According to prosecutors, waiters at Smith amp; Wollensky, Wolfgangs Steakhouse and other restaurants used small devices called skimmers to secretly obtain customer information from the magnetic strip of credit cards.

The skimmers were then returned to the alleged ringleader, 41-year old Luis Damian Jacas, who encoded the stolen information into fake credit cards. A network of shoppers used the fake credit cards in high-end stores including Chanel, Cartier, Hermes, Burberry, Jimmy Choo and Bloomingdales in Manhattan, Boston, Florida and Chicago.

The fraudulently purchased merchandise was typically sold at 50 percent of the retail price.

At least 50 American Express account holders were affected by the scheme that allegedly began in April last year.

Apart from Jacas, 27 other people are identified in the 172-count indictment. Seven waiters are charged with using skimming machines: Daniel Burns, Kenneth Franquiz, Peter McGuire, Jennifer Morgan, James OConnell, Sasha Scollin and Brian Torrey.

The restaurants targeted by the group included the Capital Grille and JoJo, both in Manhattan, and the Bicycle Club in New Jersey and Mortons in Stamford, Connecticut.

Eric Brahms and his wife Emily Brumfield Brahms were among those charged for being complicit customers and making regular orders to the crime ring despite knowing the goods were fraudulently acquired. According to prosecutors, the couple also acted acted as fences and sold the items online.

The investigation by Manhattan District Attorney Cyrus Vance together with the US Secret Service and New York City police is continuing. The charges were announced following the confiscation of $1 million worth of luxury watches and wine while executing search warrants last week. Authorities also seized skimming machines and $1.2 million in cash.

Every day, hardworking New Yorkers find themselves the victims of identity theft It can take often take years to have their credit restored, Vance said in a statement.

Rejected.

Why? Because while American swipe-and-sign credit cards still come with the classic magnetic strip verification system, much of the rest of the world has long moved on to chip-and-pin cards built with microchips. Virtually all of Europe, as well as many countries in Asia and South America, have embraced the chip-and-pin system.

Hence, when traveling, American credit card users find it very difficult to purchase train tickets, pay at highway and bridge toll booths, parking lots, gas stations, and similar situations where only automatic dispensing machines are available.

When consumers pay with credit cards it creates a feeling of euphoria that obscures the cost associated with the purchase, a new study from the Journal of Consumer Research finds. The report, cited by MSNBC, also found that when consumers buy items with cash they tend to focus more on the downsides of the purchase, including potential product flaws.

According to MSNBC, previous research has shown that people tend to spend more when they use a credit card instead to cash — a phenomenon known as the credit card premium .

Credit card use is widespread across the country. Indeed, as of 2010, US consumers held 609.8 million credit cards, according to a survey by the Federal Reserve Bank of Boston, cited by Creditcards.com. Thats nearly two for every American.

Many of those cards may be being used illegally, however. A new paper found that despite only 27 percent of the worlds purchases occurring within the the US, the country accounts for 47 percent of global credit card fraud, Business Insider reports.

Americans debt ballooned in the lead up to the financial crisis, with the total revolving debt increasing nearly five-fold in the two decades leading up to 2008.

Since the Great Recession though, American credit card use has become markedly more conservative. By September 2010, American credit card use had already hit an all-time low.

Truth be told, store credit cards are tempting and seem practical. Who wouldnt want to score the promotional 10% or 20% off your first purchase, especially if it saves you hundreds of dollars on your holiday shopping list.

However, store credit cards are often marketed to subprime borrowers and poor credit consumers, and typically offer high interest rates and low credit limits.

As retailers aggressively push store credit cards and consumers ramp up holiday spending, dont apply for a store credit card without knowing the facts. Here are the dos and donts of store credit cards to know before you sign on the dotted line.

1. Do calculate your store cards discount. 20% off your first purchase sounds appealing when you hear it, but calculate out how much you actually stand to save on that one-time purchase. If youre buying a $150 item, youll save about $30. Not bad, however youll then be saddled with a credit card to pay off and manage. If youre buying an $800 item, youll save $160, which makes it more worthwhile to open the card.
2. Dont forget there might be better credit cards out there. The best incentive to opening a store credit card is the major discount upon opening the credit card. Read through the terms and conditions and see what other discounts, offers, or perks the card offers. Unless you can maximize those benefits, an travel rewards card like the Capital One Venture Rewards Credit Card or cash back card like the Chase Freedom Visa is a better bet with bigger perks in the long-run.
3. Do ask about 0% APR promo offers. Some store credit cards come with a six to twelve month promotional period for 0% APR, meaning you arent charged interest on your balance for that period as long as you pay on-time monthly. This is especially useful for consumers to afford a big-ticket items without accruing extra cost. However, if you dont pay off your entire balance before the promotional period ends, you may be charged retroactive interest on the entire balance.
4. Do check the cards interest rate. Store cards have notoriously high interest rates, usually 20% or higher, compared to the average credit card interest rate of 12.3%, according to the Federal Reserve. If you plan to get a store credit card, make sure you always pay the balance in full by the end of the month or it will cost you significantly in interest. The savings from that 20% discount you received when opening the card is effectively wiped out after a few months worth of interest charges.
5. Dont apply for a store credit card, or any credit card, if youre applying for credit soon. If youre planning to take out a loan or mortgage in the next few months, you may want to wait on that credit card application. Applying for a card can knock a few points off your credit score for a few months, which can affect your chance for approval and getting the best interest rates. Also, make sure you dont apply for more than one or two store cards at a time. Several hard inquiries rack up the damage on your score.
6. Do check your credit limit. Store credit cards tend to have low credit limits around a few hundred or a thousand dollars, so its easy to run up a high balance on a low limit. Using a significant amount of that available credit can weigh down your credit score.
7. Dont get a credit card if youll be tempted to spend more. A store credit card, at its best, will offer discounts and save at the places you are already spending. At its worse, a store card will encourage you to shop more at a store you wouldnt otherwise. At that point, you may be happy youre saving 10% on your store purchases, but youre spending 100% more than you would have without the credit card.

On a final note, consumers often ask if its okay to open up a store credit card to get the promotional discount or interest-free financing, then close the card after the balance is paid. Closing a fairly recent credit card can negatively impact your credit score in a number of ways: itll reduce your available credit, affect your average age of credit lines, and may shorten your credit history.

However, if you have several other active credit cards and closing down that recent store card will keep your spending and credit health in check, it may be worthwhile to close the card down.

If youre in the market for a store credit card, try researching consumer credit card reviews first at CreditKarma.com to read cardholders opinion and feedback, and make sure to read the terms and conditions of the card before you apply.

Justine Rivero is the Credit Advisor forCreditKarma.com, a free credit management website that helps nearly 3.5 million consumers access their truly free credit score.

Data from the Reserve Bank of Indias Trends and Progress in Banking report show that the total number of outstanding credit cards issued by scheduled public, private and foreign banks in 2010-11 dropped to 18.04 million from 24.70 million during 2008-09, as card issuing banks became increasingly cautious to protect against potential delinquencies.

Private sector banks have been more cautions in issuing new credit cards and the outstanding credit card numbers have fallen from 12.18 million in 2008-09 to 9.32 million in 2010-11. Interestingly, data from the central bank also show that…

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Here are only some ways to save big money with credit cards:

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Rewards Points. Charging burgers, groceries, major appliances and even tuition will provide you with thousands of reward points that can be utilized for free vacations, including round trip airfare, car rentals and hotel rooms. Not in the mood to travel? Spend your points on gift cards for specific electronic purchases or simply cash out for some greenbacks. Heck, even holiday shopping will be a breeze if you have enough points racked up–free products are only a few clicks away. It’s all legit and free to you. 

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Free Travel Insurance. Every time you book a trip or airfare, you are offered travel insurance. It is a great idea but can cost as much as 10 percent of the trips total cost, which can add up to big money. Many credit cards offer the insurance free as long as you charge the trip to their credit card. It’s a win-win! 

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Luggage Damage/Lost Luggage. Airports don’t cover the cost of damaged suitcases or lost luggage as easily as they used to. But mutilated suitcases are no longer a potential negative on your travel budget if you have a credit card that provides insurance for your luggage and its contents if they are lost or damaged when you travel. 

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Free Extended Warranties. Many credit card companies offer a full year of free extended warranty protection on your purchase. Why pay $50-plus on extending your insurance for one year when you already get it for free? Think about all those damaged toys, computers and even your cellphone. Charge them to a credit card that offers the free warranty extension–and youre covered.

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Price Protection. Your flat-panel television purchase made in a haste can land you in the hot seat when your spouse notices you could have saved $50 by buying it at a different store or waiting for it to go on sale. Price protection offers a rebate option for those willing to send in a copy of the sales receipt, credit card statement and a sales flier. Ca-ching!     

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Purchase Security. Ever buy a cellphone and then drop it in a puddle? Or have it stolen before youve even added your friends numbers? Items bought on a credit card that are damaged by water, fire, smoke, rain, snow, etc., are repaired or replaced for free within a specified amount of days from your purchase. Purchase security also covers theft of an item charged to your card within that same amount of days. Admittedly, claim procedures are a little trickier in this area but if it saves you hundreds, the effort may be worth it.

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Emergency Travel Insurance. If you ever find yourself off the beaten path in your foreign travels and need emergency translation service, ticket replacement, medical referral, transportation or even some legal referral service, look no further than the 800 number on the back of your credit card — if you charged your trip to the credit card. Can you put a price on peace of mind?

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And finally… 

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Auto Rental Collision Damage Waiver. Renting a car inevitably brings on the hard sell for the rental companys insurance coverage. Even if you carry your own insurance, why let the claim of a rental car follow you around forever? Some credit cards, like Visa Signature, offer free insurance as long as you charge the car to their card. This bennie will save you upfront money, plus the possibility of inflated insurance premiums for the next three years.

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There are more benefits readily available to credit card users and I would love to hear your success stories. Read your fine print and share your awesome benefits.

Credit cards are easy to swipe. The purchases often don’t seem as real because you can pay them over time. There’s no “pain” of counting out bills or calculating a balance in a checkbook.

But two authors of a new study in the Journal of Consumer Research have found that credit cards are influencing not just how much we spend, but how we feel about the items we’re buying.

Their study shows that under the spell of credit cards, we are more likely to focus on the positive aspects of the purchase and not on details, such as cost and how we’re really going to use it. Ignoring those aspects can lead to overspending or buying things we don’t need.

Subjects were “primed” to think about credit or cash
In the study by Promothesh Chatterjee, assistant professor of marketing at the University of Kansas, and Randall L. Rose, chair and professor in the Moore School of Business at the University of South Carolina, test subjects were “primed” to think about either credit cards or cash by playing a series of word games.

Then they were given information about things they could buy. Those who were primed to think about credit cards were less likely than those primed for cash to remember details such as cost when they considered objects such as tablet computers, iPhones and cameras.

All too often, it doesn’t take much for us to be distracted by marketing messages, the study found.
“We do a lot of day-to-day things on autopilot and that’s where we get influenced,” Chatterjee says.

Some elements of the Chatterjee-Rose study expand on previous similar research, including studies that have shown people using credit cards or debit cards were more likely to make impulsive purchases at the grocery store, buying cookies, chips, cakes and making other unhealthy choices.

Chatterjee says previous research has also shown that just by seeing a logo for a credit card company such as MasterCard or Visa in a store window or at a register may nudge a consumer to think about items in a different way and be less concerned about cost or other negative attributes of the product.

The research could have implications for other areas, including the way social welfare payments are made, for instance. According to the National Consumer Law Center, 40 states now make unemployment payments with prepaid debit cards.

While debit cards are similar to cash in how they work, they are more similar to credit cards in the way they look. It’s possible making the payments this way could influence spending behavior, Chatterjee says.

“That’s a fruitful area to research,” he says. “It could definitely have policy implications.”
Jill Norvilitis, professor of psychology at Buffalo State College in New York, said we are conditioned early on to think of credit cards as a means to get to where you want to go. “(Credit card companies) give you the impression that that’s the life you want and so they’re teaching you to focus on those benefits,” she says.

And it doesn’t take much to get us thinking about the benefits of credit cards, she says.

“What I really liked about this study is they did four separate studies and each was a relatively simple manipulation. They didn’t do a lot to prime this cash or credit idea. And yet, they got the effects in each of the four studies.”

Psychology of abstract payments
Art Markman,  Professor of Psychology and Marketing at the University of Texas at Austin, says the study highlights what happens psychologically when payments become more abstract, as they do with credit cards.

“What happens when you think of things abstractly is you tend to focus on the overall benefits of something,” says Markman, author of “Smart Thinking, Three Essential Keys to Solve Problems, Innovate and Get Things Done,” due out in January 2012.

He gave an example of someone recommending a conference six months in advance. “You decide to go because all you’re thinking about is how much fun it would be to do this. And then the week before you go, you ask, ‘how could I have said yes to this? I have all these things to do. You’re just as busy when you say yes as you are when you go, but the difference is “you’re not thinking about all those specifics.”

The same thing is happening with credit cards, he says. “You’re thinking just about the benefit of the product and not thinking about the specifics, such as how am I going to pay for this thing and what am I actually going to use it for?”

Given consumers’ weaknesses in this area, there’s a huge opening for marketers to match their messages to your thinking at the time you’re making a purchasing decision, Markman says.

“For a marketer to make this strong association for you of paying with a credit card and buying luxury goods, what the marketer is doing is making it feel more fluent for you to make these kinds of luxury purchases with credit cards.”

Normally, in order to get that kind of an association, a consumer would have to use their own repeated experiences, but marketers are “giving you all of that experience without you having to do anything,” he says.

Marketers have this connection figured out, Chatterjee says. “Believe me, marketers know how credit cards influence behavior. We have to educate the consumer. As long as they pay an equal amount of attention to costs and benefits, that’s fine. If you are swayed only by benefits, you have to be careful.”

As credit cards continue to replace cash and checks, and mobile wallets emerge with even more ways to distance transactions from cost, consumers are faced with a cognitive burden every time they shop, Markman says, and they are essentially asked to keep track of costs in their head. Not everyone will have a problem with this, but people need to be aware of the challenge.

“It’s not that we can’t possibly manage that, it’s just more difficult to manage that,” he says.

In recent years, credit card companies have begun using RFID tags in selected cards to allow fast, contactless payments. Immediately, people began to worry about their credit card information being stolen. So someone invented RFID-blocking wallets. They claim to block transmissions from your credit cards, but what exactly are they blocking? Is it a problem? In other words, are these wallets more like TV remoteshellip;or Flowbees?

What is RFID?

RFID stands for radio frequency identification. In a nutshell, an RFID credit card has an electronic tag and antenna embedded that transmits the payment information to a reader. This same technology allows you to wave your gas card at the pump to earn rewards or drive through a tollbooth with your E-ZPass.

Imagine simply waving your card, Harry Potter style, in front of a device on the checkout counter rather than swiping it every which way through a magnetic stripe reader. Voila! Faster, easier, and no need to hand over your card.

Buthellip;if your cards vitals can be read through thin air, can you control exactly who reads it? RFID readers can be bought by anyone, cheap. As youre waving your card around, just how much should you be worrying about someone behind you – or behind the counter – secretly scanning and stealing your credit card data?

Why credit card companies like RFID

You may wonder why this technology is taking off for credit cards. Speed, convenience and, yes, security are key factors.

Jay Foley, executive director of the Identity Theft Resource Center, notes, If youve stopped and taken a look at where cards are going now – where is the card reader at the grocery store? At Kohls? At Saks Fifth Avenue? Its on your side – you, the consumer. Companies dont want their employees touching your card. And the readers are touchless – you dont have to worry about someone knowing which way to swipe, which way is up. You just wave it, and, boom, it goes.

Do you have an RFID-enabled card?

You probably can tell if your card can be used for contactless payments just by looking at it. Many of the financial institutions that issue credit cards have adopted a common symbol. It looks like a radio wave growing in the distance, says Randy Vanderhoof, executive director of the Smart Card Alliance, an industry group for businesses using smart-card technology.

While many use this symbol, its not universal; JPMorgan Chases Blink cards have a unique branded logo.

Dont have one yet? Vanderhoof notes that the popularity of cards varies by region. Its up to the merchants to decide if theyre going to accept the cards, and it will depend on whether the local financial institutions provide them. So, depending on where you live, contactless-payment cards may be old hat or still a new idea.

Are RFID chips secure?

One barrier to acceptance by consumers seems to be security concerns. Local TV stations have done stories showing how the scanners work, and raising eyebrows when in one case the news team was able to use a device to read bystanders card numbers.

So far, there have been no reported cases of identity theft using RFID readers. But Dr. Marjie Britz, a criminal justice professor at Clemson University, in South Carolina, says it is naive to assume that it hasnt happened. She points out, The vast majority of individuals who have had their identity or personal information compromised do not realize it for a significant period of time, and therefore its difficult to know when, and how, the theft occurred.

Risks are inherently limited

But Foley isnt particularly concerned by the current risk. He notes two limitations – the distance at which readers work and the data available on the credit card. Card readers work up to a distance of two to four inches. Yes, I can read someones card by picking up a scanner and walking two to four inches behind them – if I dont get punched first, Foley says with a laugh.

Then, the potential thief has a limited time to use the information, Foley explains. Thats because the transmission generates a unique code, which is discarded the next time you use the card.

Finally, RFID chips dont transmit sensitive information such as your cards security code or your address or phone number.

What about RFID-blocking wallets?

RFID-blocking wallets are an evolution of law-enforcement technology. Britz says these Faraday devices – bags, cages and wallets – act as an electromagnetic shield and are often used to protect electronic evidence. To get a peek at some of the devices used for forensics purposes, look at Faraday-Bags.coms Black Hole line.

Britz notes that these types of items, including ones for consumers, are coming down in price. ThinkGeek.coms offering runs about $20.

So should you be afraid?

First, heed Britzs observation: Many victims of identity theft dont realize it for some time. No matter how your data is stolen, you are protected by your cards zero-liability policy, mandated by the federal government, as long as you or your credit card issuer catches the suspicious activity in time. But to catch such activity, you must monitor your card activity regularly.

Still concerned about RFID tech? Britz suggests avoidance. It suffices to say that avoiding cards employing RFID technology eliminates that possibility (of identity theft) completely.

Or, you could upgrade your wallet. After all, Foley concedes, They look kinda snazzy.

The original article can be found at CardRatings.com:
Whos been scanning your credit card?

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You may love the credit cards that stuff your wallet. But as holiday season rolls around, there may be better choices, according to Card Hub, a credit card research site.

Card Hub took a look at 1,000 different credit card offers and found that a number of companies, attempting to nab a bigger share of the estimated $831 that the average consumer spends on gifts each year, are presenting too-good-to-miss offers that might suggest a switch.

I cannot recall a time when the credit card deals and offers were as lucrative as they are this holiday season, said Odysseas Papadimitriou, chief executive of Card Hub. Thinking about your holiday budget now and applying for a credit card that matches your credit score and needs can save you hundreds of dollars on holiday shopping.

What are the best cards to apply for this holiday season?

Chase Sapphire Preferred card: Provides 50,000 points as an initial rewards bonus. You can redeem those points for a $500 check or a statement credit.

Capital One Venture Rewards: Offers 2 miles for every $1 spent, which translates into 2% cash back when you use your miles to offset travel-related purchases.

Citi Platinum Select MasterCard: Offers no interest charges for balance transfers for 21 months. The catch, youve got to pay a 3% balance transfer fee. Still that works out to a niggling interest charge for anyone who is able to pay the balance off completely in the 20th month.

Citi Dividend World MasterCard: Offers 15 motnhs of no interest charges for holiday purchase and provides a $100 initial bonus. If thats not enough, you can get 5% cash back on department store clothing, electronics and toy store purchase until the end of the year. All other purchases qualify for 1% cash back.

In addition, several card companies are offering holiday promotions for existing customers.

American Express is giving 5 times rewards through the New year and offering weekly Facebook deals.

Capital one is providing bonus rewards on purchases make online through Perk Central from Nov. 25 through 28th.

Chase has a weekly holiday merchandise auctions and offers bonus rewards on Amazon.com and ultimate rewards.com purchases.

Discover is offering 5% cash back on up to $300 spent on dining, department and clothing stores, as well as bonus rewards on Amazon.com purchases and deals at Shop Discover.

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Beverly Harzog with Credit.com, a credit card comparison site, put together this list of the best reward cards: