Monday, October 3, 2022
Home TECH Debit Card Fraud Leaves Ally Bank Customers and Small Stores Reeling

Debit Card Fraud Leaves Ally Bank Customers and Small Stores Reeling

Enlarge / Ally debit card owners are reporting fraudulent charges at a steady rate over the past week.

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Ben Langhofer, a financial planner and single father of three in Wichita, Kansas, decided to start a side business. He had made a manual for his family, laying out core values, a mission statement, and a constitution. He wanted to help other families put their beliefs into a real book, one they could hold and display.

Langhofer hired web developers about two years ago and built a website, customer relationship management system and payment processing. On Father’s Day, he released It has had modest success and has talked to larger groups about bulk orders, but business has been mostly quiet so far.

That’s how Langhofer knew something was wrong on Friday, August 11, when a California woman called about a fraudulent charge. She checked her merchant account and saw almost 800 transactions.

One of thousands of charges submitted from Langhofer's site earlier this week, as seen from a customer's Ally Bank app.
Enlarge / One of thousands of charges submitted from Langhofer’s site earlier this week, as seen from a customer’s Ally Bank app.

“My heart sank,” Langhofer told Ars on Thursday. He immediately contacted his payment provider, Stripe, who he told her about. card test—a scheme in which online card thieves use small charges from an account to check if cards are valid. Stripe said it would issue a massive refund, Langhofer said. Knowing that his payment processor was aware of the problem, he went on with his weekend.

Langhofer woke up early Monday morning to a flurry of missed calls.

He said his site had attempted almost 11,000 more transactions, each for $1, most of them initiated by minutely different email addresses. Many of them involved Ally Bank cards, Langhofer said. She had only received two phone calls to the forwarded number listed in his online store, but now his phone would not stop ringing.

“My dad always taught me to have a good name, so this hurts,” he said. “I don’t have a lot of staff, but I have a big name in Wichita, in this state. Now my business is tied to this and I have no idea what’s next.” In text messages before an interview with Ars Technica, Langhofer said the order “consumed my entire week and caused more panic than I remember having in a long time.”

I sell debit cards, little use

Langhofer’s business appears to be the victim of a chain of fraud that has affected thousands of debit card customers over the past week. Chief among them are Ally Bank clients who have been tweeting and post on the r/AllyBank subreddit about charges on cards, some that have never been activated or used. They have reported (and Ars Technica has seen) phone support wait times of up to an hour or more.

There is an overwhelming feeling that something is happening, but for days, the main parties have still not confirmed anything.

(Update 4:56 p.m.: An Ally Bank spokesperson said in a statement: “Overall, the financial services industry is experiencing an uptick in debit card fraud activity caused by bad actors.” The release noted that unauthorized transactions reported within 60 days of an account statement will result in a new card and fees refunded.

The statement added: “Call centers are experiencing longer than usual wait times due to nationwide staffing challenges combined with increased call volumes. This is not unique to Ally.”)

Screenshot from r/AllyBank on the morning of Friday, August 19.
Enlarge / Screenshot from r/AllyBank on the morning of Friday, August 19.

Two of those wondering what’s going on are Stephen Fuchs and Curt Grimes, a Chicago-area couple who spoke with Ars Technica and shared their documentation. They opened their joint Ally checking account in March 2022. They both had linked debit cards, each with different numbers. Fuchs never activated his card. As of last week, Grimes had only used his card once to send someone about $5 via Apple Cash.

On August 10, a $15 charge from a quirky software site appeared on one of his cards, but it went unnoticed. On Friday, August 12, Grimes received an SMS fraud alert from Ally, alerting him to charges from two different Shopify stores for nearly $200. Grimes flagged the charges as fraudulent, and Ally (and Apple Pay) reported that the card was suspended. After spending nearly an hour waiting for Ally on the phone on Saturday, August 13, Grimes disputed the previous $15 charge and saw on Ally’s app that a new card, with a new number, was on the way.


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