A few days later, curiosity about the DVD crept back to my conscious mind, and I googled Comm Services. It turns out that they are well known on the Ripoff Report. My incredibly low opinion of Ripoff Report aside, I was interested to learn that I should look for a $9.95 charge to my wifes credit card. Sure enough, there was a charge from Comm Services at the end of March. My wife had overlooked it, thinking that the name was related to one of our telephone or data services. A review of Comm Services website told me that, aside from some very strange ordering procedures, they are happy to give a full refund if you return the DVD. I then went to check the DVD only to find out that it didn't work.
Based on this information, and my knowledge of credit card processing rules and practicalities, a few things became known to me.
- My wife's credit card number was compromised.
- We had gotten off easily, only losing $10 in the process.
- Comm Services is a scam. There are 0 people on this planet willing to pay $10 for a copy of "I Wonder Who's Killing Her Now"
As far as credit card scams go, this one is not half bad. So first, and explanation of what I think they are doing. When an amateur steals a credit card, they go on spending spree. If they are a smarter than average amateur, they wait until after the close of business on Friday, so that the charges don't show up on any statement until the following Tuesday. A pro, on the other hand, is not going to run the charges at a store to get new shoes, they are going to run it through some form of clearing house where the charges can be turned into cash.
A clearing house for this sort of thing will typically look like a normal business, but it sells products that no-one would actually go looking for. The key is to be nondescript; have an accessible presence to give the illusion of legitimacy, but make sure to only sell something that no right-minded person would actually order. If someone stumbled on your site and ordered, you would have to provide a product and or service, which would complicate things. On the other hand, the clearing house should seem legitimate enough that they can play the role of the victim if a card-holder comes looking into what this or that charge means. Cash can then be bled from stolen credit cards at the clearing house. If a card-holder calls demanding information or reports the theft, the clearing house immediately acquiesces in order to keep charge-backs to a minimum. A smart clearing house is going to use multiple processors on continuous rotation to keep charge-backs with any single processor to a minimum.
When a credit card is run at a merchant, a deduction is immediately made from the customers credit account. That money then goes to the processor, the company that provides the ability to take credit cards to the merchant. After swirling around in the ether for about three days, the processor wires the money into merchants bank account. When a charge-back occurs, the customer goes to their credit account holder and reports an erroneous charge. The credit account institution and the processor then argue for a little while, and possibly request documentation from either the customer or the merchant to verify whether the charge was legitimate. If the charge is found to be illegitimate, then the processor makes a demand on the merchants bank, the bank deducts the money from the merchants account, and the money heads back to the customers account.
Typically a thief will try to bleed as much money as possible, as fast as possible without tripping the credit card company's fraud detection system. As soon as the money hits the bank account it is immediately withdrawn, so that when the processor goes to claw back the funds, the bank account is empty, and the merchant's bank is left holding the bag. Comm Services is smart in that they go for the slow kill. By using a nondescript name, which could be anything really, and charging a very small amount, they slip under most people's radar. The typical consumer, even if they check their statement thoroughly every month, is likely to, just like my wife, justify the charge rather than question it. $9.95 is so low that it is very unlikely to trip any fraud detection system, but if it is run on thousands of credit cards every month can quickly add up to real money. The numbers used are likely bought on exchanges that trade in stolen credit card numbers, where batches of numbers are sold for cash.
So why the DVD? Simple, to confuse the charge-back system. Since something of "value" has been exchanged, Comm Services is able to argue against the charge-backs, delaying the time before a threshold is reached where the account is closed for suspicious activity. Terrible movies that no-one would want are used because the discs are pirated. If the copyright holder doesn't care about the piracyl, then there is almost no chance of prosecution. Because the amount per charge is so low and actual merchandise changed hands, it is unlikely that law enforcement will get involved, seeing it as merchant account issue and leaving it up to the banks to enforce. Furthermore, because the $9.95 charge is ostensibly for shipping and handling, even if piracy was alleged they could claim that they weren't actually selling the DVD.
So the question remains, what to do? Aside from reporting the card as stolen, which we did as soon as we figured out what was going on, I'm going to send the disc back so that the credit card company can't refuse my request to get our money back. I will probably mail it certified, just so that I can prove that I did send it back, which means that we're out $4 no matter what, but before I do that I'm going to talk to the postal police. I don't expect anything to come of it, but you never know- it is a form of mail fraud
As a general rule of thumb, I can't stand crusaders; people who see an injustice, real or imagined, that then work to, "take them down" or "punish" the wrongdoing. I'm a big believer that you can't get angry because of this sort of thing. At most you inform someone in authority and then let them do the rest. Society is going to function whether these guys go down or not, and even if they do go down something else will take their place. But, they did have the good fortune of catching my attention, and I see no reason why I shouldn't rattle their cage to see if I can't get some fun in watching them scurry. I hope the Postal Police have some good advice, it could be fun to watch this go someplace.
