phrack/issue16/5.txt

		===== Phrack Magazine presents Phrack 16 =====
			   ===== File 5 of 12 =====

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|		  The Laws Governing Credit Card Fraud			|
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|			Written by Tom Brokaw				|
|			 September 19, 1987				|
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|			Written exclusively for:			   |
|			  Phrack Magazine				 |
|									  |
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		(A Tom Brokaw/Disk Jockey Law File Production)


Introduction:
------------

     In this article, I will try to explain the laws concerning the illegal
use of credit cards.  Explained will be the Michigan legislative view on the
misuse and definition of credit cards.


Definition:
----------

     Well, Michigan Law section 157, defines a credit card as  "Any instrument
or device which is sold, issued or otherwise distributed by a business
organization identified thereon for obtaining goods, property, services or
anything of value."  A credit card holder is defined as: 1) "The person or
organization who requests a credit card and to whom or for whose benefit a
credit card is subsequently issued" or	2) "The person or organization to whom
a credit  card was  issued and	who uses a credit card whether the issuance of
the credit card was requested or not."	In other words, if the company or
individual is issued a card, once using it, they automatically agree to all
the laws and conditions that bind it.


Stealing, Removing, Retaining or Concealment:
--------------------------------------------

     Michigan Law states, that it is illegal to "steal, knowingly take or
remove a credit card from a card holder." It also states that it is wrongful
to "conceal a credit card  without the consent of the card holder."  Notice
that it doesn't say anything about carbons  or numbers acquired from BBSes,
but I think that it could be considered part of the laws governing the access
of a persons account without the knowledge of the cardholder, as described
above.


Possession with Intent to Circulate or Sell
-------------------------------------------

     The law states that it is illegal to possess or have under one's control,
or receive a credit card if his	intent is to circulate or sell the card.  It
is also illegal to deliver, circulate or sell a credit card, knowing that such
a possession, control or receipt without the cardholders consent, shall be
guilty of a FELONY.  Notice again, they say nothing about possession of
carbons or numbers directly.  It also does not clearly state what circulation
or possession is, so we can only stipulate.  All it says is that possession of
a card (material plastic) is illegal.


Fraud, forgery, material alteration, counterfeiting.
----------------------------------------------------

     However, it might not be clearly illegal to possess a carbon or CC
number.	It IS illegal to defraud  a credit card holder.   Michigan law states
that any person who, with intent to defraud, forge, materially alter or
counterfeit a credit card, shall be guilty of a felony.


Revoked or cancelled card, use with intent to defraud.
------------------------------------------------------

    This states that "Any person who knowingly and with intent to defraud for
the purpose of obtaining goods, property or services or anything of value on a
credit card which has been revoked or cancelled or reported stolen by the
issuer or issuee, has been notified of the cancellation by registered or
certified mail or by another personal service shall be fined not more than
$1,000 and not imprisoned not more than a year, or both.  However, it does not
clearly say if it is a felony or misdemeanor or civil infraction.  My guess is
that it would be dependant on the amount and means that you used and received
when  you  defraud  the	company.   Usually,  if  it is	under	$100,  it is a
misdemeanor  but if it is over $100, it is a felony.  I guess they figure that
you should know these things.


The People of The State of Michigan vs. Anderson     (possession)
------------------------------------------------

     On April 4, 1980, H. Anderson attempted to purchase a pair of pants at
Danny's Fashion Shops, in the Detroit area.  He went up to the cashier to pay
for the pants and the cashier asked him if he had permission to use the credit
card.  He said "No, I won it last night in a card game".  The guy said that I
could purchase $50 dollars worth of goods to pay back the debt.	At the same
time, he presumed the card to be a valid one and not stolen.  Well, as it
turned out it was stolen but he had no knowledge of this.  Later, he went to
court and pleased guilty of attempted possession of a credit card of another
with intent or circulate or sell the same.  At the guilty hearings, Mr.
Anderson stated that the credit card that he attempted to use had been
acquired by him in payment of a gambling debt and assumed that the person was
the owner. The trial court accepted his plea of guilty.	At the sentencing,
Mr. Anderson, denied that he had any criminal intent.  Anderson appealed the
decision stating that the court had erred by accepting his plea of guilty on
the basis of insufficient factual data.	Therefore, the trial court should not
have convicted him of attempted possession and reversed the charges.


The People of the State of Michigan vs. Willie Dockery
------------------------------------------------------

     On June 23, 1977, Willie Dockery attempted to purchase gas at a Sears gas
station	by  using  a  stolen  credit  card. The  attendant noticed  that his
driver's license  picture was  pasted on  and  notified	the police.   Dockery
stated that he had found the credit  card and the license at an intersection,
in the city of Flint.  He admitted that	he knowingly used the credit card and
driver's license without the consent of the owner but he said that he only had
purchased  gasoline  on	the  card.  It	turns	out  that  the credit card and
driver's  license was  stolen from a man, whose grocery store had been robbed.
Dockery said  that he  had no knowledge of the robbery and previous charges on
the cardwhich totalled$1,373.21.  He admitted that he did paste his picture
on the driver's license.  Butagain the court screws up, they receive evidence
that the defendant had a record of felonies dating back to when he was sixteen
and then assumed that  he was guilty on	the basis of his prior offenses.  The
judge later said that  the present  sentence could  not stand in this court so
the case was referred to another court.


Conclusion
----------

     I hope that I have given you a better understanding about the law, that
considers the illegal aspects of using credit cards.  All this information was
taken from The Michigan Compiled Laws Annotated Volume 754.157a-s and from The
Michigan Appeals Report.

In my next file I will talk about the laws concerning Check Fraud.


					     -Tom Brokaw