By Guo Hongpeng, Liu Baijun of the Legal Daily, and Lin Jinrong, a correspondent of the Legal Daily,
In a living room less than 30 square meters in size, 12 POS machines from four provinces across the country were neatly arranged. In just one year, these 12 POS machines, under the meticulous operation of three "professional credit card cash-out individuals," managed to withdraw over 100 million yuan in cash.
On July 16th, Peng Amin, aged 31, and other suspects were arrested by the Economic Crime Investigation Brigade of Quanzhou Public Security Bureau in Fujian Province on suspicion of illegal business operations, dismantling this crime gang that used POS machines as tools for professional credit card cash-outs.
The three suspects withdrew over 100 million yuan in cash within a year.
In early June this year, officers from the Financial Crime Investigation Team of Quanzhou's Economic Crime Investigation Brigade discovered an advertisement in a local media outlet in Quanzhou offering credit card cash-out services.
"Can I use my credit card to withdraw cash? What are the handling fees?" Under the guise of inquiry, the police called the number listed in the advertisement.
"The fewer the amount of cash withdrawn, the higher the handling fee; the more cash, the lower the percentage of the handling fee, roughly between 0.8% to 2%," was the affirmative reply they received. Based on this, the officers decided to conduct a field investigation.
The location provided for the credit card cash-out service was inside a high-end residence in the central area of Quanzhou. The officers found that in the small living room, which was less than 30 square meters, there were 12 POS machines. Just as the two women and one man inside were about to escape, they were controlled by the police.
According to Chen Yixi, only 29 years old, after graduating from university, she learned from others that applying for bank POS machines to help customers withdraw cash and earning the difference in handling fees was a good way to make money. Since the highest fee per transaction using a bank POS machine does not exceed 50 yuan, but the handling fee for cashing out with a POS machine can be charged at 0.8% to 2%, she turned her "employment" towards the easy job of withdrawing cash using bank cards. Her younger sister, Chen Yi Mei, who graduated from university without finding work, was thus kept by her side. Soon, Peng Amin, a graduate from Longyan, Fujian Province, also joined this easy way to make money.
Chen Yixi successively applied for a total of 12 POS machines under various names including her own, her friends', and her mother's, to banks in Guangdong, Guizhou, Inner Mongolia, and Fujian Provinces. She then rented an apartment in a high-end residential area in the central district of Quanzhou (Room 801), turning one of the rooms into a "workroom" to engage in illegal credit card cash-out services. Chen Yixi was responsible for applying or renting bank POS machines, Peng Amin was responsible for withdrawing cash from the bank for clients, while Chen Yi Mei handled the credit card swiping for clients and bookkeeping.
To expand their "business," they even placed advertisements for illegal cash-outs using POS machines in a local media outlet with a circulation exceeding 100,000 copies in Quanzhou (i.e., withdrawing cash illegally for credit card holders without any actual transactions taking place). The police investigation revealed that in less than six months, Chen Yixi and others used the Industrial and Commercial Bank of China's POS machine under the name of Zunyi Nianfa Furniture Business Department to illegally withdraw 6,820,011.40 yuan RMB. From last year until the case broke this year, they had withdrawn a total of over 100 million yuan in cash. At the scene, the police seized 101 bank cards and 27 rolls of credit card transaction receipts. Chen Yixi and the other two suspects were criminally detained by the police on suspicion of illegal business operations. Later, due to breastfeeding a baby under one year old, Chen Yixi's detention was changed to bail pending trial.
Four types of credit card cash-out criminal activities
According to the investigating officers, currently, some lawbreakers are gradually shifting their focus to POS machines that are outside the financial system and thus easily overlooked. They take advantage of design flaws, program loopholes, and management oversights of POS machines, using them as a medium to wildly cash out funds. These activities manifest in four specific types:
First, illegal intermediaries and merchants use POS machines to cash out. Lawbreakers either apply for POS machines themselves or rent them from others. After a cardholder swipes the card on the POS machine, the amount is immediately paid to the cardholder, and a handling fee of 0.8% to 2% of the cashed-out amount is charged. After deducting the swipe rate paid to the bank, they illegally profit.
Second, cloning POS machine crimes. Suspects use fake IDs to apply for credit cards and POS machines. By swiping purchases, they obtain merchant POS machine receipts. Using technical means, they modify the parameters of their own POS machines to match the information of the merchants' POS machines. In this situation, the suspects then cancel (or return) the previous transaction.
Third, exploiting time differences in programs for fraud. Lawbreakers take advantage of the few-minute delay in information transmission between POS machines, UnionPay, and the banking system to cash out funds. Generally colluding with the cardholders, the cardholder deposits cash at the bank counter into the account, while the suspect simultaneously uses a POS machine with accumulated funds elsewhere to transfer the money out. Then, the cardholder at the bank counter refuses to sign due to reasons such as entering the wrong account number, retrieving the money or depositing it into another account. However, the POS machine's transaction information usually takes one to two minutes to feedback from the UnionPay system to the bank, making it generally difficult for the bank to detect.
Fourth, cashiers stealing bank card information while using POS machines to settle customer transactions. In real life, people often swipe their cards at hotels, malls, supermarkets, and other bank-designated merchants. Some cashiers take advantage of this opportunity, using the fact that cardholders may be unaware or under the guise of convenience, to take the card away from the scene and steal the card number and password. They then collaborate with lawbreakers to create counterfeit cards for withdrawals or purchases.
In the case of credit card fraud involving Yu and others solved by the Quanzhou Public Security Bureau's Economic Crime Investigation Brigade, suspects Yu, Wu, and four others, taking advantage of Wu and Wang's jobs as cashiers at a hotel in Dongguan, Guangdong, stole the bank card information of customers Mr. Li and Mr. Wang when they settled their accounts by swiping their cards. They also peeked at the passwords and then forged Mr. Li's and Mr. Wang's bank cards. Subsequently, they used these cards to withdraw money or purchase gold jewelry through swiping at banks and jewelry stores in Quanzhou city, Shishi, and Xiamen, totaling 734,468 yuan RMB.
Bank supervision is virtually non-existent and urgently needs improvement
"With the continuous rapid and healthy development of our country's economy and society, financial sector activities have become increasingly active. Credit card business, as a mainstay of banks, has also been increasingly developed by various banks. According to incomplete statistics, the current issuance volume of credit cards in our country has exceeded 150 million. Meanwhile, 'card slaves' who use multiple cards in a loop to cash out and 'moonlighters' who cannot repay their credit card overdrafts have also increased significantly. Professional 'card nurturing' and professional credit card cash-out businesses have emerged accordingly, leading to an increase in fraud and theft cases triggered by 'card nurturing' and 'card swiping,'" Officer Fang Weiqing of the Quanzhou Public Security Bureau's Economic Crime Investigation Brigade told reporters.
According to Fang Weiqing, so-called professional credit card cash-out individuals refer to those who use commercial bank POS machines to illegally withdraw cash for credit card holders without any actual transactions occurring, charging high cash-out handling fees. For example, if a cardholder withdraws 40,000 yuan, the single transaction fee charged by the bank does not exceed 50 yuan. However, professional credit card cash-out individuals charge a 1% handling fee, collecting 400 yuan, and after deducting the bank's 50 yuan fee, they actually earn more than 350 yuan.
"Applying for a POS machine requires not only a business license but also registration with the tax authorities. Banks must conduct on-site inspections and compare identification documents before issuing one. Yet, Chen Yixi from Quanzhou, Fujian Province, managed to get approval for a POS machine application under her mother's name from a bank in Zunyi, Guizhou Province. Moreover, the police investigation revealed that all the clients who cashed out 6.8 million yuan in five months were from Fujian Province. Such obvious issues highlight the deficiencies in relevant bank supervision," Captain Lin Dongsheng of the Financial Crime Investigation Team of Quanzhou's Economic Crime Investigation Brigade told reporters. According to bank regulations, the issuing bank should regularly inspect clients, but this requirement is virtually non-existent.
Lin Dongsheng suggested increasing the intensity of crackdowns and enhancing research on this type of crime. The credit card center of financial institutions should communicate information with the police, timely tracking and reviewing signed merchants, strengthening management of professional cash-out operators and unscrupulous merchants, while simultaneously establishing a "credit blacklist." Through regular and irregular joint meetings, comprehensive analysis and judgment can be conducted to facilitate accurate and effective strikes.
Legal Daily, Quanzhou (Fujian), July 18th.