Visa Fraud

PRESS RELEASE

TRAVELLERS BEWARE:
VISA AND MERRILL LYNCH PARTICIPATE IN INTERNATIONAL FRAUD


May 1, 1999
FOR IMMEDIATE RELEASE

For further information, please contact
Professor Majid Tehranian
Tel.: 808-988-9563; 808-955-8231; 808-956-3353
Fax: 808-988-4483
Email: majid@hawaii.edu


In every major tourist city around the world, there are numerous traps
waiting for the innocent tourists to fall into. That is partly the cost of
world travel. However, when major financial institutions such as Merrill
Lynch and Visa International, knowingly participate in the fraud, the
issue is a cause for alarm.  

I have been a loyal customer of Merrill Lynch Cash Management Account for
the past 20 years. I have never contested a single visa charge. But on
March 1, 1999, I was defrauded of about $4000 for the price of a beer and
a cup of coffee in Istanbul, Turkey.  I had no choice but to contest this
outrage.  After two months of haggling with Merrill Lynch over the visa
charges, despite previous assurances, Merrill Lynch and Visa International
have refused to challenge the international fraud in which they are
participating with the deceitful and extortionist establishments involved
in this case.

I arrived in Istanbul on the late evening of February 28.  Because of jet
lag, I could not sleep. I decided to take a stroll in front of my hotel,
the Marmara, in the early hours of March 1. A smiling young man by the
alleged name of Hassan Kivan, who introduced himself as a tourist guide,
befriended me and asked to have a drink with him at a nearby bar. With his
broken English, he seemed earnest and sincere.  He took me to two places
that night at which I had a beer and a cup of coffee for which I paid in
cash.   However, the managers claimed that the cash is not enough and
asked for a credit card.  Assuming that I could always put a stop payment
on it, I gave them my Merrill Lynch Visa card. They soon came back with a
small slip that I could not read in the dark and, under duress, had to
sign.  I left Hassan completely exhausted and dejected. But I asked him to
write his name and phone number on the back of one of the visa charges.
The next morning when I woke up, I wanted to know how much the two
establishments have charged me. Since Turkish Lira is a highly inflated
currency and the rate of exchange is about 360,000 TL to one U. S. dollar,
I was thoroughly confused as to how much I was paying. Besides, the salons
were dark and the men threatening.  To my astonishment, I discovered that
the first establishment had charged $1803 for a beer, and the second one
had charged $1995 for a cup of coffee.

I immediately called up Mr. Phillip Knorr, my Merrill Lynch Executive
Accountant in Honolulu, to let him know of the fraud and to request a stop
payment on the visa charges. He was sympathetic, told me stories of his
own bad experiences in Istanbul, and assured me that the case would be
easily resolved. He also asked me to report the incident to the Visa
Dispute Section of Merrill Lynch and request a STOP PAYMENT. The memo was
faxed on March 1, the same day, with a copy to Mr. Knorr. I also took the
memo to the Hotel managers and my tourist guide, Mr. Katsumi Makishi of
Magister Tours, Istanbul.  The hotel managers, Mr. Cem Gundes and Ms. Sima
Molho, expressed sympathy and told me that this is a frequent occurrence
in Istanbul.  They also sent me along with a hotel staff member to the
nearest police department. From the careless attitude of the police,
however, I soon realized that there is no use in a police complaint. The
police are perhaps working hands in glove with the network of tourist
traps. Mr. Makishi suggested taking me to another police station where his
organization had some influence. We spent half a day waiting for the
officer in charge. When he arrived, all he did was to stamp my report
without recording the complaint. Discouraged by the police indifference,
on March 4, I wrote a letter to the Turkish Minister of Tourism, Mr. Ahmed
Tan, and requested investigation. To this day, I have not received a
reply.  

I also pursued the matter by long-distance phone calls to the Visa Dispute
Section of Merrill Lynch.  Ms. Merrie Michaels of that office told me that
I should wait until the charges are cleared.  She also explained that
sometimes, the fraudulent merchants decide not to submit the charges out
of the fear of being prosecuted.  Upon return to home in Honolulu on or
about March 12, I called up Mr. Knorr again to see what has happened. He
again assured me that
similar cases have been easily resolved.  However, he also urged me to
call up the Visa Dispute Section directly because "they would listen
better to a customer."  In my conversation with Ms. Sherry Alston at the
Visa Dispute Section, however, I was told that since I had signed the visa
charges on my debit card, there is nothing they can do for me. I brought
back the bad news to Mr. Knorr who by now was ignoring my phone calls. On
or about April 5, however, Mr. Scott Furukawa of the Merrill Lynch office
in Honolulu called me up and asked to be updated on the case. He was
courteous and sympathetic while repeating several times that he would have
been equally outraged under the circumstances. He promised to call back in
a few days to let me know of the results of his negotiations with the Visa
Dispute Section.   

On March 8, Mr. Furukawa called me up to say regretfully that his efforts
on my behalf have failed.  We ended the conversation by my telling him
that Merrill Lynch and Visa Corporation were knowingly participating in an
international fraud without attempting to severe their ties with the
deceitful merchants. I informed him that I would therefore withdraw my
account and publicize the case.  A few days letter, I received the
followed letter from Mr. Furukawa:

"In reference to our telephone conversation today (March 8, 1999), Merrill
Lynch will not be able to reimburse you for the March 2, 1999 visa charges
in the amounts of $1,995.05 and $1,803.27 you made while visiting
Istanbul.  While we sympathize with your claim of being victimized by the
local establishments in Istanbul, you, nevertheless, signed your name to
these transactions."

There are lessons to be learned from this experience.    First,
undoubtedly, Merrill Lynch and Visa Corporation profit from international
tourist business. That is legitimate. However, when they knowingly refuse
to break off their relations with deceitful and extortionist
establishments, they are actively participating in international
fraudulent schemes.  Second, credit card payments are convenient,
particularly when travelling abroad, but they open you up to a whole
variety of fraudulent operations.  This includes adding a few digits in
front or back of your actual charges.   Third, travelers must be
extra-careful in their dealings with strangers.   My case clearly
demonstrates this.  If it happened to me, it can happen to you.