US New Mexico FCU Helps Bust Young Adult Fraud Scam


By Nick Pappas / Journal Asst. Business Editor


Math doesn’t lie – that is, $400 minus $200 does indeed equal $200 – but it shouldn’t trump common sense.

So if a stranger should approach you with a promise of making some easy money by depositing a check in your account, don’t do it. 

If you do, you will become the latest victim of what appears to be a relatively new scam sweeping the nation called “card-cracking.”

Earlier this month, the U.S. New Mexico Federal Credit Union posted a warning to members on its website about this check-cashing scheme, which it said had affected some of its members.

Here is how the credit union described this scam on its website:

A man or woman approaches you and says they have a check for $400. They will give you $200 of that check if you will simply deposit the check in your account and give them the remaining $200. Sounds like a good deal, right? Wrong. The check is a forgery or stolen and soon will come back to the credit union’s attention as fraud. Now YOU are responsible for the $400 the credit union paid for that bad check.”

Based on media reports, the scam appears to have originated on the South Side of Chicago – it’s even been glorified in some rap songs there – and spread to places such as New York, Seattle and now Albuquerque.

And while there no doubt are exceptions, card-crackers generally are targeting college students to either cash the checks themselves or – even worse – supply the scam artists with their ATM cards and PINs so they can carry out the transaction on their own.

In some cases, they are approaching students where they tend to hang out – college campuses, fitness clubs, restaurants and the like. Other times, they are recruiting their next victims through social-media sites such as Facebook and YouTube.

In Albuquerque, card-crackers tend to seek out potential victims at parties, said Sharon Foreman, fraud manager at U.S. New Mexico, where reports began to surface among its members around the first of the year.

“The common practice was the fraudster would approach young people, primarily young people in their late teens and early 20s, most of the time … at a party,” Foreman told the Journal last week. “The individuals presented themselves as friends of a friend.”

They also came with a sob story of some type, she said, which made it more likely the potential victims would agree to help.

In the credit union’s experience, Foreman said, all the transactions took place at an ATM – not inside the bank with a teller. And while most conversations began at parties, she said, one customer was approached directly while using the ATM.

At the completion of the transaction, the fraudster would take his cut of the money and leave, never to be seen again.

As for the customer?

He or she would be notified a few days later that the check they deposited was no good.

And while the bank will try to work with victims if they incur overdraft fees, Foreman said, there isn’t much that can be done about the lost funds.

“Know who you are dealing with,” she said. “Don’t take checks from individuals you don’t know because you are responsible for anything you put in your account.”

Ditto for giving out personal financial information.

“Never share your information with anyone for any reason,” said Alan Varela, the credit union’s vice president of strategic development and marketing. “Don’t give out your account number or PIN number.”

For its part, the Albuquerque Police Department is no stranger to this growing scam. In fact, it arrested an individual earlier this month who is suspected of running this scam in the region.

Cmdr. Harold Medina, who heads the department’s Property and Economic Crimes Division, said card-crackers tend to prey on college-age students because they have less experience dealing with banks.

“I think they are getting these younger crowds because they don’t have experience with the banking industry,” Medina told the Journal. “It’s a group that is gullible and makes them subject to this kind of victimization.”

Medina said the department’s close working relationship with the Albuquerque banking community was instrumental in identifying and apprehending the suspected card-cracker two weeks ago.

Rebecca Branch, deputy director of the New Mexico Consumer Protection Division in the Attorney General’s Office, said card-cracking is a variation of counterfeit check schemes that are common in other scams, such as those work-at-home offers that turn up in classified ads.

Still, she said, it may take a while to educate the public about this relatively new phenomenon.

“The newness of this type of scam is going to give them the upper hand to initially be successful until we get it out there through the media and whatever other means,” Branch told the Journal.

Until then, common sense may be the best defense against being victimized by this scheme.

“You just have to be very aware and very suspicious,” she said, “if someone wants to give you $200 for nothing.”

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