AP
A witness who requested to be referred to as "Mr. W." testifies before the Senate Special Committee on Aging about how telephone con artists, one posing as his grandson and one as a policeman, persuaded him to send thousands of dollars to them via MoneyPak cards purchased at Walmart, on Capitol Hill July 16.
The fraud revolves around prepaid debit cards called MoneyPaks sold by the Green Dot Corporation, used by people who don't have access to a traditional bank account. Because money transfers using the 14-digit access code on the back of each card are hard to trace, the card has become a favorite among scammers.
The thefts follow similar patterns. In the case of 86-year-old Dorit Austin, the fraudsters used the false identity of a prominent
For Dominican Republic immigrant Juan de los Santos, the scam began with a phone call from someone pretending to be from Con Edison's billing department, reported New York Daily News. He told Santos they'd shut off his electricity unless he immediately purchased three $500 prepaid MoneyPak cards at the store and gave him the 14-digit access code for those cards.
"They're targeting our most vulnerable communities, our elderly and our new immigrant communities," NYPD Inspector James Klein said recently, according to the Daily News.
AP
The MoneyPak prepaid debit card enables people to shop anywhere PayPal is accepted without the need for a bank account or credit card.
Scammers can then transfer the stolen money to their own prepaid debit cards. Americans reported the loss of $42.86 million from scams related to prepaid products in 2013, The Times reported. But the true number is expected by experts to be higher because some victims don't report incidents due to embarrassment or the belief the thieves won't be caught.
Amid the surge of reported cases, Green Dot plans to eventually replace the MoneyPak and its problematic 14-digit access code with a new electronic cash-transfer system in stores. But consumer advocates are concerned that thieves will simply switch to other less popular prepaid card companies offering similar cash-transfer products.