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Protect your bank account from strip club scams

​A news headline reads: Strip Club Scam Stings Reservist for $25,000. Bank of America Refuses Liability.

It’s a classic and increasingly common scam: You go to a night club. You order a few drinks. Some pretty girls sidle up to you and you buy them a few drinks, too. And when you leave, you’re presented with a ridiculously expensive bill for hundreds of dollars.

If you don’t pay it, of course, the club will call the police and you’ll be arrested for a dine and dash – the last thing you need when you’re on leave from Afghanistan, or if you’re on TDY and you need to be at work the next day.

Scammed by an Athens Club

Well, that’s what happened to this service member, John McDevitt, a U.S. Army Reserve member from Clayton, New York.

According to this report, McDevitt took two weeks of leave from Afghanistan in 2010, and went to Athens, Greece. He went to a club called the Palia Platka, and – he says – ordered a couple of beers. When he tried to leave, the club employees confronted him with a bill for 600 euros. Yes, the euro hasn’t been doing well. But that’s still a lot of money for a couple of beers for one person.

Not wanting trouble, he presented his Bank of America debit card, signed the slip, paid the 600 euros, and left.

According to McDevitt, the club then turned around and made over $25,000 worth of bogus charges to his debit card. And since it was to his debit card, rather than a credit card, McDevitt, and not the Bank of America, was out the money.

Then he goes back to Afghanistan and goes back to work. He says he checked his account two weeks later and noticed the fraudulent activity – six charges in all, between $2,058.66 and $6,780.66 each, over the next few days.

He reported the fraudulent activity to Bank of America. But Bank of America said it contacted the merchant and determined that in their view, the claim was not fraudulent. According to news reports, the merchant did present a signed slip for at least one transaction. Bank of America informed McDevitt that the merchant presented the card imprint (meaning that they have evidence that the card was present), and indicated multiple signed sales drafts.

As a result, the bank docked the provisional refund they granted McDevitt while the claim was under investigation. McDevitt is being held liable for what he claims is fraudulent activity.

This is not an uncommon claim at nightclubs and strip clubs run by organized crime. In fact, police have noticed a similar modus operandi at eastern European-owned nightclubs and fake nightclubs in Hollywood, Florida and Miami.

From the Miami New Times blog:

    Federal prosecutors charged seventeen people today in the scam, which hinged on lovely Eastern European "Bar Girls” -- or "B-Girls" -- luring out-of-town businessmen and tourists from legit clubs to the gang's "private establishments."

    Here's how the incredible scheme worked, the feds say.

    The gang set up at least six fake clubs: Caviar Beach and Stars Lounge, both at 643 Washington Ave.; a room inside Club Moreno at 1341 Washington Ave.; a room inside of Nowhere Bar at 653 Washington Ave.; Steel Toast at 758 Washington Ave.; and the Tangia Club at 841 Washington Ave.

    They also shipped in numerous B-Girls from Eastern Europe and rented them apartments around South Beach. The gang's bouncers, meanwhile, prevented anyone from entering the clubs except for marks accompanied by B-Girls.

    Once inside, bartenders working for the gang would rack up tens of thousands of dollars on the men's credit cards and sometimes forge their signatures.

Service members are easy marks for this scam. They are often far from home, in other countries, with a hard deadline on when they have to be back. Criminals who run these establishments know they will do nearly anything to avoid being arrested under “innkeeper” laws.

Another variant of the scam involves the club manager getting photographs of married men usually out-of-town businessmen - with the girls, and blackmailing the patron into forking over the money.

Normally, you only have $50 worth of liability on a fraudulent credit card transaction, by federal law – provided you report the fraud to your financial institution in a timely manner.

For its part, your card issuing bank will contact the merchant. If the merchant can demonstrate that the charge was legit, though, you lose.

Defensive Tips

Limit your clubbing activities to reputable establishments – with assets that are potentially collectible if it came to a lawsuit. The owners should have something to lose if they are guilty of theft. However, if you are in a foreign country, you will have a very hard time pursuing them.

  • Don’t take a mixed drink from someone you don’t know in these places. Drink beers you can open yourself. One variant of the scam is to drug the patron so he has no idea what he’s signing.

  • Don’t leave a buy-me-drink-joe-girl alone with your drink for a second. (Female service members, this is good advice to follow in any club!)

  • Never use a debit card to pay in these establishments. If you use a debit card, the bank will have your money. If you use a credit card, at least you aren’t out the cash while the bank investigates – and then the bank will have its own difficulties collecting if they wrongly deny your legitimate fraud claim.

  • If you use plastic, only use card-swipe transactions. This puts a date-time stamp on the transaction. This way, the merchant cannot later claim you were there on subsequent nights. They will not have a card swipe placing your card at the venue on subsequent nights.

    Note that in the McDevitt case, the bank made reference in its letter to multiple card imprints. This means that the club owners took a carbon paper imprint of the card. This should be a red flag. It is a simple matter for a criminal to take your card from one purchase, and take several carbon paper imprints. Even dozens. And then have you sign one, and then forge your signature on the others.

    It seems that this is likely in this particular case. (Banks know this, and for this reason charge much higher discount rates to merchants who don’t use an electronic card swipe for this reason).

  • Check your bank account the following day – and keep checking it. Remember – there were a number of fraudulent charges made over time. Some criminals will wait for a while before springing their trap. And then keep charges small, hoping you won’t notice.

  • Don’t go to these clubs alone. Bring friends you know and trust.

  • Meet a pretty girl on the street or a nearby bar or hotel lobby? Don’t go to the club she suggests. She may be in on the scam.

  • Carry small amounts of cash (an amount you can afford to lose), or travelers checks to limit your exposure to risk.

  • If someone takes your card, keep an eye on what they do with it.

  • If a cashier or staffer tells you “I need to run your card again,” or “I need you to re-sign this receipt,” be especially wary.

  • This scam isn’t unique to foreign locales. Similar scams are afoot in Florida, Las Vegas, and anywhere criminals think gullible business travelers, military, or other people can be separated from their money.

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