Breaking News in the Industry: April 4, 2017

Texas man gets 11 years in US prison in credit card fraud case

Authorities say a Cuban national who ran an international online credit card fraud operation must serve more than 11 years in a US prison. Jorge Ernesto Blanco-Rodriguez of Havana was sentenced in McAllen. The 43-year-old Cuban and Spanish citizen pleaded guilty last year to conspiracy to commit wire fraud. Prosecutors say Blanco-Rodriguez, who possessed about 12,000 stolen credit and debit card numbers for sale, must also pay more than $600,000 in restitution. The Texas-based investigation began when authorities arrested two Mexican nationals for credit card fraud. Search warrants were carried out, leading to Blanco-Rodriguez. Officials say Blanco-Rodriguez, whose operation was based in Cuba, was arrested in July 2015 in Miami while traveling to Florida to visit family.   [For more: KWTX10 News]

Detectives say brains behind fraud scheme was already in a Florida County jail

Pinellas county sheriff’s detectives didn’t have to look very hard to find the man they contend cooked up a scheme to use fraudulent credit card transactions to buy supplies for jail inmates. He was, they said, pulling off the scam while he was an inmate at the Pinellas County jail. Detectives arrested the inmate, Robert Bryan Kinzinger, 47, and his girlfriend Theresa Farr, 52.  According to detectives, Kinzinger told Farr to retrieve a credit card number he had stored on his laptop at home. The credit card belonged to a former, unidentified neighbor of his, age 75.

Detectives said Kinzinger instructed Farr to use the credit card number to buy food and hygiene products for other inmates via an online account with, an online service that delivers commissary packages to inmates. Farr placed four online orders totaling $365.47 using the neighbor’s identity and credit card number, according to the Sheriff’s Office.

Why was Kinzinger in jail? He’s awaiting trial on other charges he stole the identities of 15 people and used those for credit card fraud and stealing Internet and cable services. Kinzinger was also already on probation for a 2012 case in which he helped burglarize the office of Clearwater dentist Bill Strupp. Kinzinger and an accomplice swiped computers, cameras and a portable X-ray machine, as well as signed baseballs and bats that Strupp had been given by his friend, the late New York Yankees owner George Steinbrenner. Kinzinger and his accomplice were nabbed when they tried to sell the valuable sports memorabilia back to Strupp for $10,000.  [For more: Tampa Bay Times]

Amazon seller wins $6.8M in suit over knockoff fitness gear

A federal jury ruled in favor of Fitness Anywhere on Thursday awarding the TRX fitness equipment company $6.8 million in damages. The decision came after Fitness Anywhere sued WOSS Enterprises for patent and trademark infringement, alleging it manipulated e-commerce platforms like Amazon.

This decision marks a legal precedent in brands’ battles with counterfeiters and e-commerce knockoffs. “This jury award should serve as a notice to all those determined to engage in intellectual property infringement or other similar unlawful activity that they are not beyond the reach of justice by federal court juries,” Paul Zadoff, president of TRX for Fitness Anywhere, said in a statement.

Amazon has been cracking down on fakes sold through its site over the past few years. In November it filed two lawsuits alleging that more than 20 companies and individuals were involved in selling knockoff exercise and furniture moving equipment. For the most part, Amazon has escaped criticism leveled at other online retailers, most notably Chinese rival Alibaba, for selling counterfeits through their websites. Amazon has mostly avoided such criticism, in part because of its years of investments in anti-counterfeiting technology and staff.  “The internet has enabled a class of e-commerce parasites to evolve and feed on the investment and hard work of others,” Randy Hetrick, founder and CEO of TRX for Fitness Anywhere, said in a statement. “This verdict is a big win for brand innovators and customers alike, and it officially puts the fraudsters and cheaters of our industry on notice.”   [For more: C|net]

TN Bill increasing shoplifting penalties headed to Governor’s desk

A bill enforcing stricter penalties for shoplifting is headed to Governor Bill Haslam’s desk. Representative. Jason Zachary and Senator Richard Briggs, both of Knoxville, co-sponsored the bill in the House and Senate.  The bill expands the definition o theft to include evading alarm systems or store cameras, and also sets a $300 minimum fine for a conviction. The bill passed the House on a 93-0 vote on March 6, and was approved in the Senate with a 30-0 vote on Thursday.

The bill will become state law if Haslam signs it. Zachary and Briggs have also introduced a separated “Organized Retail Crime Prevention Act,”that would crack down on people who sell gift cards for a profit by punishing these crimes as theft. During a taping of Inside Tennessee in January, Zachary said his district, specifically Turkey Creek, is hit hard by these crimes. “Most people don’t realize that Knoxville is the number one city in the nation for gift card theft and abuse,” Zachary said.  The retail crime bill has been “placed behind the budget” in the House, which means lawmakers will consider it after the state’s spending priorities have been set.  [For more: WBIR News]

Arby’s whacked with more data breach class action lawsuits

As we previously reported, Arby’s was hit with malware that infected over 1,000 of its fast food locations throughout the U.S. between October 25, 2016, and January 19, 2017, and was hit with multiple class action suits over the data breach. After it reported the breach, several class action lawsuits were filed against it alleging “inadequate data security measures” to protect the credit and debit card information of over 355,000 customers.

Three different credit unions, a bank, and a couple who purchased food at a Arby’s in Connecticut have filed the newest cases. The couple alleges that a month after the data breach, thousands of dollars in unauthorized charges were racked up on their credit card. As a result, they allege they were harmed by losing access to their account funds, missing payments, were unable to use the credit card until a replacement card was provided, and not being able to use reward points and cash-back rewards. They allege breach of implied contract, violations of the Connecticut Unfair Trade Practices Act and negligence.  [For more: Data Security + Privacy Insider]

WV Committee passes new version shoplifting bill

The Senate Judiciary Committee quickly passed a new version of the House bill aimed at curbing the organized shoplifting crime called boosting. The bill is HB 2367. Boosting is also termed organized retail crime, or organized retail theft in the new version. In boosting, the fence, the head of the ring, sends out a team to stores, with a list of items to steal. The team sells it to the fence for a small percentage of the dollar, who in turn sells it online or in stores set up for the purpose for a profit, at a price undercutting the victim retailer.  Delegate Rodney Miller, D-Boone, is lead sponsor and appeared before the committee to explain the bill. The boosters are most often addicts earning drug money, he said. The fences are often foreign nationals who send the profits overseas. It passed unanimously and goes to the full Senate. [For more: The Dominion Post]

Retail earnings on track for worst quarter in more than three years

If you thought the fourth quarter was tough on retailers, brace yourself for an even more dismal first-quarter report card. With roughly two-thirds of the fiscal quarter in the books for most chains, Retail Metrics expects the sector’s earnings to fall 6.8 percent. That would mark the worst three-month performance since the final quarter of 2013, when profits fell 7.1 percent, according to the firm’s data. Revenues are also expected to be their weakest since the fiscal 2013 fourth quarter. They’re seen rising just 1.6 percent, compared with a 1 percent gain during that period. Retail Metrics’ data is based on the historical and expected performance from 113 companies. “It has been a cruel [first quarter] for the industry,” Retail Metrics President Ken Perkins said in a report.

Indeed, the year kicked off with a spate of bankruptcies that have put the industry on track for the greatest number of Chapter 11 filings since 2009. Nine retailers filed for bankruptcy in just the first three months of the year, reaching halfway to 2009’s total, according to AlixPartners consulting firm. Many of the chains that have filed or are expected to file had been purchased by private equity firms that saddled them with debt, AlixPartners found. Yet Retail Metrics’ data shows the industry’s pain isn’t limited to distressed chains. Only three segments of the industry are expected to post year-over-year earnings growth: home improvement, office supplies and auto parts. Teen apparel and department stores are seen turning in the worst performance.

Perkins attributed the industry’s pain to more than a dozen factors weighing on its sales and profits. They include the rapid growth of Amazon, a declining middle class, promotions and lower mall traffic. These trends have caused retailers from Macy’s to Crocs to shrink their store fleets. Despite the struggles of traditional retailers, the industry as a whole continues to grow. The National Retail Federation expects sales to increase between 3.7 and 4.2 percent this year, after turning in 4 percent growth over the holidays. Online shopping is driving much of that growth, according to Commerce Department data.  [For more: CNBC News]


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