Debit Card Fraud Leaves Ally Bank Customers, Small Stores Reeling

Originally Posted on Ars Technica

Some are seeing charges on cards they've never activated or hardly used.

Ben Langhofer, a financial planner and single father of three in Wichita, Kansas, decided to start a side business. He had made a handbook for his family, laying out core values, a mission statement, and a constitution. He wanted to help other families put their beliefs into a real book, one they could hold and display.

So Langhofer hired web developers about two years ago and set up a website, customer relationship management system, and payment processing. On Father's Day, he launched MyFamilyHandbook.com. He's had some modest success and has spoken with larger groups about bulk orders, but business has been mostly quiet so far.

That's how Langhofer knew something was wrong on Friday, August 11, when a woman from California called about a fraudulent charge. He checked his merchant account and saw nearly 800 transactions.

"My heart, it sunk," Langhofer told Ars on Thursday. He immediately contacted his payment vendor Stripe, who he told him about card testing—a scheme in which online card thieves use tiny charges from an account to test for valid cards. Stripe said it would issue a bulk refund, Langhofer said. Knowing his payment processor was aware of the issue, he went about his weekend.

Langhofer awoke early Monday morning to a flurry of missed calls.

He said his site had attempted nearly 11,000 more transactions, each for $1, most of them initiated by email addresses minutely different from one another. Many of them involved Ally Bank cards, Langhofer said. He'd only ever had two phone calls to the forwarded number listed in his online store, but now his phone wouldn't stop ringing.

"My dad always taught me to have a good name, so this hurts," he said. "I don't have a big staff, but I have a great name in Wichita, in this state. Now my business is tied up in this, and I have no idea what's next." In text messages before an Ars Technica interview, Langhofer said the ordeal "consumed my entire week and caused more panic than I recall having in a long time."