What Do You Know About Card Cracking?

November 12, 2015
Eileen L., Financial Expert

Card cracking is a scam that can hit you with thousands of dollars of debt, a ruined credit score, and even criminal charges. But what is card cracking?

Card Cracking 101
Card cracking is a type of account fraud. The scammer asks you for your checking account information or debit card and PIN. Then, scammers deposit fake checks (or even sometimes counterfeit bills) and immediately withdraw the money, giving some of the cash to you. How does this work? Card cracking takes advantage of the check clearing process.

When you deposit a check, it takes a while for it to “clear.” Say your friend Bob writes you a check. After you deposit the check at MSUFCU, it’s sent from MSUFCU to Bob’s bank. Once Bob’s bank verifies that the money is in Bob’s account, his bank sends the money to MSUFCU. When the whole process is done, Bob’s check has successfully cleared.

But what happens if Bob doesn’t have money in his account or he has fake checks? Bob’s bank won’t send the money to MSUFCU, and the value of the check you deposited will be taken out of your account. Sometimes this process takes time, and card cracking takes advantage of this. Scammers withdraw the funds from the account before the fake check or cash is discovered.

What happens next is devastating. Both financial institutions realize the check isn’t backed up by real money. So, the value of the check is removed from the your account. But the scammer has already withdrawn the amount in cash, so the money isn’t there to take out.

Scammers target people who need money and sometimes even advertise fake scholarships or contests. When the check bounces, it often makes the checking account go negative.  If your account goes negative because you give your debit card and PIN or ComputerLine login to someone, YOU are responsible for paying that money back. By giving out your information, you are authorizing the scammer to use your account.

If you give out your information and then report your card as lost or stolen, you are an accomplice to the crime. People who falsely report their cards as lost or stolen can go to jail for up to 30 years!

Who Are the Targets of Card Cracking?
When money is tight, it’s understandable that people look for ways to earn cash fast. Scammers often target college students, young adults, and recently enlisted members of the military. But, card cracking is illegal, and it won’t put you in a better financial position. At the very least, you’ll have to pay back the money from the fake check. Landing in thousands of dollars of debt because you were promised a few hundred dollars? No thanks!

Protect Yourself from Card Cracking
Most card cracking schemes are advertised on Twitter, Instagram, and even Craigslist. Scammers will post asking if their followers have certain accounts. You might think they are looking for a recommendation, but scammers only want to take advantage of you. Or, someone might contact you telling you you’ve won a contest or scholarship.

Never give your banking information to anyone. Contests and scholarships don’t need your banking information, and neither do your friends. If someone wants to deposit a check in your account or use your debit card as a favor, just say no. Another way to spot a scam is to look for misspellings and writing errors. Legitimate businesses, contests, and scholarships shouldn’t make those mistakes.

Your bank account information is the key to your money. Just like your key to your home, protecting the key to your money keeps it safe. The Federal Trade Commission has a lot of great information about different types of scams, including fake checks and card cracking. Information is the best defense against card cracking! Once you know what to look for, you’ll know how to tell when something is a scam.

Tags: Learn About Credit, Credit Cards, CU News