EXPERT INSIGHT 46 WWW.LAWYER-MONTHLY.COM | JUN 2022 recently at a gas pump. All credit cards are comprised of is plastic and magnetic strips that read electronic data; these skimmers are creating their own card systems from the comfort of their living rooms or motel rooms and training others as if this was a how-to-get-richquick scheme. With the stolen card information and dubbed cards begins phase three of the operation for converting the cards into cash. Phase three is the money laundering portion of the enterprise, usually conducted on the second day of the criminal operation. On day two the organised groups target several local grocers and retailers to purchase gift cards in bulk. We are talking about purchasing dozens upon dozens of $25-100 gift cards. These gift cards are now untraceable and can be used just as simply as cash. The game does not end there. It would be suspicious if someone were to pay for items strictly with a bunch of gift cards – hence enters phase four, the final phase of the card skimming scheme. The skimmers utilise social media group chats used for selling and trading items to sell these cards at a discounted rate in exchange for cash; think of an ad selling a $50 amazon gift card for $25. Thus the money laundering process is completed. How organised have these groups become, and how sophisticated are their methods for choosing targets? The ease of access to the tools for committing this crime, paired with the anonymity and lucrative nature of the offence, ushered in a crime wave of card skimmers throughout the state of Texas for a period of several years. Case law research in the prosecution of gas station credit card skimmers goes back to 2011, but the surge in the criminal enterprise appears to have begun around 2017, peaking in 2018 and lasting until around 2020. This crime wave blindsided every law enforcement agency, both state and federal. They were lost, confused about how to charge and prosecute these offenders, and about what statutes within the Texas Penal Code would apply. At the beginning, district attorneys’ offices were charging individuals with low-level felony offences indicted as “fraudulent use of identifying instruments”. Bonds were being set at a rather low amount, as judges were not aware of the magnitude and gravity of the losses that financial institutions were experiencing at the hands of the card skimming craze. Is there ever an international element to these crimes? What further complications can this cause? Due to the federal financial institutions being involved as victims of the events, the United States Secret Service was involved in investigating these crimes. Any time a bank is involved in a financial or cybercrime, the United States Secret Service will be party to the investigation to assist law enforcement at the state level for the criminal exploitation of our federal banking system. The software developed for card skimming was thought to be coming from overseas, but with limited state-wide resources and lack of jurisdiction in foreign nations, law enforcement shifted their focus to tracking the criminals who were utilising the technology for illegal financial gain. Why are rural counties particularly at risk of these attacks? Every county in Texas has an annual budget. Larger counties have more financial resources then smaller counties. It is expensive to prosecute and try a case. Smaller counties with a population of about 50,000 on average have a $100,000 prosecution budget minus salaries for the district attorney and assistant district attorneys and staff. Compare that to Dallas County, which has a fiscal budget of over $61 million for the Dallas County District Attorney’s Office in 2022. Smaller counties are at a disadvantage and are vulnerable due to the lack of financial resources to prosecute complex cases involving technology that would require the testimony of experts in the field of software development and technology. Rural law enforcement just did not know how to deal with these offences when they began to spread. It was literally not in the books. How does that vulnerability extend to ordinary citizens? Everyone is a potential victim. We all use a vehicle and stop and buy gas on a weekly basis. If you live in a rural area of Texas, you either have been a victim or know someone who was a victim of card skimmers. A lot of times you may have been a victim and not even been aware of it. These criminals were not liquidating your bank account; they were taking small amounts to evade detection – $50, $75, a small amount that would likely not draw attention from a bank or its account holder for unusual or suspicious activity. These are amounts that would Rural law enforcement just did not know how to deal with these offences when they began to spread. It was literally not in the books.
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