Friendly Fraud
by Lee Williams
Greetings.
Lee the Agent here. By now I hope you can recognize my writing style across editions of this magazine and figure out who I am even though I've been writing under different pseudonyms. Now, let's get to the article.
When someone fraudulently takes money out of your bank account, most of the time you have almost nothing to worry about. The bank, whoever that is to you, is required to keep your money safe. When your money goes missing, the bank is never allowed to say "sucks to be you" and then leave it at that. They have to insure your money. Therefore, banks have these processes called "disputes" that allow the customer to get their money back when shit hits the fan. You see a fraudulent charge on your account, you make a dispute with your bank, and if you're being honest, they will place the money back in your account.
This goes beyond unauthorized transactions.
If a merchant scams you, you can actually go to your bank and tell them that. If you order two snacks at the vending machine but it only gives you one, you can go to your bank and tell them that. The bank has the option to side with you, and if you're being honest, they will. So I went to the vending machine, bought two candies, but only one came out. I told my bank this, and I received half of the money back into my account. That's when it hit me: I can steal with this. If I can file a fraudulent dispute, I can get away with not paying for shit.
There's one specific bank, the one I bank with, who will always side with the customer when dealing with disputes. I'm not going to say the name of the bank, but it's one of the largest banks in the United States. Let's call it Digital Dash National Bank. What this means is that when you file a dispute, nothing else matters; They're on your side. My current love interest has family who actively does fraud with Digital Dash National Bank because the bank just enables it. This happens all the time. People realize that when you dispute a charge you get your money back, so people take advantage of it. They would make huge purchases and then dispute the charge.
I found out that my bank sides with the customer when I bought a partially broken knife at a gas station.
It broke the same day I bought it. It was partially functional, enough that I still wanted to keep it. I went straight to my bank to tell them that the merchant (the gas station) sold me a broken product. The man on the other end of the phone told me that they're taking my side, and they always will. My bank, which was actually one dollar in negative balance, had the money spent on the knife back in my account, and I was no longer in debt. But there's a catch.
When you do an honest credit card dispute, you have to also, in good faith, make an effort to resolve the issue with the merchant first. When the merchant won't help you, then you make a dispute. But I technically skipped the step of trying to resolve the issue with the merchant and went straight to the bank. My bank was in negative balance. Afterwards it wasn't. The knife was partially functional. I just skipped the step of trying to resolve the issue with the merchant. This is around when I realized what I did was technically fraud. Whoops. Thankfully, nothing ever came of it, but I never did it again.
The merchant, however, is allowed to argue the dispute and keep the money. If they don't make a good argument or don't respond fast enough, the customer wins the dispute. Most banks follow this protocol.
This happens all the time, where people will do fraud without serious malicious intent. Perhaps they did what I did, and just skipped a step with no ill intentions. My goal wasn't to steal from my bank; I just wanted my money back. People will dispute charges by accident, or skip steps, and end up committing a crime. But with my bank, there seems to be no chance of them siding with the merchant in a dispute. So what's stopping me from consistently disputing charges, stealing from both the merchant and the bank, a real 21st century heist?
The Blacklist.
Not many people really know exactly how the anti-fraud algorithms work except for the bank. But we all know that the algorithm isn't stupid. There are certain things that we know will tip it off, like having a VPN or your ZIP Code, but there are other times where the algorithm just somehow knows that you're doing something wrong. Among other things, the algorithm pays attention to your disputes, how often they happen, when they happen, and other pieces of context about them. There's really no perfect ratio to successfully do a fraudulent dispute. It's more of a guessing game when your intention is to do fraud.
"But Lee, you said your bank sides with customers all of the time! How will they stop fraud? Why haven't they stopped your lover's family?"
Well, even though they side with you, the algorithm can still figure out you're doing fraud.
Once they finally catch on, risk analysis at the bank determines that you're a threat to them and other financial institutions, so they place your Social Security Number (SSN) in a database I refer to as The Blacklist. Other people also refer to it like that; I just like the dramatic effect of The Blacklist in italics. Once your SSN ends up in the blacklist, you won't be able to get approved for a loan or a mortgage, and you won't be able to set up bank accounts. You could end up in that database forever, and you're basically f*cked for life at that point, as no financial institution will want you because they think you're going to steal from them.
The reason her family hasn't gotten caught is most likely because they successfully fooled the anti-fraud algorithm. If I'm being honest, I don't know the exact details of what they're doing, but it's definitely more than just disputing charges. Thankfully, I'm not in the blacklist, but I almost ended up in the blacklist one time and can no longer bank with a separate major bank. I'm lucky they didn't sue me or press charges, but at that time they thought it was not a malicious act of fraud, but rather I had gotten scammed so it makes sense why no action was taken. That's not actually true, but I'd rather them think that it is and then close my account.
Here are two real-life scenarios:
Scenario One: You go to Walmart in another town and buy a burner phone with cash. Then you walk to a cafe, log into your bank on the burner phone, and purchase a brand new pair of black Air Force 1s. Then, a day later on your main phone, you dispute the charge.
Boom, you're in the blacklist because the algorithm knew that you were up to no good, or you messed up somewhere, or some other reason on the incalculable list of reasons for why it got flagged. Risk analysis deems you a threat, you get blacklisted, and the credit bureaus write your name and SSN down somewhere.
Scenario Two: Your bank is in negative balance. You dispute that meal you ate yesterday, claiming your food never came. The algorithm knew. Risk analysis deems you a threat, you get blacklisted, and the credit bureaus write your name and SSN down somewhere.
There's no way to know if your dispute will blacklist you or not. Once you're in, it's hard to get out and your life will be very difficult from there on out.
That said, the only time you should be worried is if you're doing fraud.
And if you do happen to dispute a charge in good faith and the algorithm flags it, you can always make a call to the right people ("the right people" being your bank) and explain the situation to them.