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Torn-up Credit Card Apps Not So Safe
Maximum Prophet writes "This dude tears up a credit card application, tapes it back together, sends it in with his cell phone number and father's address, and voila, gets a credit card.
Who would have thought security at a credit card company was so lax? The company recommends that consumers "tear up" financial solicitations before throwing them away, "so thieves can't use them to assume your identity.", but according to them, "Applications that arrive in damaged form are customarily transferred to an electronic format, he said -- often by machine. So it's possible a human being never handled the taped-up application and never had the chance to spot the obvious sign of trouble." In this era where we worry so much about identity theft, this sort of thing really makes you wonder what the point really is.
"Applications that arrive in damaged form are customarily transferred to an electronic format, he said -- often by machine. So it's possible a human being never handled the taped-up application and never had the chance to spot the obvious sign of trouble."
What, a machine opened the letter, recognized it was an application (and not, say, other junkmail that got stuffed into the nearest bulk reply envelope), fed it into a scanner, then trashed the hard copy? At no point in the process does a human see it? Sounds like bullshit.
Buy a shredder. I shred every credit card offer and transfer check my current credit card company sends me. It's ridiculous the crap they send me. One of these days, a thief is going to raid my mailbox before I get home and get a credit card in my name. Oh well. At least I get to play Enron Executive with my niece.
Why do banks accept any application, even ones with errors?
Banks want you to have credit -- of course they'll accept any application as long as the name and social security number match their lookups, and your FICO score is reasonably high (although banks are now lowering standards to give out even more credit).
When a bank offers credit, it does so based on money it has (of course). Yet it is very important for the average person to understand where this "money" comes from -- especially digital money such as you'd have when you have an available credit line.
All banks that are part of the central banking system (the Federal Reserve) are required by the Federal Reserve to stick something called a money multiplier. I believe the current money multiplier is 12% or so, but it varies. This basically means that a bank must keep a reserve of that amount versus the actual money is sends out. If a bank loans out $1000, it has to keep $120 in the bank. Even if it loans out the $880 ($120 in reserves) the bank can stil say it has $1000 in demand deposits available -- even though it doesn't.
The collusion comes into place when the first bank is given $1000 by the Federal Reserve. The Federal Reserve is allowed to print new money out of thin air by creating loans against government property and future government income. This initial $1000 is placed in Bank A as available cash. Bank A holds $120 but loans the remaining $880 to Bank B which is also part of the Federal Reserve banking system. Bank A still holds a demand deposit value of $1000 which is available to be withdrawn! Bank B also has $880, but has to reserve 12% of it ($105). It then loans the rest ($775) to Bank C, but still lists $880 as its available balance of demand deposits. Bank C reserves its 12% ($93) and loans the rest ($682) to Bank D, while still listing the original $775) as its available balance. This collusion continues to go around until there is no more reserve balance available. In the end, the original $1000 the Federal Reserve created is held as a base reserve for the $9000 or so "new money" that is created.
Banks need people to accept this money in loans or in credit -- this is the way the bank actually makes money. Eventually all the loans are hopefully paid back into the system, so the bank makes a nice interest rate. On the new $1000 created, each bank wants to loan out as much as possible -- and these loans are used to buy goods, which recycles money back into the banks which can be kept as reserves to create even more money! If the bank takes $1000 and loans out $880 but receives $400 of that bank in, it can now loan out a portion of that $400 that it has in reserves.
In the long run, the system wants debt out there because it is created out of fake inter-bank loans anyway. Most of you don't even see your physical money because it doesn't exist -- there are about $600 billion dollars in circulation worldwide, but there are over $10.2 trillion dollars on the books!
And people have faith in the system.
There's a foolproof way to keep this kind of identity theft from happening to you: just make sure your FICO score is really, really low!
That way, nobody will be able to get credit in your name. And, as a bonus, it's really easy to do!
>I really loathe these pre-approved credit card ads that come with large bright "0% for six months!!!" print on the outer envelope.
Amen. The reason I opted out of receiving those was exactly the one you mentioned, that they're a security problem.
The number to stop them at least used to be 888-5OPTOUT.
Better than a shredder, ask the banks to stop sending you the applications in the first place: http://www.optoutprescreen.com/. I used to receive several per month, now I get two per year.
If humans aren't involved in the letter opening process, it's time to have some real fun...see how well their machines handle foreign substances
1) Save the return envelope.
2) Fold up a blank piece of paper with a nice wad of chewing gum/peanut butter/diaper contents/etc
3) Mail your "application"
4) ???
5) Profit
I'd guess yes, at no point in the process does a human see it.
Here's one vendor -- OPEX. This one does opening and extraction but isn't particularly fast at 17,000/hr. They have a scanning solution as well -- significantly slower but the mail goes straight from envelope to scan.
This is just what I've found in a quick search because I knew something like it existed; I'm not that familiar with the high-speed mail processing industry. I'd imagine that the technology would surprise most people.
You'd think so, wouldn't you. However, you might want to read this story about the Iranian students in 1979.
First three sentences of the fourth paragraph:
This particular story didn't say so but I read elsewhere that the students laid out the shredded documents on the floor of gymnasiums and pieced the documents back together.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
The point he was tyrying to make is that the standard advise of ripping up credit card offers is worthless if any random person can tape the pieces together and apply for credit in your name fraudulently. That's why he applied in his father's name - he put in a fradulent application and it was accepted.
I know I'm going to be more careful to shred them all, but if you still think it's useless, that's fine by me. Send all of your ripped up CC applications to me, and I'll dispose of them.
"As God is my witness, I thought turkeys could fly." A. Carlson
My wife did a few months on graveyard shift at a First Security payment processing center (before Wells Fargo assimilated them). She said those machines are *really* cool, really fast, and jam up so easily that they have dedicated staff on-hand to fix particularly nasty jams.
So if you want to put a (albeit small) dent in the productivity of the Evil Credit Card Sharks, send back those handy self addressed envelopes stuffed with their own junk mail. Be sure to fold, spindle, and mutilate the envelope, too. :)
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