Credit Card Fraud Costs $720 Million : Crime: That was the figure for losses in the U.S. last year. Thieves are becoming bolder and more sophisticated.

For Rebecca Ginther, it began as a phone call from a gift catalogue business about a $500 order she never made. Then she got a bill from another company for $230 worth of grass skirts and other party gear.

“I don’t know what the market price of grass skirts is, but that was another surprise,” said Ginther.

The mailing address on the first order wasn’t hers, and the phone number listed on the party supply bill led to an answering machine.

Ginther was among thousands of law-abiding Americans increasingly touched by the world of credit card fraud. Someone Ginther had never met was using her name and card number account information to charge up a storm.

These days, people use credit cards to pay for just about anything from gas at the pump to merchandise over the phone. As the use and popularity of credit cards has grown, so has the sophistication and brashness of criminal abuse.

The RAM Research Corp., a Frederick, Md.-based concern that compiles statistics on credit cards, estimates that U.S. losses in the use of four major credit cards--Visa, MasterCard, Discover and Optima--rose from $125 million in 1983 to $720 million last year.

Global losses from credit card fraud are much higher, though exact figures aren’t known. But just for Visa and MasterCard alone, losses due to various scams totaled $1.18 billion in 1992 worldwide, company figures show.

Another trend noticed by law officers: the Midwest, with its abundance of friendly towns, has become a popular venue for outsiders to commit credit card crime because they can get away with it.

Douglas Buchholz, a special agent in charge of the Secret Service in Kansas City, said credit card thieves from densely populated areas like New York, California and Florida like to roam the Midwest.

Like modern-day Dillingers or Bonnies and Clydes, they move from town to town, city to city, one step ahead of the law.

“It’s the old phenomenon of high concentration, high visibility and low concentration, low visibility,” said Bill Noonan, senior vice president of Credit Systems Inc., a processor for MasterCard and Visa transactions in the Midwest.

Still, not every credit card crime goes unpunished. Last year in Kansas City, Mo., for example, police arrested two women believed to be part of a card fraud scheme operating out of the Los Angeles area. The pair went on a two-day, $19,000-spending spree with false driver’s licenses and seven counterfeit cards. Both pleaded guilty and were sentenced to prison terms.

In a more recent bust, a couple from California were arrested for using counterfeit cards to rent a car and get cash advances in Kansas City. Both pleaded guilty last spring and served jail time.

Many cases, though, are never prosecuted. Ginther, who canceled her credit card after getting the suspicious phone call and bill, said the bank that issued her card won’t pursue a case if the cost exceeds the fraud amount.

“Many of the smaller amounts are never caught,” Buchholz said. “The company that issues the card must often swallow the cost.”

Card holders may be liable for up to $50 if their cards are used fraudulently. This might seem a minor problem, but canceling and replacing the card and clearing up a credit report can be a hassle.

Further, financial institutions that absorb the loss often pass the cost on to consumers. This partly explains why credit card interest rates, while they have eased in the past few years, remain substantially higher than most loans.

But credit card issuers aren’t standing by idly while thieves reap millions from their trade. Visa, for example, rolled out a new technology worldwide in April that checks a card’s magnetic stripe for alterations. Visa says the improvement should help prevent $20 million in counterfeit losses this year.

Others are improving identification safeguards to foil imposters using stolen cards. Citibank, for example, began digitally imprinting a customer’s photograph on its credit cards this year.

Still, that doesn’t mean credit cards are necessarily less vulnerable to abuse.

“People think they’re safe going on vacation with $20 in their pocket and three credit cards rather than taking $1,000 in cash. But it’s no safer,” said Chip Buland, a Dallas-based investigator for Citibank, the nation’s leading issuer of credit cards.

Emily Tennyson of Detroit learned that lesson in June when she got a $76 credit card bill from Negril Palm Beach Club in Jamaica.

“At first I couldn’t figure out where that came from,” she said. Then she remembered a family dinner at the restaurant during a vacation last November. Someone at the restaurant, rifling through the garbage, had found a carbon copy of Tennyson’s credit card bill and used the number fraudulently.

An unscrupulous employee who saves transaction carbons is just one kind of credit card crook. Besides outright thieves and counterfeiters, there are “dumpster divers,” who search garbage bins for carbons or receipts; and “shoulder skimmers,” who get the number while glancing over the shoulder of someone with a credit card in view.

“At some gas stations, all people have to do is run their card through a machine, and then they dump the receipt,” Buland said. “Someone else can easily pick it up.”

Some thieves use account numbers to impersonate cardholders and request new copies of a card. The gutsier thieves apply for new cards with purloined personal information from other people’s lives.

Buland said those “personal identifiers” aren’t too difficult for seasoned thieves to get: They search trash cans for discarded mail, lift new mail right from the box, or steal wallets or personal documents that have the needed information.

Serious credit thieves can make their own cards if they have a magnetic encoder, a computer and an embossing machine--technology readily available at hospitals and universities with machines that scan personal identification.

Noonan said that is the method of choice for sophisticated fraud rings, which melt down a credit card, re-form the numbers and transfer stolen account information onto a magnetic strip.

A close inspection can sometimes reveal that a card has been re-embossed or doctored. In some cases, for example, the original numbers remain visible under the reformed plastic, and the card looks slightly distorted.

But Noonan said some counterfeit cards are so well-made, their flaws can barely be detected.

“Being diligent is all you can do,” he said.