Justice Department cracks down on microtransaction scams

Simon Druker
·2 min read
5
UPI
The U.S. Justice Department's Consumer Protection Branch has filed several civil lawsuits that aim to "halt networks of fraudsters that use misrepresentations or unauthorized charges to steal money from consumers' financial accounts." File Photo by Bonnie Cash/UPI

Dec. 15 (UPI) -- American officials are cracking down on so-called "microtransactions," which target unsuspecting consumers, the U.S. Justice Department announced Friday.

The department's Consumer Protection Branch has filed several civil lawsuits that aim to "halt networks of fraudsters that use misrepresentations or unauthorized charges to steal money from consumers' financial accounts."

Two of those lawsuits were unsealed in a Florida court Monday and name an international network of suspected fraudsters.

One case lists defendants from Louisiana, Florida and the Canadian province of Quebec.

A second case in California lists defendants from that state, as well as Nevada, Texas and India.

In both cases, suspects processed client payments using unauthorized charges on consumers' accounts "and engaged in a variety of other illegal activities, including technical support scams."

"This case marks a significant step in halting fraud schemes that reap financial gain by scamming consumers and making misrepresentations to financial institutions," U.S. Attorney Phillip Talbert said of the California case.

"It also sends a clear signal that we have used, and will continue to use, all means at our disposal to protect citizens from such schemes to defraud."

Justice Department officials contend the defendants use the "microtransactions," also referred to as "microdebits" to slowly siphon money from an individual's bank account via "unauthorized charges with a large number of low-value, straw transactions to lower the fraudster's chargeback rate."

Chargebacks refer to transactions that are refused or reversed by an account holder's bank and can eventually lead to account scrutiny or closure.

The micro variations of the transactions reduce the risk of chargebacks.

"These cases mark an important step in the department's efforts to halt schemes that prey upon individuals and small businesses across the United States," Principal Deputy Assistant Attorney General Brian Boynton said in a statement.