cheered proudly for the 'red, white, and blue,' creators of the Keycharge economic empire rooted with equal fervor for the 'blue, green, and gold' international colors of the Keycharge card. The approval procedures moved at jet speed.
Wherever they were, merchants and others dialed directly through WATS lines to the Keycharge nerve center in PMA Headquarters Tower. Automatically, each call was routed to a free operator whose first words were, 'What is your merchant number?'
As the answer was given, the operator typed the figures, which appeared simultaneously on the cathode ray screen; Next was the card number and amount of credit being sought, this too typed and displayed.
The operator pressed a key, feeding the information to a computer which instantly signaled 'ACCEPTED' or 'DECLINED.' The first meant that credit was good and the purchase approved, the second that the cardholder was delinquent and credit had been cut off. Since credit rules were lenient, with banks in the system wanting to lend money, acceptances by far outnumbered turndowns. The operator informed the merchant, the computer meanwhile recording the transaction. On a normal day fifteen thousand calls came in.
Both Alex Vandervoort and Nolan Wainwright had accepted headsets so they could listen to exchanges between callers and operators.
The security chief touched Alex's arm and pointed, then changed headset plugs for both of them. The console Wainwright indicated was carrying a flashi ng message from the computer 'STOLE N CARD.'
The operator, speaking calmly and as trained, answered, 'The card presented to you has been reported as stolen. If possible, detain the person presenting it and call your local police. Retain the card. Keycharge will pay you thirty dollars reward for its return.'
They could hear a whispered colloquy, then a voice announced, 'The bastard just ran out of my store. But I grabbed the mother's plastic. I'll mail it in.'
The storekeeper sounded pleased at the prospect of an easy thirty dollars. For the Keycharge system it was also a good deal since the card, left in circulation, could h ave been used fraudulently for a much greater total amount.
Wainwright removed his headset; so did Alex Vandervoort. 'It works well,' Wainwright said, 'when we get the information and can program the computer. Unfortunately most of the defrauding happens before a missing card's reported.' 'But we still get a warning of excessive purchasing?'
'Right. Ten purchases in a day and the computer alerts us.'
Few cardholders, as both men were aware, ever made more than six or eight purchases during a single day. Thus a card could be listed as 'PROBABLY FRAUDULENT' even though the true owner might be unaware of its loss.
Despite all warning systems, however, a lost or stolen Keycharge card, if used cagily, was still good for twenty thousand dollars' worth of fraudulent purchasing in the week or so during whic h most stolen cards stayed un reported. Airline tickets for long-distance flights were favorite buys by credit-card thieves; so were cases of liquor. Both were then resold at bargain prices. Another ploy was to rent a car preferably an expensive one Using a stolen or counterfeit credit card. The car was driven to another city where it received new license plates and forged registration papers, and was then sold or exported. The rental agency never saw car or customer again. One more gimmick was to buy jewelry in Europe on a fraudulent credit card backed up by a forged passport, then smuggle the jewelry into the U.S. for resale. In all such instances the credit-card company bore the eventual loss.
As both Vandervoort and Wainwright knew, there were devices used by criminals to decide whether a credit card in their possession could be used again, or if it was 'hot.' A favorite was to pay a headwaiter twenty-five dollars to check a card out. He could get the answer easily by consulting a weekly confidential 'warning list' issued by the credit-card company to merchants and restaurants. If the card was unreported as hot, it was used for a further round of buying.
'We've been losing a helluva lot of money through fraud lately,' Nolan Wainwright said. 'Much more than usual. It's one of the reasons I wanted to talk.'
They moved into a Keycharge security office which Wainwright had arranged to use this afternoon. He closed the door. The two men were much in contrast physically
Vandervoort, fair, chunky, non-athletic, with a touch of flab; Wainwright, black, tall, trim, hard, and muscular. Their personalities differed, too, though their relationship was good.
'This is a contest without a prize,' Nolan Wainwright told the executive vice-president. He placed on the office desk eight plastic Keycharge credit cards, snapping them down like a poker dealer, one by one.
'Four of those credit cards are counterfeit,' the security chief announced. 'Can you separate the good ones from the bad?' 'Certainly. It's easy. The counterfeits always use different typefaces for embossing the cardholder's name and…' Vandervoort stopped, peering down at the group of cards. 'By God! These don't. The typeface is the same on every card.'
'Almost the same. If you know what to look for, you can detect slight divergences with a magnifier.' Wainwright produced one. Dividing the cards into two groups, he pointed to variations between the embossing on the four genuine cards and the others.
Vandervoort said, 'I see the difference, though I wouldn't have without the glass. How do the counterfeits look under ultraviolet?' 'Exactly the same as real ones.' 'That's bad.'
Several months earlier, following an example set by American Express, a hidden insignia had been imprinted on the face of all authentic Keycharge credit cards. It became visible only under ultraviolet light. The intention was to provide a quick, simple check of any card's genuineness. Now that safeguard, too, had been outflanked.
'It's bad, all right,' Nolan Wainwright agreed. 'And these are only samples. I've four dozen more, intercepted after they'd been used successfully in retail outlets, restaurants, for airline tickets, liquor, other things. And all of them are the best counterfeits which have ever shown up.' 'Arrests?'
'None so far. When people sense a phony card is being queried they walk out of a store, away from an airline counter, or whatever, just as happened a few minutes ago.' He motioned toward the authorization room. 'Besides, even when we do arrest some users it doesn't follow we'll be near the source of the cards; usually they're sold and resold carefully enough to cover a trail.'
Alex V andervoort picked up one of the fraudulent blue, green, and gold cards and turned it over. 'The plastic seems an exact match too.'
'They're made from authentic plastic blanks that are stolen. They have to be, to be that good.' The security chief went on, 'We think we've traced the source of the cards themselves. Four months ago one of our suppliers had a break-in. The thieves got into the strong room where finished plastic sheets are stored. Three hundred sheets were missing.'
Vandervoort whistled softly. A single plastic sheet would produce sixty-six Keycharge credit cards. That meant, potentially, almost twenty thousand fraudulent cards.
Wainwright said, 'I did the arithmetic too.' He motioned to the counterfeits on the desk. 'This is the tip of an iceberg. Okay, so the phony cards we know about, or think we do, can mean ten million dollars' loss in charges before we pull them out of circulation. But what about others we haven't heard of yet? There could be ten times as many more.' 'I get the picture.'
Alex Vandervoort paced the small office as his thoughts took shape.
He reflected: Ever since bank credit cards were introduced, all banks issuing them had been plagued by heavy loss through fraud. At first, entire mailbags of cards were stolen, their contents used for spending sprees by thieves at bank expense. Some mail shipments were hijacked and held for ransom. Banks paid the ransom money, knowing the cost would be far greater if cards were distributed through the underworld, and used. Ironically, in 1974 Pan American Airways was castigated by press and public after admitting it paid money to criminals for the return of large quantities of stolen ticket blanks. The airline's objective was to avoid enormous losses through misuse of the tickets. Yet unknown to Pan Am's critics, some of the nation's biggest banks had quietly been d oing the same thing for years.
Eventually, mail theft of credit cards was reduced, but by then criminals had moved on to other, more ingenious schemes. Counterfeiting was one. The early counterfeit cards were crude and easily recognizable, but quality improved until now as Wainwright had shown it took an expert to detect the difference.
As fast as any credit card security measure was devised, criminal cleverness would circumvent it or attack a vulnerability elsewhere. As an example, a new type credit card now being marketed used a 'scrambled' photograph of the cardholder. To ordinary eyes the photo was an indistinguishable blur, but placed in a descrambling device it
