Q: How can thieves steal a brand-new credit card that I’ve never used?
A: Anyone with a debit or credit card has likely experienced the unsettling notification of a fraudulent transaction, which leads to them questioning themselves what they did to allow it to happen.
The natural assumption is that a recent transaction with a compromised retailer or an unscrupulous employee used a card skimmer to capture the card details.
Many retailers or restaurants are wrongly accused of being responsible, because the notification of a fraudulent transaction came right after the transaction with them.
Your situation, where the card was never used, clearly shows why jumping to conclusions about a recent transaction can be misguided.
Massive guessing attacks
There’s a form of “card cracking” that uses computers and online bots to guess your card number, expiration date, or the three-digit CVV (Card Verification Value) on the back.
Let’s start with the 16-digit card number, which may look like a complicated thing to guess — but thieves don’t need to guess all the numbers.
The first six numbers signify the card network and the issuing bank, which is clearly explained by Forbes. Look at your credit cards and you’ll see that if it’s a Visa card, it starts with a 4. Mastercard starts with a 5 and American Express starts with a 3.
Since the cyber thieves know which numbers are standard and which ones need to be guessed, they set up large online bots that can submit small transactions to thousands of e-commerce websites with the guessed numbers to see which ones are accepted.
This is why you often hear of a massive fraud incident that only targeted customers of a certain bank.
Another way they perform their guesses is by compromising a less-secure credit card processing system, which gives them the ability to run thousands of transactions per second to quickly discover legitimate card numbers, etc.
Known credit card numbers can also be purchased from the dark web, which bypasses the need to guess them at all.
Once they determine legitimate card numbers, the rest is quite simple from a math standpoint.
The expiration date is one of the easiest to guess, since the date is only up to five years, or 60 different values. Your three-digit CVV only has 1,000 possible combinations, which is nothing when you consider bots can submit thousands of transactions in a very short period of time.
I recently chimed in on a news story from Arizona where a large number of Wells Fargo customers (including a close relative) were alerted to an attempt at a fraudulent transaction that had the incorrect expiration date.
A small computer shop in Alabama was used to attempt to process 560,000 transactions in the middle of the night. Many of the transactions being rejected because of an incorrect expiration date.
The thieves clearly acquired a list of valid credit card numbers of Wells Fargo customers in the Phoenix area, and used the credit card processor for the small shop in Alabama to execute their massive guessing scheme.
Until the credit card industry changes its current methods, this very effective method of card cracking will continue to be a nuisance to us all.