Credit Card Fraud - 18 U.S.C. § 1029

Review of Federal Credit Card and Debit Card Fraud Laws and Defenses

The vast majority of credit card fraud cases are prosecuted under state laws and courts, but they can also be charged as a federal crime under 18 U.S.C. § 1029.

Credit card fraud occurs in many ways and several federal statutes can be used by a prosecutor to indict someone who has violated federal laws.

Frequently, credit card fraud cases include identity theft to acquire credit cards in another person's name, submission of fraudulent credit card applications, use of a lost or stolen credit card, use of skimmers at an Automatic Teller Machine (ATM), creating fake credit card, or stealing mail to get cardholder personal information.

18 U.S.C. § 1029 is one statute used by prosecutors to file charges for federal credit card fraud.

Technology also plays a role in someone committing commit credit card fraud, such as intercepting transactions, hacking devices, sending “phishing” emails to credit card owners, installing malware on personal computers, and computer hacking to get access to credit card databases.

In 1988, credit cards became one of the most common forms of payment, with nearly two-thirds of American households owning one.

Today you can do more with credit cards than most people of the era imagined. Customers can enter their credit card numbers into online payment forms.

They can electronically transfer cash via payment applications like Venmo and Cash App, and they can tap, swipe, and insert their cards into an ever-changing array of card readers. 

The increase in payment options has also increased the types of activities the law considers credit and debit card fraud.

What used to involve the physical theft of someone's card has become a much more sophisticated crime involving phishing and skimming schemes.

To get a better understanding of this ever-changing landscape, our Los Angeles criminal defense lawyers will explain what you need to know about federal credit and debit card fraud.

Types of Credit Card and Debit Card Fraud 

Generally, credit card and debit card fraud are broad terms meant to explain the crime of using a credit or bank account to buy goods or services to evade payment.

However, federal law prohibits several activities that fall under those definitions. These activities include:

• using a consumer's credit or debit card without their permission;
• fraudulently obtaining, taking, using, selling, buying, or forging credit or debit card information;
• phishing or using digital tactics to steal login credentials and credit card numbers;
• using a credit or debit card knowing that it is revoked, expired, or lacks sufficient funds;
• selling goods or services knowing the buyer made their purchase using a credit or debit card obtained illegally;
• opening a credit or debit card account with stolen information;
• using a fake or counterfeit credit or debit card;
• gift card skimming; and
• recording and using unsold gift card numbers.

Connection with Access Devices

Federal prosecutors frequently charge someone in credit card fraud cases using 18 U.S.C. § 1029 that describe fraud and related activity related to access devices. 

It's a felony crime to produce, use, or traffic in counterfeit access devices or unauthorized access devices, which include credit cards, debit cards, and gift cards.

Federal credit card fraud is often called access device fraud. Under 18 U.S.C. § 1029, it is a federal crime to knowingly, with an intent to defraud, the following:

• using or trafficking counterfeit access devices;
• using, trafficking, or possessing a scanning receiver or modified instruments to obtain use of telecommunications services;
• possession or trafficking any device making equipment;
• possession of 15 or more counterfeit devices;
• use of hardware or software to modify credit card instruments;
• solicit somebody for offering or selling a fraudulent access device.

Federal prosecutors often use 18 U.S.C. § 1028A aggravated identity theft charges when someone uses, transfers, or has possession of the identification of another person.

A defendant can still be charged with violating 18 U.S.C. § 1029 even if they never made any actual fraudulent transaction, but they would have to have unlawfully possessed 15 or more credit cards.

Federal fraud crimes primarily fall under chapter 47 of the federal code. However, prosecutors most commonly charge credit card and debit card fraud under three statutes, including:

• 18 U.S.C. § 1028A - aggravated identity theft,
• 18 U.S.C. § 1029 - access device fraud,
• 15 U.S.C. § 1644 – fraudulent use of credit cards,

18 U.S.C. § 1028A - Aggravated Identity Theft

A person is guilty of aggravated identity theft if they use, transfer, or possess the identifying information of another in connection with certain federal offenses. These offenses include any crime from Chapter 47 and Chapter 67 of the criminal code and Chapter 63 offenses that include mail fraud, bank fraud, and wire fraud.

Federal prosecutors prefer to prosecute offenders under aggravated identity theft instead of identity theft (18 U.S.C. §1028) because it carries a mandatory two-year sentence that one must serve consecutively to the punishment for any other conviction.

This penalty far exceeds that available under the standard identity theft law. 

18 U.S.C. § 1029 - Access Device Fraud

As noted above, 18 U.S.C. § 1029 makes it illegal to produce, use, or traffic in counterfeit or unauthorized access devices.

Access devices include credit cards, debit cards, and gift cards. Possible penalties for a conviction under this statute include 10 to 15 years in prison, forfeiture of any money or items obtained illegally, possible restitution, and a fine of up to $250,000.

15 U.S.C. § 1693n - Debit Card Fraud

15 U.S.C. § 1693n specifically makes it illegal to use, transport, attempt, or conspire to transport a counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently obtained debit instrument.

A debit instrument includes a debit card, code, or any other device used to make an electronic fund transfer. The penalties for violating this statute are a fine of up to $10,000, imprisonment for up to 10 years, or both. 

Related Fraud Statutes

In addition to the most common charges, prosecutors charge debit and credit card fraud under several other federal laws, including:

• 18 U.S.C. § 1341 - mail fraud,
• 18 U.S.C. § 1343 - wire fraud,
• 18 U.S.C. § 371 - conspiracy,
• 18 U.S.C. § 1344 - bank fraud,
• 18 U.S.C. § 1956 – money laundering,
• 18 U.S.C. § 1037 – email fraud,
• 18 U.S.C. § 2325 - telemarketing fraud.

Defenses to Credit and Debit Card Fraud

Credit card and debit card fraud are theft offenses. Like other theft offenses, there are several defenses available if you are charged with these crimes.

If you, too, were a victim of identity theft, you can potentially demonstrate that you were not the person who committed the theft offense.

If you believed you were authorized to use a credit or debit card, you might be able to show that you did not intend to commit a theft.

We can use several different defense strategies against credit or debit card fraud charges.

If you committed an unlawful act defined under U.S.C. § 1029 but didn't have a specific intent to defraud, then you might be able to avoid a conviction.

For example, maybe someone gave you stolen gift cards, but you didn't know they were stolen. Recall that a federal prosecutor must be able to prove you acted knowingly, willingly, and with an intent to defraud.

To be convicted of federal credit card fraud, it has to be connected to interstate or foreign commerce.

For instance, perhaps you have been accused of making an online purchase using another person's credit card, but the transaction occurred from an online retailer in the same state where you live.

In this example, you could face state-level credit card fraud charges, but it would not be filed as a federal offense because the transaction did not cross state lines.  

Finally, if someone coerced you into using a stolen card or set you up through an entrapment scheme, you also might have a viable defense to these theft offenses.

Eisner Gorin LLP is based in Los Angeles County and you can contact our law firm for an initial consultation by calling (877) 781-1570 or filling out our contact form here.