Credit Card Fraud: Criminal Defense and Federal Penalty Exposure

Section 1029 of Title 18 makes it a federal felony to knowingly and with intent to defraud produce, use, traffic in, or possess fifteen or more unauthorized access devices, and a single credit card number obtained through skimming, phishing, or data breach qualifies as an access device whose unauthorized use supports federal prosecution, and wire fraud defense counsel handling credit card fraud prosecutions should analyze whether the government's evidence of the defendant's knowledge and intent to defraud is based on direct evidence or on a co-conspirator theory that attributes the acts of others to the defendant under Pinkerton liability.

Credit card fraud prosecuted alongside identity theft charges under 18 U.S.C. .ection 1028A imposes a mandatory two-year consecutive sentence that must be served in addition to any sentence imposed on the underlying fraud charge, and this consecutive sentencing requirement eliminates the court's discretion to run the identity theft sentence concurrently with the access device fraud sentence, and identity theft defense counsel representing defendants facing both credit card fraud and aggravated identity theft charges should assess whether the government can prove that the defendant actually knew that the means of identification used belonged to a real person.

The credit card fraud sentencing guideline under USSG section 2B1.1 begins with a base offense level and then adds specific offense characteristics based on the loss amount, the number of victims, whether the defendant abused a position of trust, and whether the offense involved sophisticated means, and financial fraud defense counsel challenging the loss calculation in a credit card fraud sentencing proceeding should contest whether the government's loss figure reflects actual losses to victims or inflated potential losses and whether account takeover losses attributable to other participants in a conspiracy should be attributed to this defendant under the relevant conduct principles.

A credit card fraud conviction triggers mandatory restitution to all identifiable victims under the Mandatory Victims Restitution Act, and the restitution order is imposed in addition to any period of incarceration, creating a long-term financial obligation that survives bankruptcy in most circumstances, and bank fraud defense counsel advising defendants on the full scope of credit card fraud financial exposure should confirm whether any civil forfeiture proceedings are pending alongside the criminal case and whether the issuing banks have filed or plan to file civil suits to recover fraud losses beyond what restitution covers.

Federal credit card fraud investigations typically involve grand jury subpoenas to card issuers and networks for transaction records, warrants to cellular carriers for geolocation and call records, seizures of point-of-sale skimming devices, and analysis of cryptocurrency transaction records in cases where fraud proceeds were converted to digital currency, and credit card fraud defense counsel retained at the investigation stage should immediately assess whether the defendant received a target or subject letter from the government and whether a proffer session with the investigating agents is likely to produce more favorable treatment than declining to cooperate until charges are formally filed.

Most credit card fraud cases involving larger loss amounts, organized schemes, or interstate electronic transactions are prosecuted federally, while state prosecution is more common for isolated unauthorized use cases involving in-person transactions within a single state, and federal criminal defense counsel advising defendants under investigation for credit card fraud should identify at the earliest possible stage whether the investigation is being led by federal or state authorities, because federal prosecution carries substantially higher sentencing exposure and limited parole availability compared to state prosecution in most jurisdictions.

The most effective credit card fraud defenses challenge the government's evidence of the defendant's specific intent to defraud, because unauthorized use that occurred under mistake of fact, authorization claims, or duress from a co-conspirator can defeat the intent element even when the defendant's physical involvement in the fraudulent transactions is not disputed, and white collar crime defense counsel building the credit card fraud defense should assess whether any Fourth Amendment suppression motion is available based on the warrantless collection of geolocation data or financial records and whether any witness identification evidence relied upon by the government was obtained through constitutionally defective procedures.

Federal credit card fraud defendants who possess information about co-conspirators, criminal networks, or related financial crimes that the government has not yet prosecuted have significant leverage to negotiate plea agreements that include cooperation provisions and sentencing recommendations producing sentences substantially below the applicable guideline range, and federal and state fraud defense counsel negotiating a credit card fraud plea agreement should evaluate whether the loss amount proposed in the plea agreement accurately reflects the conduct the defendant actually participated in rather than the entire scheme loss and whether any safety valve provision under USSG section 5C1.2 is available to eliminate a mandatory minimum sentence.