Federal officials are warning merchants — and credit card customers whose cards have been stolen — of a new, decidedly low-tech scam called the Feed Horn Scheme””
Federal officials are warning merchants — and credit card customers whose cards have been stolen — of a new, decidedly low-tech scam that has targeted victims in the Midwest and the Middle Atlantic states and may be spreading.
All that’s needed is a ladder, a roll of aluminum foil and a stolen credit card. It’s called the “Feed Horn Scheme.” Or maybe we should call it the “Foiled Again Scheme.”
This satellite feed horn at a store in Kentucky was wrapped in aluminum foil by a crook. Source: FBI
Mollie Halpern, a spokeswoman for the FBI, said that scammers associated with loosely knit groups known as African Criminal Enterprises are using nothing much more sophisticated than tinfoil to steal thousands of dollars from gas stations and convenience stores.
According to federal investigators, the bad guys climb up to the roofs of these stations and stores and then wrap aluminum foil around the “feed horn,” the part of the satellite dish that transmits and receives signals.
“The foil blocks the signal, interfering with credit card authorization systems,” Halpern said in the bureau’s Dec. 26 podcast, “FBI This Week.” “The criminals then use stolen credit cards to buy cigarettes and high-value electronics.”
The bad guys sometimes use the stolen credit cards to buy prepaid debit cards, most often Green Dot Prepaid Gold Visa cards, according to the FBI. In turn, those cards are used elsewhere to purchase electronics.
The scheme is made possible by the same technological glitch familiar to consumers who use satellite receivers for television or Internet service: frequent outages due to rain, wind or heavy clouds. “By wrapping the feed horn in aluminum foil, the effect of bad weather is duplicated,” the FBI said in an advisory.
When outages happen at home, consumers scream at their TVs. But at small businesses such as service station and convenience stores, clerks “commonly” accept credit card transactions anyway, even though they aren’t validated through the satellite feed, according to FBI agents. For brief weather-related outages, no problem: The unauthorized transactions queue up, then go through as soon as satellite communication is restored. Scammers know this practice, use their stolen cards during the outages they induced, then flee before store personnel investigate the lengthy satellite signal outage.
“When they remove the [tinfoil] blocker on the roof, they realize that it was a scam and that the credit card is never validated and the people have walked out the door with the merchandise and it’s not been paid for,” said FBI Supervisory Special Agent Vicki Anderson.
The plunder often is taken to New York, where it is sold in pawnshops or on the street, or it sometimes is shipped overseas, the FBI said.
The scam already has hit merchants in Indiana, Kentucky, Ohio, Pennsylvania and West Virginia. “This activity appears to be new and may become more prevalent due to the low-tech execution of the technique,” the FBI said in its advisory.
A spokesman for the National Association of Convenience Stores, which represents 2,200 retail outlets and 1,600 suppliers and closely monitors security operations at those businesses, did not immediately respond to requests for comment.
According to the FBI, the loosely confederated groups known as African Criminal Enterprises are flourishing, despite efforts to curtail their operations. Many are based in Nigeria and most engage in financial fraud or drug trafficking.
Among their most common activities: credit card, bank and check fraud, advance-fee schemes (the familiar Nigerian bank email scams), insurance fraud and health care billing fraud.
The FBI advised merchants who are victimized by the “feed horn” scheme to report the incidents to their local FBI field offices. Agents also advised merchants to install closed-circuit security cameras and, in the event of a satellite outage, to physically inspect the satellite dish, particularly the feed horn.
As always, credit card users are urged to swiftly report any lost or stolen cards.
See related: Gift card scammers skirt security with new tricks, Didn’t make that donation to charity? Watch out for fraud, $45 million heist shows vulnerability of prepaid cards