iPhone a target in PayPal fraud


O2 stores in London have been hit by a wave of bank card fraud resulting in the loss of more than £4,000 in handset sales.

O2 alerted store staff via conference calls and emails towards the end of December of fraud being perpetrated with PayPal MasterCard debit cards. Staff were warned not to accept PayPal bank cards, to be extra vigilant and to take additional identity proofs if suspicions are raised at sale.

Criminals utilised fraudulent debit cards from online money exchange system PayPal to buy prepay and contract  handsets from O2 stores across central and surrounding areas of London, with the Apple iPhone 3G the principal target.

PayPal cards enable users to store funds in an online PayPal account.
They can be obtained without credit history, but must be connected to a bank credit/debit card. In this case, PayPal cards were fraudulently linked to third-party credit/debit card accounts, it is claimed.

As a result, O2’s credit and identity vetting system was often breached, and cleared the fraudsters to take away ‘free’ handsets, such as the iPhone, on contract, and then default on monthly payments.

“It has happened across the country, although Oxford Street and London were worst hit. It is really difficult to know because the credit and identity checks  pass. We were told immediately not to accept PayPal,” said one staffer.

O2 was unavailable for comment at press.

Orange, Vodafone, T-Mobile and 3 claimed to have had no reports of illegal purchases by customers with PayPal cards.