Federal Credit Card Fraud | 18 U.S. Code 1029

Federal Credit Card Fraud Laws - 18 U.S. Code § 1029

While individual states have laws to address credit card fraud, violations involving substantial amounts of money or those that cross state or international boundaries may fall under federal jurisdiction.

When a credit card fraud case falls under federal jurisdiction, the penalties can be significantly more severe than those under state law. This underscores the seriousness with which the federal system treats such crimes.

Federal Credit Card Fraud - 18 U.S. Code 1029

18 U.S.C. 1029, federal credit card fraud law, makes it a crime to use or traffic in counterfeit access devices that cross state lines.

Fraudulent activity related to credit cards and other access devices is generally prosecuted under Title 18, U.S. Code, Section 1029. If you're convicted under this statute, depending on the specific activity, you could face 10 years or more in federal prison.

Just about any unauthorized use of a credit card can be prosecuted as credit card fraud. Most cases are charged under state laws, but credit card fraud is often prosecuted as a federal crime under 18 U.S.C. 1029.

With modern technology, credit card information is now readily accessible, resulting in a significant increase in credit card fraud cases. Credit card fraud occurs in various forms, and several federal statutes are used to prosecute those suspected of violating federal credit card laws.

While there has been an increase in the number of credit card phishing or skimming schemes, a sharp rise in credit card fraud cases has also made headlines. While collecting personal information from victims with a credit card skimmer is one form of credit card fraud, there are many other ways to violate credit card fraud laws.

An example of credit card fraud includes using identity theft to obtain credit cards in someone else's name, using a lost or stolen credit card, using skimmers installed on gas pumps or ATMs, submitting fake credit card applications, creating fraudulent credit cards, and stealing mail to obtain cardholder information.

Some perpetrators are using advanced technology to commit credit card fraud.

This includes intercepting credit card transactions over unsecured networks, hacking devices on online retailer websites, sending "phishing" emails to credit card owners, creating fake websites to trick people into submitting credit card information, installing malware on personal computers, and gaining access to credit card databases through computer hacking..

What Constitutes an Access Device?

Under federal law, the term "access device" refers to any device that allows someone to obtain money, goods, services, or other valuable items. This includes both physical items, such as credit cards, and digital or electronic information. Examples include any of the following:

Cards or account information: Credit cards, debit cards, or gift cards.
Codes: PINs, passwords, or access codes for online banking systems or accounts.
Telecommunications identifiers: These include electronic serial numbers, mobile identification numbers, and other identifiers related to telecommunications. These are used to identify and connect devices in a telecommunications network.
Other electronic credentials: Tokens or instruments that enable access to bank accounts or payment systems.

The broad interpretation of "access device" under federal law ensures that criminal activity involving both tangible and intangible means of unauthorized access is comprehensively covered.

A federal statute often used to prosecute federal credit card fraud cases is 18 U.S.C. 1028A, which pertains to aggravated identity theft. Under federal identity theft laws, it's a felony crime to use, transfer, or possess by any means the identification of another person.

Prohibited Activities for Section 1029

The statute lists a wide range of offenses involving access devices, all of which require criminal intent, specifically an intent to defraud. Below are examples of prohibited activities:

Producing or trafficking in counterfeit access devices: Any activity involving the creation, distribution, or use of fake or altered access devices is prohibited.
Using unauthorized access devices: Using an access device that doesn't belong to you (e.g., a stolen credit card) to obtain goods, services, or anything of value.
Possessing counterfeit or unauthorized access devices: Possessing 15 or more counterfeit or unauthorized access devices is a federal crime, even if they have not been used.
Using device-making equipment: Possession of equipment meant to create access devices with the intent to defraud.
Soliciting others for access device fraud: Offering stolen access devices or selling information related to such devices (like account credentials).
Tampering with telecommunications equipment: Modifying hardware or software to intercept calls or gain unauthorized access to telecommunications services is explicitly prohibited under this law.

Other violations are tied to sophisticated actions, such as altering telecommunications identifying information or submitting false records tied to transactions using stolen credit cards.

Definitions of Key Terms

Title 18 U.S. Code 1029, fraud and related activity in connection with access devices, has several definitions for some key terms, such as the following:

The term "access device" means any card, plate, code, account number, electronic serial number, mobile identification number, personal identification number, or other telecommunications service, equipment, or instrument identifier, or other means of account access that can be used, alone or in conjunction with another access device, to obtain money, goods, services, or anything of value, or used to initiate a transfer of funds.
The term "counterfeit access device" means any access device that is counterfeit, fictitious, altered, or forged, or an identifiable component of an access device or a counterfeit access device.
The term "unauthorized access device" means any access device that is lost, stolen, expired, revoked, canceled, or obtained with intent to defraud.
The term "produce" includes design, alter, authenticate, duplicate, or assemble.
The term "traffic" means transfer, or otherwise dispose of, to another, or obtain control of with intent to transfer or dispose of.
The term "device-making equipment" means any equipment, mechanism, or impression designed or primarily used for making an access device or a counterfeit access device.
The term "credit card system member" means a financial institution or other entity that is a member of a credit card system, including an entity, whether affiliated with or identical to the credit card issuer, that is the sole member of a credit card system.
The term "scanning receiver" means a device or apparatus that can be used to intercept a wire or electronic communication in violation of chapter 119 or to intercept an electronic serial number, mobile identification number, or other identifier of any telecommunications service, equipment, or instrument.

What Are Related Federal Laws?

18 U.S. Code Chapter 47, Fraud and False Statements, has several related federal laws, including the following:

18 U.S.C. 1001 - Statements or entries generally.
18 U.S.C. 1002 - Possession of false papers to defraud the United States.
18 U.S.C. 1003 - Demands against the United States.
18 U.S.C. 1004 - Certification of checks.
18 U.S.C. 1005 - Bank entries, reports, and transactions.
18 U.S.C. 1006 - Federal credit institution entries, reports, and transactions.
18 U.S.C. 1007 - Federal Deposit Insurance Corporation transactions.
18 U.S.C. 1010 - Department of Housing and Urban Development and Federal Housing Administration transactions.
18 U.S.C. 1011 - Federal land bank mortgage transactions.
18 U.S.C. 1012 - Department of Housing and Urban Development transactions.
18 U.S.C. 1013 - Farm loan bonds and credit bank debentures.
18 U.S.C. 1014 - Loan and credit applications, generally; renewals and discounts; crop insurance.
18 U.S.C. 1015 - Naturalization, citizenship, or alien registry.
18 U.S.C. 1016 - Acknowledgment of appearance or oath.
18 U.S.C. 1017 - Government seals wrongfully used and instruments wrongfully sealed.
18 U.S.C. 1018 - Official certificates or writings.
18 U.S.C. 1019 - Certificates by consular officers.
18 U.S.C. 1020 - Highway projects.
18 U.S.C. 1021 - Title records.
18 U.S.C. 1022 - Delivery of certificate, voucher, or receipt for military or naval property.
18 U.S.C. 1023 - Insufficient delivery of money or property for military or naval service.
18 U.S.C. 1024 - Purchase or receipt of military, naval, or veteran facilities property.
18 U.S.C. 1025 - False pretenses on high seas and other waters.
18 U.S.C. 1026 - Compromise, adjustment, or cancellation of farm indebtedness.
18 U.S.C. 1027 - False statements and concealment of facts in relation to documents required by the Employee Retirement Income Security Act of 1974.
18 U.S.C. 1028 - Fraud and related activity in connection with identification documents, authentication features, and information.
18 U.S.C. 1028A - Aggravated identity theft.
18 U.S.C. 1029 - Fraud and related activity in connection with access devices.
18 U.S.C. 1030 - Fraud and related activity in connection with computers.
18 U.S.C. 1031 - Major fraud against the United States.
18 U.S.C. 1032 - Concealment of assets from a conservator, receiver, or liquidating agent.
18 U.S.C. 1033 - Crimes by or affecting persons engaged in the business of insurance whose activities affect interstate commerce.
18 U.S.C. 1034 - Civil penalties and injunctions for violations of section 1033.
18 U.S.C. 1035 - False statements relating to health care matters.
18 U.S.C. 1036 - Entry by false pretenses to any real property, vessel, or aircraft of the U.S. or secure area of any airport or seaport.
18 U.S.C. 1037 - Fraud and related activity in connection with electronic mail.
18 U.S.C. 1038 - False information and hoaxes.
18 U.S.C. 1039 - Fraud and related activity in connection with obtaining confidential phone records information of a covered entity.
18 U.S.C. 1040 - Fraud in connection with major disaster or emergency benefits.

Penalties for Violating Section 1029

The penalties for violating this statute vary depending on the specific offense, the value obtained by the fraud, and whether the accused has prior convictions. Here is a general breakdown:

First-Time Violations: For an initial offense, penalties can include a fine and/or imprisonment for up to 10 years. This applies to crimes such as possession of unauthorized access devices or simple fraud that do not involve aggravating circumstances.
Serious Violations: Crimes involving significant monetary losses, extensive possession of counterfeit devices, or device-making equipment can result in imprisonment for up to 15 years, along with fines.
Repeat Offenses: Individuals with prior convictions face even harsher consequences, including up to 20 years in prison.
Forfeiture of Proceeds: Property or assets used to commit the crime or derived from the proceeds of the crime may be seized by the government.

Common Legal Defenses

Being accused of a crime under U.S.C. 1029 is serious, but a skilled federal criminal defense attorney can implement certain defenses to counter the charges. These include, but are not limited to:

Lack of Intent to Defraud: Intent is a key element of the crime. If your attorney can show that you had no intention to defraud (e.g., accidental use of an access device you didn't know was unauthorized), this may serve as a defense.
Lack of Knowledge: Your attorney may argue that you were unaware of the criminal nature of your actions. For instance, you may have unknowingly received access devices from others who engaged in illegal activity.
Improper Search and Seizure: If investigators violate the Fourth Amendment by conducting unlawful searches or seizing evidence without proper warrants, any evidence obtained in this manner may be deemed inadmissible, which can weaken the prosecution's case or potentially lead to the dismissal of charges.
Duress: If you can show you were coerced into participating in the crime through threats or other forms of pressure, you may have a valid duress defense.
Corporate Authorization or Ambiguity: Sometimes, activities that appear questionable (such as modifying telecommunications equipment) may be permitted as part of legitimate corporate security measures. Clear documentation can serve as a defense.

For more information, contact our federal criminal defense law firm, Eisner Gorin LLP, based in Los Angeles, California.

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