Credit Card fraud

                             Report by Bruce Bathols, Managing Director, Bookmate Computer Services Pty Ltd
                                                                 trading as Mobile PC Workshop.

                                                       LINKS to other sites who have experienced fraudulent activities

I invite your comments by phone  or email.    Press this link www.bookmate.com.au for our web site and contact info.

Here are the details of the fraud perpetrated on this company.                                             Site updated on a regular basis
These details are published for the information of other dealers, and to warn those involved with Credit Card sales, either local or overseas, of the dangers associated with such transactions.

This information may be freely copied, and published / circulated as widely and as freely as possible.
Permission is also granted to Newspaper / Magazine editors if re-publishing these details to edit same as seen fit, but not to be altered so as to minimise the impact of the events which have occurred.

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THE SCAM
We have sent two shipments of goods to Indonesia during late February and early March 2002, the total value being AU$24,438. These two shipments were paid for by credit card. 
On Friday 8^th March 2002, I received a telephone call from the security section of the Credit Card department of the Commonwealth Bank (our Bankers). They queried the validity of the large transactions, and advised me that the credit cards used had turned out to have been fraudulent, and that the money paid into my Commonwealth Bank business account would be reversed.  I was shocked to say the least.

The full details of the events leading to these transactions are now specified hereunder:

BACKGROUND and BANKING DETAILS
We are a computer reseller, dealer, and consultant. During the course of our business we sell by credit card to clients all over this country.  Orders are received mainly by fax or phone, but lately mainly by email. To date we have had no problems. We have been in this business for over 10 years.
The Credit Card arrangements with our Bankers, the Commonwealth Bank of Australia, specifically enable us to accept transactions / sales by Mail Order, Telephone, and INTERNET Sales. With these sales, the actual physical sighting of the credit card is not possible. 
We therefore rely totally on our own business integrity, and general fact that the details of any stolen cards would be advised to the respective banks. This also applies to those sales where the card is produced and a signature is obtained. 
To my knowledge, there are very few traders who are qualified to determine whether a signature on a credit card is genuine, or who are signature or handwriting experts. 
To complete most sales, we are required to obtain authorisation from the Credit Card Consortium which is managed by all of the major and contributing banks.
If the transaction is approved, an approval number is allocated, and this number is then inserted on the banking documents which accompany the debit advice, which is then paid into our Bank Account. This is the actual physical method of payment in which Credit Card Merchants receive their money.
If the transaction exceeds normal limits, or suspicion is aroused, the call is transferred to a Supervisor. The Supervisor then queries the merchant of the actual details of the Credit Card, Card number, Name, Expiry Date, how we obtained these details, what our relationship to the Credit Card holder is, and the purpose of the transaction. 
In all of our dealings with these international transactions, a supervisor has been involved, the appropriate questions asked of us, and then on TWO occasions, THE TRANSACTION WAS APPROVED !!!
As a computer dealer and Credit card Merchant, what more could one ask to obtain legitimacy for these sales ???
I believe we have acted EXACTLY in accordance with our Merchant Agreement, and within the rules laid down by the Bank.
We are not trying to hide anything, or perpetrate our own scam against the bank, just a simple "YES" or "NO" answer is all that was required. A "YES" response was received, and thinking that the money was definitely available, we proceeded to fulfil our "client's" requirements.

Alternatively, the swiping of a card through the online card readers simply eliminates most of the paper work. It gives an automatic transaction approval if funds are available, and credits the merchant's account immediately. If the card is stolen, then we are in the same situation. The merchant relies heavily on the bank internal security arrangements to indicate and to advise us if the card is stolen or valid.  When a credit card transaction approval is given, the goods are then taken as being legitimately sold .... end of story, or so we are lead to believe.

HOW IT ALL STARTED:
On 12th February 2002, I received this email message from 

                   Jeffry Darmawan [store_inside@yahoo.com]

                   "Dear Sir/Madam,
                     I'm very interest for buy some products from your  store for my new computer store in Batam Island Indonesia.
                     Do you ship internationally?
                    I will pay all my orders and shipping/handling cost using my credit cards.
                    regards

                    jeffry"

I responded in the affirmative, and he asked for a quote which was duly accepted. This shipment was the purchase of 30 x Seagate 40GB ATA 100 7200 rpm IDE hard drives, and for 30 x LG CD R/W Write/ Re-write ATAPI IDE Internal CD ROM Drives (Burners) 24x10x40, with Adaptec 5.5 software. The total value of this shipment was Australian $11,590 including freight.

The shipper we used was DHL Worldwide Express, and the shipment was addressed to:
                      Jeffry Wijaya
                      J1. Cendrawasih 148 Block 4
                      BALOI  BATAM
                      INDONESIA

DHL have an office in BATAM (which is an island in Northern Indonesia, about 25km from Singapore)

The customer’s email address(es) is Jeffry Darmawan [store_inside@yahoo.com] and Jeffry Wijaya [store_inside@yahoo.com].  NOTE that this customer has used TWO email addresses.

Initial payment to us for the shipment was by VISA credit card no. 4032 1100 2009 XXXX (details omitted for security)
Exp. Date 10/02  VISA in the name of Jeffry Wijaya. This card was actually DECLINED and in the email messages which followed another card was supplied. That card was no. 4800 1218 9850 XXXX,  but this time the name was slightly different, JEFFRY DAENG.
The transaction using this card was approved by my Bank’s Credit card merchant service.

It was not until some time later that I realised there were obvious minor but relevant discrepancies in the names of the card and email. Had I picked that up earlier, I might have stopped the fraud.

While this shipment was being prepared etc, I was receiving further email enquiries from several other prospective clients in Indonesia, which were of a similar nature, but in a different part of the country.

The second shipment was for the purchase of 20 x Seagate 40GB ATA 100 7200 rpm IDE hard drives, 20 x LG CD R/W Write/ Re-write CD ROM Drives (Burners) 24x10x40, with Adaptec 5.5 software, 20 Pieces of 128MB 133MHz SDRAM, 20 x Gainward GeForce3 Video cards. The total value of that shipment was AU$11,650, and Jakarta Customs for $1,198 (See below *) -  Total AU$12,848.

The second consignee was :
                                                ARIE WIDODO
                                                G.AIRLANGGA III
                                                SURABAYA
                                                EAST JAVA
                                                INDONESIA

                                       Arie Widodo’s email details are sales@little-stores.com.

The shipment was handled by FEDEX Express, under three (3) separate Air Waybills. However they were all sent together.

These goods were promptly delivered by FEDEX on 4 March 2002.
The consignee apparantley called at the Fedex office to claim goods.
I believe the consignee's address to be false.

* CUSTOMS DUTY
When the goods arrived in Surabaya, Fedex delivered (rightfully) only TWO of the shipments to the consignee. The Indonesian Customs had assessed Import Duty at US$ 560 (approx Australian $1198). Fedex would not deliver the third package until the duty was paid. The "client" emailed me and requested could we debit his Credit Card for this value, and allow Fedex to handle the transaction on his behalf.  I discussed this with the FEDEX Head Office, they were most co-operative, and providing OUR Account (Bookmate's Account) with Fedex was debited, then they would proceeed. So the transaction went ahead, The "client's" credit card was debited for AU$1198 (approved of course by our Merchant Credit Card authority), this money was paid into Bookmate's bank account, and Bookmate gave authority to Fedex to debit our account to enable Fedex to pay the Customs Duty. 
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Tracking of the Air Waybill (AWB)
As a note of explanation, all international shippers have a internet facility to track an Air Waybill. This allows the shipper and (particularly) the consignee to ascertain the exact process of the shipment. Because of the complexities of international trade, tracking of AWBs is very important, and time consuming. Before these internet facilities were available, shipment details were sometimes only able to be obtained by phoning the shipping company. In lots of cases the information was either much out of date, or at best inaccurate. So the Internet tracking facility has provided a platform for everyone to be informed as to the exact process, without annoying the hell out of the shipment company staff.
Here is a screen dump of one of the shipments obtained within seconds of entering the Air Waybill number to the shipping company's website.

You can see from the above detail, the exact whereabouts of the shipment. A consignee only has to know the AWB number to obtain this information.

ONE OF THE STIPULATIONS FROM THE CONSIGNEES, WAS TO BE ADVISED IMMEDIATELY OF THE AIR WAYBILL NUMBER. THIS WAS OBVIOUSLY TO ENABLE THE SCAM TO BE COMPLETED, AS THE SHIPPING COMPANY DID NOT HAVE TO DELIVER PERSONALLY TO AN ADDRESS. THE CONSIGNEE SIMPLY PRESENTED THEMSELVES (OR A LOWLY PAID AGENT!!) AT THE SHIPPING COMPANY'S LOCAL OFFICE, REQUESTING IF A PACKAGE IN THEIR NAME HAD ARRIVED (AS THEY KNEW IT HAD FROM THE TRACKING INFO), AND SIMPLY WALKED OUT THE DOOR WITH THE GOODS .... SHIPMENT DELIVERED .... THANKYOU VERY MUCH INDEED !!!

This delivery and tracking facility has many weaknesses, and traps for the unwary, and in my opinion now needs to be substantially reviewed to avoid these circumstances.

Shipment Delayed:
By a strange quirk of fate, the first shipment to Wijaya was sent to JAKARTA instead of BATAM. This caused confusion and some worry to me and also our “client”. So much so that the shipper decided to clear the goods to BATAM, but, they ran into Customs problems.

Jakarta customs would not release the goods until assessed Customs Duty of US$1,100 had been paid.

Our client Wijaya advised me (by email) there should have been no duty payable as the original delivery port (BATAM) was a duty free port (I have been unable to confirm this).

As a result, our client Wijaja became quite annoyed (by email), and after investigation and complaining, the customs charges were paid.

This had an additional delay effect on the shipment, in fact the goods were kept at Customs for approx 9 days. After the duties were paid, the Jakarta customs requested identification of the consignee prior to releasing the goods.
I contacted Wijaya by email, and told him to get in touch with the DHL Jakarta office.

Apparently, Wijaya then sent a faxed copy of a document (drivers licence ??) which was basically unreadable. Jakarta Customs had trouble determining what it was, and requested a better copy be sent.

Two more days elapsed, and on Thursday 7^th March, Customs were satisified with the identification, and released the goods to DHL for uplifting to BATAM.

At noon the next day (8^th March), the telephone call came from my bank advising of the fraud which was occurring.

I immediately contacted DHL Australia who informed me the shipment was on a flight from Jakarta to Batam. I told them the full story, and delivery of the shipment was halted. At that point of time, DHL advised me the shipment is on its way back to Australia.
I have to pay the re-shipping costs (about AU$1000) when they arrive back here.

We may be able to retrieve some of the value of the goods, assuming they are in saleable condition, but a heavy loss (estimated at about $4000) will occur as a result.

So we may gain our shipment back, but the losses are also high in that regard.

Had Wijaya not complained about the additional customs charges, and paid for them normally, it is possible he would have had the goods delivered to the original port they were intended for, and I would have lost the shipment forever. 

GOOD NEWS !
Last Thursday, the goods were returned to us by the DHL courier. They have travelled a long journey. The five boxes in the shipment were basically intact, except for three which had been opened and inspected by Customs, probably both here and in Jakarta. A special Customs sticker had been placed on the cartons. 
In one of these cartons, I sadly noted that one of the 40 GB Seagate hard drives was missing from its secured position inside the carton. No evidence, no recriminations, just another part of this saga.

A SPECIAL NOTE OF THANKS...
The recovery of these goods would not have been possible without the willing and most efficient assistance of the staff from DHL Head Office (in Sydney).  In particular, the many phone calls and emails to Elisha Steadman and her staff became an almost daily event over a period of ten days. Elisha and everyone I spoke to showed enormous concern and interest to our plight.
We offer our most grateful thanks to DHL in helping us with the final outcome of this shipment.

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In the washup ... Police help and advice !!!
After the initial shock of being told the Bank was going to debit our account, I proceeded to settle down and start an investigation.
Firstly, I made a complaint to the local police (Mordialloc). A most polite and efficient female constable took the details, and spent some considerable time on the case. She then advised me the matter would need to be referred to the region's CI section, but the nearest was at Chelsea Police station (about 6 km away).
On contacting Chelsea Police station, the male Senior Constable referred the matter to the CI chief, and I was politely informed that the local Police could not act, because there was no "local or state" crime committed.
It was suggested I contact the Australian Federal Police.
On contacting the Federal Police, I was similarly informed that no action could be taken, as "NO Federal Offence" had occurred. The matter was a private matter between the both parties.
I was outraged .... I was being given little or no help .... where to next ?
Do I ring the Jakarta police ?? Do they speak English ??
This being a crime of international proportions, I checked out the website for INTERPOL, there it is explained that INTERPOL can only act if the LOCAL or FEDERAL Police have been advised of a crime, and are prepared to act as advisers in the matter.
So we were back to square one !! 
Why couldn't the local or Federal police come up with that answer?? 

INDONESIAN CONSULATE
Then the penny dropped !!! why not try the Indonesian Consulate here in Melbourne. But of course it was 6.00 pm on a Friday, the Consulate office was closed. On the following Monday, I had a most meaningful conversation with "Freddy" from the Indonesian Consulate.
Freddy showed great interest in my story, wanted as much detail as possible, copies of all email etc. He informed me that I was not the only one affected, some other dealers in Canberra and Sydney had also been conned by this scam.
The Consulate offered sympathy to our problems, and said they would refer the matter direct to the Indonesian Police.

So now we wait to see if anything further comes out of all this.

FINAL LOSS
Our estimate of the actual physical loss sustained as a result of the Bank debiting our account is AU$17,700 (US$9,750 +/-).
This amount includes the freight costs for the return shipment, and Customs Charges by Fedex on the second shipment.
The overall amount having been substantially reduced by the return (less one hard drive) of the first shipment.
Our wholesalers have agreed to re-purchase the returned goods at a re-stocking fee of only 1.5%.
We are most grateful for their kind consideration, and it goes to prove that the healthy relationship built up by loyalty over several years with our suppliers pays dividends.

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Here are the details (taken from the respective emails) of all of the other persons who have made enquiries from us regarding sale of goods to Indonesia. There are 75 messages in total referring to this enormous scam on our behalf.
There is a similarity of all of the first approaches and the ongoing dialogue.
Some became quite friendly and personal, obviously this is a ploy to gain our confidence. Very clever !!!

I have also added the details supplied by other traders / business operators who have read these pages, and who have identified a fraudulent sale or attempt thereat. 

Here is some useful information from others ...

I invite your comments by phone or email.    Press this link www.pcworkshop.biz  for our web site and contact information.