Cashing In on Trash : Dumpster Divers Fish for Old Checks, Credit Cards and Other Pearls of Information That Can Clean You Out

Some of the people rummaging through your garbage may look like they only want a few bottles or cans to recycle, but fraud investigators say they might be getting a lot more cash from your trash.

They’re called “dumpster divers,” crooks who search your trash for discarded charge receipts and bills, brokerage statements and transaction slips, old checks--anything financial. These are gold nuggets to thieves, for they can provide enough information to launch a raid on your checking and charge accounts.

The credit card industry loses $1 billion or more a year in thefts and “trash is their No. 1 information system,” said Huntington Beach Police Detective Jeff Nelson. “You can find out a lot about someone by what they throw away.”

Coralie Reed, a retired caretaker from Long Beach, learned rubbish security the hard way. She threw out a box of checks from a closed account and wound up in a nightmare.

Ominous letters from businesses and collection agencies complaining about bad checks began arriving from all over Los Angeles and Orange counties.

After six months and $2,000 in bad checks, police arrived at Reed’s door, telling her they had arrested a woman at a La Mirada grocery store for attempting to pass one of the discarded checks.

“I still don’t know how she did it,” Reed said. “She didn’t even have an ID or anything. How could they honor those checks?”

The most sophisticated divers usually prey on the trash of businesses, according to Beverly Hills Police Detective Paul Edholm, who is considered a “garbagology” expert. (He’s also technical adviser for the film “Mystery Date,” in which boy meets girl by going through her garbage.)

“Normally, trash divers usually go behind places like restaurants and car rental businesses looking for credit card receipts and extra copies of rental contracts,” he said.

Beverly Hills is unique in that it has an ordinance making going through someone’s trash a violation.

“You are what you throw away,” said Edholm.

Anaheim Police Detective Werner Raes, who serves on the board of the California Check Investigators Assn., says the dumpster-diving racket is a lot more organized and dangerous than it may appear.

“It’s big business in trash cans,” Raes said. “We’re starting to hear that they’re actually fighting and shooting at each other over territory.” He added that there are enforcers in the dumpster-diving underground who strong-arm other divers away from the trash cans on their turf.

Members of four organized dumpster-diving rings have been arrested by Anaheim police in the last two years, Raes said.

Usually the ringleaders pay drug addicts to collect bags of discarded checks and credit card information, Raes said.

The divers typically bring the bags to a large hotel suite, where they dump the contents into the bathtub and sort it, gluing together pieces of ripped financial information. “We’ve seen bathtubs literally overflowing with these checks,” Raes said.

“Mules” are provided with phony identification to match the credit cards and checks obtained by the divers and are sent to liquor stores and markets to cash in, Raes said.

But Detective Tim Watkins of the Inglewood Police Department thinks trashdiving may be on the decline in his city because criminals have discovered cleaner ways to get the same information.

“It’s easier for crooks to find someone (who is dishonest) inside a car rental agency, travel agency or airline ticket office who has access to credit information,” he said.

“The number is the key. You’ve got to protect that number,” said Jim Jarrett, Citibank’s vice president for security.

A diver’s favorite find nowadays is a pre-approved credit card application, according to Maria Rullo of Citibank. The diver mails the application back with a change of address indicated and waits at that address for the credit card to arrive. He can then charge under the name of a person who never actually applied for the card.

Credit card companies are beginning to check change-of-address requests to combat the problem, but they warn that tons of these pre-approved applications are still being discarded as junk mail.

“We’ve known about the phenomenon for quite some time,” said Albert Coscia, a spokesman for Visa, U.S.A. “Education is the first line of defense.”

Visa, which has 18,000 banks issuing its cards, is battling to stay one step ahead of credit card frauds, from the dumpster diver to the mail crook.

“We’re competitive with other credit card companies,” Coscia said, “but we work together on this.” MasterCard and Visa together lost about $624 million to credit card fraud in 1991, according to Citibank.

What to do?

Papers containing any kind of financial information should be shredded, burned or torn into tiny bits, advises Jarrett. If you’re throwing away lots of financial information at once, dispose of half in one trash bag, half in another, then set them out as close to collection time as possible.

Banks, with their wealth of financial information, also have learned about the dumpster diver through experience.

“At one time, it was a big problem,” said one banker. “Now we use shredders and other precautions, so it’s not coming from the bank anymore.”

But even if you burn every financial document, you can still be victimized, for according to postal inspector Pamela Prince, some dumpster divers daylight as mailbox thieves.

Outgoing bills should never be left in your mailbox for the postal carrier, Prince said. Such mail should be hand-delivered to the carrier or dropped into a Postal Service mailbox. Also, she said, incoming mail should not be left in an unlocked mailbox. “If you’re dangling the bait out there, somebody’s going to bite it . . . maybe a shark.”

Seal Beach resident Earl Hardy was bitten by that shark six months ago, when his new MasterCard fell into the hands of a mail crook, who promptly made $8,000 worth of charges in Georgia. After making sworn statements that the charges were unauthorized, Hardy was let off the hook.

But such mail fraud is so common in some areas that credit card companies are mailing credit cards that are, in effect, no good. The card is not activated until the customer receives it and calls the specified toll-free telephone number.

“We’re involved in a constant fight, and we take it very seriously,” Coscia said.

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Writer Susan Jaques contributed to this story.