Law enforcement officials in most U.S. states have quietly deployed controversial handheld scanners as part of an effort to interdict suspicious funds held on prepaid cards and other magnetic-stripe products. The Electronic Recovery and Access to Data (ERAD) scanners permit users to verify the card numbers and legal holders of debit and credit cards seized from a suspect, and to ascertain and temporarily freeze balances stored on seized prepaid cards after the suspect consents to a search or investigators establish probable cause. The readers also give law enforcement agents a tool to determine whether criminals are reprogramming and using the...
Prompted by signs that criminals are increasingly exploiting prepaid cards, federal and state investigators are turning to a handful of recent legal decisions to justify reading the value held on the instruments, sources say.
As U.S. officials work to shield American prepaid cards from abuse by financial crooks, foreign-issued stored value products remain a relatively easy avenue to move money into the United States anonymously.
Displeased with proposed regulations, federal and state law enforcement officials are asking lawmakers and the U.S. Treasury Department to strengthen controls on the cross-border movement of prepaid access products.
Restricting transfers between unrelated individuals and requiring IDs to load value are among over a dozen ways financial institutions can limit compliance risks with prepaid access products, an association of banks said Friday.