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How Fraudsters steal IDs, credit cards, and your profits.

Image of Allie Roberts
Allie Roberts
Credit Card placed on credit card machine at counter

Fraudsters continue to use various nefarious methods to defraud liquor businesses and consumers alike. In a previous blog, we mentioned the importance of checking the authenticity of your customer’s ID for compliance reasons. And while an underage drinker may try to illegally purchase alcohol using a fake or stolen ID, another risk is presented by criminals who use illicitly obtained IDs to steal from your business. These criminals pair a fake ID with a stolen credit card that has the same name listed on it to purchase large quantities of alcohol or other merchandise.

Without a proper ID document validation process in place, an unsuspecting liquor store may not realize a stolen credit card was used until the fraudster already left with the goods, leaving the business to bear direct losses when the charge is later rejected as well potential downstream fines.

This was the case for several stores last month located in Knoxville, TN. A man used a stolen credit card at a Total Wine and More in Knoxville buying over $250 worth of items. He then went on to conduct the same crime at multiple other retailers in the area. The owner of Total Wine and More did not realize a crime had taken place until the charge later showed on their account as fraudulent. The suspect has yet to be apprehended and could be making more fraudulent transactions at other retailers.


Stolen Credit Cards Used to Steal from Liquor Stores

A news report from 2018 tells a similar story of a liquor store in Memphis, TN that was hit with over $700 of fraudulent charges from one customer. The fraudster also hit several other retailers in the area. Concerningly, the man had an ID that matched the name on the stolen credit card, leaving the unsuspecting cashier to assume the transaction was legitimate. The article did not indicate whether the criminal was ever brought to justice.

That same year, in Dutchtown, LA, two criminals used stolen credit cards at a local liquor store to buy almost $3000 worth of alcohol, leaving the business to take the financial hit. The fraudsters visited the location two times, using different credit cards for each of the transactions. Police were alerted after the second shop visit and similar to the previous tales above, it is unknown if the criminals were ever caught.


What steps can you take?

In a common scenario, a customer prepares to make large credit card transaction, and the employee follows established store procedure by requesting a matching ID, which is then provided by the customer. Everything appears to be legitimate, but how can you and your employee really be sure? As was apparent in the Memphis incident, liquor store employees had been given an ID that matched the credit card, only to find out later that the charge was rejected as fraudulent.

Clearly, it’s not enough to just have the same name listed on both a credit card and ID document. Business should go one step further to protect their assets by authenticating the ID document presented to ensure no fakes slip through. Fraudsters continue to evolve and improve their methods, mandating businesses to do the same to combat them.


How Fraudster create fake IDs and credit cards

Near the end of 2021, a couple in Carson City were arrested under the suspicion of running a credit card forgery lab out of a local hotel. One of the fraudsters revealed to authorities how they conducted the forgery operations, as they did not have official jobs and instead made their income by running these schemes.

ID Fraud Dark Web - Identity Authentication Graphic (1)

The couple acquired fake IDs by purchasing them on the web. These high-quality fakes included pictures with their faces on them. Next, they purchased credit card information off the dark web and would place it into an Excel or word document. After the information was gathered, they would use a reader/writer card machine to encode the credit card information onto a blank card. The machine also added a layer of gloss on top, making the cards nearly impossible to distinguish from a genuine credit card with embossed security features – only detectable with a counterfeit detection device.


An Authentication Solution to stop fraudster in their tracks

Over the years, thousands of our retail store clients have found our PALIDIN Desktop solution to be an essential tool in preventing fraudulent transactions. PALIDIN is the industry’s most advanced ID document system that authenticates government issued identity documents with extreme accuracy. Paired with a ID document hardware scanner, our PALIDIN software is installed on a Windows PC computer and can be placed on the counter by your cash register for seamless integration with your usual checkout process.

The first step is to capture the images of the ID document using one of the specialized PALIDIN-compatible document scanners such as the ID-150 or AT-10K.

PALIDIN scanners - Identity Authentication Graphic (2)

From there, the scanner will authenticate the embedded security features on the ID document. PALIDIN will run multiple security-feature verification tests against the document and compare it against the world’s largest document library ensure authenticity of the physical document and the data printed on it. In seconds, your cashier will be provided with the pass or fail authentication result on their screen letting them know whether they can safely proceed with the transaction.

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