1. [When diners club was being created] McNamara hired a man named Dick Kirkpatrick who, in a matter of weeks, created a simple bookkeeping process for sorting and billing charges and paying the restaurants. Since the computer was still in its infancy, everything was done by hand. In later years, we were to discover that Kirkpatrick’s manual systems were more accurate and certainly more profitable than the early computers installed in the sixties.

  2. when you charge a meal at a restaurant with a Diners’ Club card, your bill is sent to Diners’ headquarters. The restaurant is reimbursed by Diners’. Diners’, mean¬ while, deducts 7 per cent from the price of your meal, a sum the restaurant pays. This sum goes to Diners’ for the han¬ dling, bookkeeping, and collection of the money the card¬ holder pays Diners’ at the end of the thirty-day billing- period.

  3. (1960 article) Frequently, a thorough credit check will flash in advance whether a potential member will turn “sour”—a term ap¬ plied by the credit industry to those who refuse to honor their time payments. One credit manager of a large Eastern oil company told me that his company offered credit-card applications to the members of two plush country clubs. Credit checks, however, resulted in a 25 per cent turn down. As the credit manager put it: “We had to turn them down. Although their average earnings were twenty thousand dol¬ lars a year, they were living on thirty thousand.” The credit manager also reported similar results when his company can¬ vassed a group of political appointees, policemen, and fire¬ men in one of New Jersey’s more populous counties. Those rejected earned an average of six thousand dollars annually. They were spending as much as nine thousand dollars. Recently, H. M. Barrentine of Skelly Oil Company sur¬ veyed all the members of the American Petroleum Credit Association on the subject of fraud and the misuse of credit cards. His replies totaled 100 per cent. He classified the credit card abuses into these three categories. They are listed here in descending order of volume losses.
  4. Cards stolen outright or misused by some member of the family.
  5. Where the owner of the card suddenly went haywire.
  6. Cards obtained through misrepresentation with no intent to pay. Although the third category represents the smallest total volume loss, it usually produces the greatest losses dollar- wise, as far as individual cases are concerned. The credit-card cheat is not only growing in numbers, but has opened new vistas of fraud. 24 : buy now, pay later Besides a few cases of eager innocents such as Joseph Mirag- lia mentioned in Chapter 1, an unusual group of professional thieves has joined the American scene. Lusty and lusting for the finer things in life they have mined a world of riches with the Aladdin’s Lamp of consumer credit. It has reached the point where the F.B.I. has found it necessary to create a whole new criminal category: “Most wanted credit-card thief.” One of the gamest is an elegant ex-con by the name of Charles Gregory Cannon. When taken into custody in New York by the F.B.I., Cannon sported a silver-handled cane and a broad British accent. The F.B.I. found in his hotel room a two-thousand-dollar portable printing press which he used to print his own credit cards and checks. According to Assis¬ tant United States Attorney David P. Bicks, who has handled several cases involving credit-card cheats, the dapper Cannon traveled extensively throughout the Northeast and Canada. During a five-month period, Bicks said, he cashed twenty thousand dollars in fraudulent checks and spent another twenty thousand dollars in hotels and restaurants with his phony credit cards. Though noticeably slim when arrested. Cannon somehow managed to spend twenty-five dollars nightly for dinner. Cannon’s take was small compared to a Canadian ring which set up a printing plant to duplicate credit cards issued by the Diners’ Club. Although Diners’ did not suffer any serious financial loss, the group, using the cards as identifica¬ tion, managed to pass over $250,000 in bad checks at several Canadian banks. In contrast to those who counterfeit credit cards, a sub¬ stantial business has grown up in stolen credit cards. Assis¬ tant U.S. Attorney Bicks reported the case of a six-member The Rub in Aladdin’s Lamp : 25 ring which was recently sentenced in New York. These care¬ free credit-card buccaneers passed more than one hundred thousand dollars in bad checks by using stolen credit cards as references. Says Bicks: “This was a national operation. They were operating as a conspiracy and they had every conceivable kind of credit card. They flew all over the coun¬ try in jets, living on the cards and cashing checks on the way.” On occasion, the frenzied quest for new members has un¬ wittingly resulted in a credit card cheat. Not long ago a resi¬ dent of Minneapolis decided to investigate the contents of a trash can. His efforts were rewarded, for he came across the nearest thing to a blank check. In this instance, a Hilton Carte Blanche credit card. A short time later he landed in Chicago. Within less than eight hours the Minneapolis treasure hunter had run up bills totaling eight hundred dollars at a camera shop and at a ritzy clothing shop affiliated with the Carte Blanche plan. A clerk, however, became sus¬ picious and phoned Carte Blanche headquarters. The Hil¬ ton people made a quick check and discovered that they had mailed the card to a man who had been dead two years. Who¬ ever had received it, apparently had thrown it away. How did the error happen? When Hilton climbed aboard the credit-card wagon in early 1959, they mailed out one million Carte Blanche cards to persons formerly listed by the Hilton Hotels as credit customers. Carte Blanche mem¬ bers are now charged a six-dollar annual fee when they use the card outside of a Hilton Hotel. Perhaps the most disheartening problem the credit card companies face are the thieves who find eager partners among the businessmen who agree to honor the cards. The Wall Street Journal records the case of a former Manhattan ad- vertising executive who managed to have a large oil company finance a leisurely jaunt through the Southwest. The former ad man owned a pink 1958 Lincoln sedan and a credit card issued by the Esso Standard Oil Division of Humble Oil & Refining Company. Among other things, he appeared to be charging tires every two weeks. Actually, he wasn’t buying all those new tires. He simply persuaded the service station operators to charge them to his credit card account. Instead of taking the tires he would pocket the money the tires cost, kicking back a percentage to the co-operative operator. By the end of his journey, the ad man had managed to run up a three thousand dollar bill, which Esso had to charge off. As an Esso credit official said, “This is the kind of thing that makes the credit card business a little discouraging.” The Diners’ Club had an even more discouraging experi¬ ence during the 1959 season at Miami Beach. A stolen credit card ring, which worked the Beach’s B-girl joints, managed to run up between seventy-five thousand and one hundred thousand dollars in fraudulent sales. According to Philip Adelman, a Diners’ official, the ring used waiters to steal the cards. The waiters would pick the customers’ pockets and in several instances gave the customers knockout drops so that they could pick their billfolds. The ring also em¬ ployed merchants, restaurant owners and night club oper¬ ators. One pizza parlor, for example, charged a phony customer five hundred dollars. A Chinese restaurant charged another seven hundred dollars. And one night club used a stolen credit card to bill a customer five hundred dollars and then added another four hundred for a tip. Diners’, of course, no longer does business with these Miami Beach establish¬ ments. As Adelman noted: “It has always been the policy of Diners’ to pay off merchants who unknowingly sell goods to a person with a stolen credit card. We absorb the loss and we will continue to do so unless the charges are obviously and flagrantly false.” To keep the bloodletting at a minimum, the all-purpose credit card companies have instituted several discreet safe¬ guards of which most of their members are not aware. The maximum amount each cardholder can charge without ap¬ proval generally runs around one hundred dollars. Just be¬ fore the 1959 Christmas season, Hilton slashed its maximum allowance from five hundred to one hundred dollars. If the customer wants to charge more than one hundred dollars, the merchant usually is supposed to obtain approval by calling central headquarters collect. American Express has one de¬ partment that works around the clock seven days a week taking calls from all over the country. In addition, twenty clerks at American Express daily check each of the thousands of charge slips that pour into the office. Each cardholder is rated according to his credit risk. The clerks add each incom¬ ing charge to his account. If the customer surpasses his indi¬ vidual debt limit, the account is then turned over to a super¬ visor for study. Credit-card companies also work up confidential blacklists of people who buy now, but never pay. These lists identify cards that have either been stolen or lost. The blacklists are sent to all member establishments. Diners’ lists usually con¬ tain about two hundred names. However, American Express has sent out a list with eighteen hundred names and Carte Blanche had one list that included thirty-five hundred dead beats, skips and lost or stolen cards. When the lists become that unwieldy, they may prove no help. A salesman or cashier may either be too lazy or too busy to check the names. Incidentally, if you are a credit cardholder and the card is 28: BUY NOW, PAY LATER lost or stolen, report the loss immediately to the company. Unless the loss has been reported, you will be held respon¬ sible for all charges made on your card. The safest procedure is to phone or wire the credit card office, then send a regis¬ tered letter. Several credit-card companies actually have men whose full-time job is to pick up cards that have been declared in¬ valid. Diners’ has a staff of twelve. American Express can call on its own staff of detectives who until recently spent the major part of their time protecting the company’s Travelers Cheques. Headed by a former F.B.I. man, these company sleuths have been responsible for the jailing of some of the nation’s most notorious thieves. The abuse that followed the current popularity of credit cards has resulted in a series of laws that would have been unheard of only ten years ago. At least four states—Texas, Florida, Georgia and Kentucky—have enacted legislation aimed at curbing credit-card thieves. The first and so far the toughest was passed in Texas in May, 1959. Maximum penal¬ ties for the misuse of a credit card include a ten thousand dollar fine and ten years in jail. It is expected that within the next decade the majority of states will enact legislation sim¬ ilar to, though perhaps not as stringent as, the Texas law. Among other original contributions, it appears that credit cards are opening a whole new