Salt Lake City, UT September 25th, 2010 – Investigators from MailCase Locking Mailbox have uncovered a new identity theft scam using American Express credit cards. This new identity theft scam exploits a major flaw in the credit card activation system used by American Express.
Read our free special report with a real life case study about this serious identify theft problem and how you can protect yourself at www.MailCase.com/american-express.
There’s a fatal flaw in the American Express activation system that exposes many consumers to identity theft. The problem is that the credit card company relies only primarily on caller ID to authenticate a new or replacement credit card. The breech is difficult to detect and easy to exploit. MailCase.com has a story from an actual drug addict who shares how she made money taking credit cards from people’s mailboxes and sold them to criminals.
Most credit card activation systems require multiple levels of authentication:
1. They require customers to call to activate their card from the phone number associated with their account. Most homeowners use their home phone number.
2. The card holder enters the 16 digit number found on the front of the card.
3. MasterCard, Visa, and Discover require an additional step not required by American Express. Customers provide the last 4 digits of their Social Security Number, a PIN, or a code word determined when the account was first established.
Most American Express cards do not require the third activation step. American Express uses caller ID to automatically detect the customer’s home telephone number. They activate accounts based on the home phone number matching the phone number on the account.
MailCase investigators understand the scam to be remarkably simple. Thieves steal mail and pull out all new American Express cards. They then have credit cards and the address of the cardholder. Next, they stake out the addresses for each American Express card and look for telephone boxes. Every house with a land-line has a box where the telephone line comes into the house. Lines go to a central box where telephone lines from 4 to 6 houses come together.
Using a modified telephone, the criminal can clip into a phone line with the American Express card in hand, call American Express and activate the card. American Express thinks it's the card owner calling and activates the card without further authentication.
It’s a tough crime to detect even if customers have paid to have their credit monitored. "Credit monitoring services like Lifelock and Triple Alert cannot protect against this type of identity theft" reports Matthew Prestwich, President of MailCase. "Those services are great for protecting against somebody fraudulently opening a new account, but for a stolen AmEx card, the account already exists so activating it won't set off an alert."
MailCase would like to see American Express to add a third authentication step to easily solve the problem. Until then, how can people protect themselves? “Get a P.O. Box at the post office, or buy a locking mailbox for your home," said Prestwich. "If you think you have been a victim, immediately call AmEx and see if your account was just activated. If so, cancel that card," said Prestwich.
MailCase.com was started in 2008 to combat identity theft. Matthew Prestwich, an entrepreneur based in Utah, is president. Prestwich both designed and had the mailboxes manufactured to meet his rigorous quality expectations and to comply with federal law and USPS Policy. The MailCase Locking Mailbox has been approved by the U.S. Postmaster General.