Watch out for holiday 'carding'

By HELEN MALANI
shopzilla.com
Tuesday, November 27, 2007

Do not be fooled by the seeming innocence of this column's headline. It has nothing to do with the sweet sentiments that will fill your mailbox in the coming weeks. No, the holiday "carding" I am talking about is far more sinister.

The term "carding" refers to bad guys' purchasing of stolen credit cards from other bad guys who stole them. While there's nothing new about stealing credit cards, said bad guys have found a way to hedge their bets that the stolen credit cards they are buying will actually work. I suppose even thieves want some assurances before they spend money on anything!

If a stolen credit card has already been reported stolen, it loses its value on the black market because the bad guys won't be able to wrest any more money from it. But if you can prove a stolen card has yet to be reported, it can garner a lot more money. Kelly Martin of Symantec, a leading Internet security company, says, "Symantec is monitoring underground-economy servers. We're finding that you can purchase a stolen credit card for anywhere between $1 and $6, and a 'validated' credit card is worth more."

Proving the viability of a stolen credit card is called "validating." Here's how it works. The thieves will test the stolen card by making a small, barely noticeable transaction and waiting to see if it goes through. If it does, the card is validated. But here's the most sinister part of the scheme: Thieves prey on victims by transacting with charities. The charities are being used as vehicles for validating cards.

During the holidays, charities come out in force asking for donations. You've probably received your share of these solicitations over the years, and you may even have opened your wallet to a few. That's a good thing. But the criminal element knows you are being solicited by charities and is capitalizing on that. Remember that small, barely noticeable transaction I just mentioned? It will show up on your statement as a $5 or $10 contribution to a charity. The typical reaction? You can't remember whether you actually donated, or, more commonly, you don't challenge the charge -- either because it's too insignificant to bother or because you feel bad calling a charity to demand $5 back.

My advice to you this holiday season is to check your credit-card activity regularly -- even daily, if your card offers statements online. Immediately question anything unfamiliar to you, even if it is in the form of a small charitable donation. The last thing I want to do is discourage anyone from donating to legitimate charities. The holidays, after all, are the season of giving, so give early and often, but do so in a safe and secure way, and make sure you monitor those statements. Ignoring a questionable charge of $5 could wind up costing you dearly later.

(Helen Malani is the chief shopping expert for Shopzilla.com, an E.W. Scripps Co. Got something to say about shopping? E-mail askhelen(at)shopzilla.com)