LaFAYETTE, Ga. -- Last Sunday, Lori Pettyjohn panicked when her debit card was declined hours before she left to pick up her daughter nearly 200 miles away.
When she checked her Bank of LaFayette account, she found that three fraudulent purchases made in California had wiped out her checking account -- a total of $577.
Pettyjohn later found out that $114 had been stolen from her sister's Wells Fargo account, and her sister's husband had to cancel his Gateway Bank card because of losses. Another sister's daughter had an $80 charge on her account from New York. And Pettyjohn's co-worker had more than $400 stolen from her account, all via debit card transactions.
"It seems like the whole town [was affected]," Pettyjohn said.
As local police and the FBI work to piece together how hundreds of residents of Walker, Catoosa and Chattooga counties had their bank card numbers compromised over the Thanksgiving holiday week, locals said the scam has them rethinking how they use their debit cards.
"Now I'm wondering if it's safe to use it," said Pam Lamberth, who had $544 stolen from her account.
Since police began to receive the first calls about the scam around Thanksgiving, the number of victims has swelled to nearly 600 in Walker County alone, and numerous cases now are being reported in Catoosa and Chattooga counties, though new illegal transactions haven't been seen since early last week.
Meanwhile, federal and local authorities are turning to surveillance video in a search for leads.
Donna Job, resident agent in charge of the Chattanooga Secret Service office, said fraud cases are increasing, specifically those involving the use of skimming devices to steal card information.
Similar fraud schemes nationally have cost banks hundreds of millions of dollars and tied up law enforcement with investigations.
In 2010, about 8.6 million households had at least one member 12 years or older who was a victim of identity theft -- an increase from 6.4 million in 2005, U.S. Department of Justice figures show.
Victims of banking or savings account thefts fall under the umbrella of identity theft. And the misuse of accounts other than credit cards increased from 2.3 million in 2005 to 3 million in 2010.
"More and more we're turning to the cyber arena to fight these types of scams," said FBI Special Agent Stephen Emmett of the Atlanta office.
The Atlanta office usually sees large-scale identity theft schemes in the metropolitan area, and this case in North Georgia is unusual for a smaller community, Emmett said.
"CYBER TERRORISM"
In LaFayette suspicious charges began to appear on bank customers' accounts on Nov. 22 -- two days before Thanksgiving.
By the weekend, hundreds of accounts had been compromised, causing many people to lose access to their cash at one of the busiest travel and shopping times of the year.
"It's cyber terrorism," said LaFayette police Sgt. Stacey Meeks.
The suspicious transactions were made across the country, in Canada and as far away as Egypt.
Federal agents say international transactions are typical in these types of fraud cases, because the information has usually traded hands several times by the time a purchase is made.
FINDING A LEAK
A week after the local scam was reported, police still aren't able to say how the card information was stolen. Early theories pointed to an elaborate skimming operation or a sophisticated hack into a card-processing database.
Local victims say they have tried to compare shopping notes to see if they had a store or business in common. But police say reports don't seem to match up at this time and it's too early to tell.
"We're not pointing fingers at any one merchant," said Walker County Sheriff Steve Wilson. "There [are] a lot of theories flying around right now."
An FBI agent with the Dalton office has been assigned to work with local police on the LaFayette case. Federal agents will go through the banks to get an official count of victims, police said.
One of the first steps will be to track down surveillance video of the nearest transactions to find suspects, Meeks said. Suspects who used a fake debit card with the stolen numbers might be able to lead authorities to the culprits behind the crime.
Many of the elaborate identity theft scams are operated by international crime rings, authorities said.
These crime rings are becoming more sophisticated and often are based in Eastern European nonextradition countries, said Kurt Helwig, president and chief executive officer of the Electronic Funds Transfer Association, which studies skimmers.
If a skimming device was used to capture the information in the North Georgia cases, the thieves likely had a local accomplice, Helwig said. That could mean that an employee at the targeted business was involved because a skimmer has to be placed directly onto the credit card machine to steal the information, he said.
Hacking into a credit processing account is far more difficult, he said. When the card is swiped the information is encrypted as it is sent over the wire.
However, it still happens, officials admit.
"The criminals are clearly getting more sophisticated," Helwig said.
And as the criminals learn new tactics, so do the banks.
BANK SECURITY
All local banks were affected by the recent fraud schemes, police said.
Customers from 17 banks or financial companies have reported losses from their accounts, but some bank officials say they already have reimbursed customers.
At the Bank of LaFayette, more than 200 customers' accounts were compromised and everyone has been reimbursed, said bank president Henry Gilbert.
While the bank's private insurance will cover some of the losses, the bank will have to absorb most of the cost, Gilbert said.
That's typical in these types of debit-fraud schemes, said David Oliver, a Georgia Bankers Association spokesman.
"For the most part, banks are on the hook for the losses," he said in an email. "Even if the acts of fraud were in no way related to the banks' employees or information security procedures and protection."
The latest figures in 2008 show the banking industry nationwide lost $700 million in debit card fraud, Oliver said.
But fraud prevention measures are always evolving. Security measures banks have put in place range from account monitoring systems to specific types of protective hardware, Oliver said.
"We try our hardest to stay one step ahead of the bad guys," he said.
LaFayette resident Lecia Eubanks said she is grateful that her bank reimbursed her so quickly, but she is antsy now about using her debit card.
"Being left vulnerable is scary to most of us," she said. "I'll put [up] a few more safeguards and maybe keep a little more cash on hand."