used in purchasing the impounded gift cards.

During the investigations, the officers also discovered that the fraudulently obtained cards were used across Minnesota in making purchases in Sam’s Club outlets by Lorenzo-Concepcion between 9th and 12th September 2016. The cumulative value of the charges made to the card amounted to $8,072.38 ((United States Department of Justice, 2018). Following the investigations, Jorge Consuegra-Rojas and Lorenzo-Concepcion were arraigned before Judge Peterson at the District Court for the Western District of Wisconsin. Scott C. Blader, the region’s attorney, preferred charges against the two, with Pedro pleading guilty to the possession of 15 or more access devices for counterfeiting and a conspiracy to defraud the public. Judge Peterson noted that Lorenzo-Concepcion was an active player in an expansive network of credit card fraudsters spread across multiple states and sentenced him to 46 months in jail (United States Department of Justice, 2018). Pedro’s counterpart, Consuegra-Rojas, was in 2018 handed a 60-months sentence in federal prison over his role in the swindling activities.

Applicable Cybercrime Topology, the Offenders, and Victims

The applicable cybercrime topology in the case is credit card theft and fraud topologies. The former involves the stealing, phishing of their credentials, and the subsequent use of credit cards, and their use by unauthorized persons. The letter encompasses intentionally deceptive actions designed to provide the criminals with illegal benefits or gains. Leukfeldt and Yar (2016) contend that although there are no criminological models developed to explain crimes occurring in the virtual environment, the Routine Activity Theory (RAT) provides valuable insights into this class of cybercrimes. This implies that credit card fraudsters and counterfeiters are motivated by various factors, identify a suitable target, and facilitate criminality by the absence of an effective deterrent or monitoring systems. Williams (2016) corroborates this view and argues that three components have significantly contributed to the explosive prevalence of this acquisitive offense in Europe. Notably, this perspective has been supported by the statistical findings of the European Central Bank (2021), which established that card frauds had been increasing steadily over the years. Therefore, RAT provides a robust theoretical explanation regarding the growing frequency of financial cybercrimes involving credit cards.

Additionally, the financial cybercrime committed by Pedro Lorenzo-Concepcion, Jorge Consuegra-Rojas, and another person within the precincts of Wisconsin and neighboring states engenders a distinct trend involving situational and locational characteristics. For instance, the trio has been perpetrating fraudulent activities across Wisconsin and Minnesota (United States Department of Justice, 2018). From this dimesnion, it is apparent that the fraudsters are situationally aware that the risk of apprehension is considerably minimal due to the impossibility of the legitimate cardholder failing to identify the thief. Van Sleeuwen et al. (2021) argue that offenders are highly likely to commit crimes at locations where their awareness intersects with the availability of suitable targets. This distinctive attribute is manifested in the number of transactions and purchases in selected outlets, including grocery stores and Sam’s Club shops.

Further, the Federal Bureau of Investigations, the Mauston Police Department, and the Juneau County Sheriff’s Office established that the apprehended offenders were a part of a large-scale network of credit card fraudsters. The discovery was tabled before Judge Peterson during the sentencing, who recognized that one of the offenders, Lorenzo-Concepcion, had been previously convicted and served a sentence for drug trafficking offenses (United States Department of Justice, 2018). These observations and discoveries made by the investigative and prosecution teams demonstrated that cybercrime offenders are likely to be engaged in other criminal activities. Although the article does not explicitly indicate the victims of the crime, it is evident that the fraudsters targeted credit card users and shops which accepted had card payment options.

Other relevant information regarding the credit card fraud and counterfeiting perpetrated by criminals is the growing prevalence and evolution of transactions to card-not-present payment models. In this regard, criminals increasingly integrate such advanced technology as computers, storage devices, card readers, writers, and skimmers (United States Department of Justice, 2018). According to Sharma and Jha (2017), online credit card fraud incidences have been rising as cybercriminals have become innovative and sophisticated. Therefore, financial cybercrime is progressively becoming syndicated and networked, where the criminals perpetrate the swindling across expansive jurisdictions.

Case Analysis

Pedro Lorenzo-Concepcion, Jorge Consuegra-Rojas, and another were convicted of several charges, including a conspiracy to commit credit card fraud and the possession of devices to perpetrate financial cybercrimes. The offenders’ motives were to defraud unsuspecting customers and businesses which were accepting card payment systems. Notably, the case had an enormous technological aspect as evidenced by the recovered devices, including computers, storage devices, credit card skimmers, readers, and writers. Moreover, the investigating agencies had to conduct a forensic assessment to discover the stolen credit card numbers.

From a crime methodological perspective, credit card fraud and counterfeiting exploited various circumstances, which cumulatively facilitated the perpetration of crime. These essential elements include an accessible target, the absence of an effective guardian or deterrence, and the criminals’ motives (Leukfeldt & Yar, 2016). For instance, the ease of acquiring credit card numbers through skimming and the low possibility of being discovered by the victims incentivize financial cybercrimes. Similarly, credit cards only require the user to provide their identification without verification for a transaction to be successful. Notably, the law enforcement agencies responded by carrying out thorough investigations, which contributed to the imprisonment of the offenders. However, this incident was not an isolated eventbut a widespread global problem affecting financial systems and credit card users worldwide.

Case Implications

The arrest, successful investigations, prosecution, and the conviction of Pedro Lorenzo-Concepcion, Jorge Consuegra-Rojas, and another person engender various critically significant implications. One such effect is the essence of integrating technology in the inquiries by the law enforcers to surmount the challenge and sophistication which are increasingly characterizing the crime (Goyal et al., 2020). For instance, the discovery of skimming devices indicates that the fraudsters could use the card without requiring its physical presence.

Credit card fraud and counterfeiting inflict significant detriments to various victims, including the card owners, shopping outlets where they have been used, and the issuing financial institutions. Although these institutions and individuals suffer monetary harm, this kind of crime ultimately injures the consumers’ confidence in such payment systems and imposes major challenges on banking organizations. Additionally, they adversely affect the profitability of financial institutions and business outlets by necessitating extensive investment in risk management systems and reimbursements (Becker et al., 2017; Leo et al., 2019). Credit card fraud and counterfeiting negatively affect millions of individuals and industries across the world.

Currently, there are numerous measures implemented to detect and prevent the perpetration of credit card fraud. Some of the interventions are designed to be practiced at the individual level, while others are industry-wide strategies. For instance, financial institutions invest heavily in advanced technologies such as computer algorithms that analyze consumer purchasing decisions and flag unusual or suspicious transactions. Others are requiring outlets to have two-level authentication strategies to minimize fraudulent transactions. Industry regulators are also overseeing the adoption of stringent measures to protect consumers’ finances. Although these measures are significantly effective and appropriate, their effectiveness is continuously undermined by the evolving and rapid sophistication of the crime.

The objective of credit card fraud prevention is to detect and forestall unauthorized transactions and activities promptly. An adequate safeguard requires collaborative interventions between consumers, industry players, and law enforcement agencies. For instance, financial institutions can integrate a two-level user authentication procedure and ask consumers to agree to the instant stoppage of suspicious transactions. These organizations should also educate and sensitize cardholders on the risks associated with such payment models and possible measures to mitigate incidences of fraud. Similarly, actors in the criminal justice system can enhance the available legal deterrence by improving their knowledge and skills in investigating, prosecuting, and pursuing the enactment of laws that support punitive punishments. Ajayi (2016) and Sabillon et al. (2016) contend that although cybercrimes affect millions of people globally and threaten financial institutions, they still attract light punishments compared to other traditional offenses. Currently, technological solutions, such as algorithms, are the most effective strategies, implying that computer-aided approaches provide the most effective solution to the challenge.

Conclusion

Credit card fraud and counterfeit are globally prevalent financial cybercrimes, costing individuals and organizations billions of dollars annually. The rapidly evolving and sophisticated nature of the crime poses a major challenge in formulating preventive strategies with complement ability to detect and stop suspicious transactions. This incentivizes the crime, resulting in its proliferation, both in frequency and the amount of money involved. However, punitive punishments such as lengthy jail terms and hefty fines can be a deterrent since prevention is significantly challenging.

References

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European Central Bank. (n.d.). Sixth report on card fraud. Web.

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Leo, M., Sharma, S., & Maddulety, K. (2019). Machine learning in banking risk management: A literature review.Risks, 7(1), 1−22. Web.

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United States Department of Justice. (2018). Florida man sentenced to 46 months for counterfeit credit cards.The United States Attorney’s Office Western District of Wisconsin. Web.

van Sleeuwen, S., Ruiter, S., & Steenbeek, W. (2021). Right place, right time? Making crime pattern theory time-specific.Crime Science, 10(1), 1−10. Web.

Williams, M. L. (2016). Guardians upon high: An application of routine activities theory to online identity theft in Europe at the country and individual level.British Journal of Criminology, 56(1), 21−48. Web.