ERAD card scanners were first developed around 2012 for the science and technology arm of the U.S. Department of Homeland Security to combat the use of prepaid debit cards by drug cartels to transport drug money, according to a Homeland Security media release.
Since then, some law enforcement agencies around the country have adopted the technology.
According to ERAD Group’s patent for the device, law enforcement can determine the balance of money in an account associated with a prepaid card that is part of branded “open loop” networks such as Visa or MasterCard or “closed loop” cards that only allow purchases at a single company, such as gift cards.
When the card is scanned by the officer to check the account balance, the system disguises the balance request as a typical vendor request to prevent alerting suspects that law enforcement is checking the card, the patent states.
Once the card’s account balance is determined, the officer can use the device to freeze the funds, preventing withdrawal or use of the money in the account, or seize the funds by having them transferred to a law enforcement financial account, the patent states.
Although the device does not allow funds from non-prepaid cards to be frozen or seized, it can provide the officer information about those cards such as the card number, the name on the card, expiration date and the card issuer.
> the system disguises the balance request as a typical vendor request to prevent alerting suspects that law enforcement is checking the card
Wouldn't that go against the credit card (or pre-paid card) merchant agreement? And wouldn't ERAD have to have signed such an agreement in order to access the credit card network?
From that contract that was linked elsewhere, the equipment being provided includes:
> One (1) VX680 GPRS Terminal w/battery, thermal printer
The VX680 is a mobile credit card terminal (http://www.verifone.com/media/413350/VX680_2_lg.jpg) made by Verifone, much like the type that restaurants use most places besides the USA. If I had to speculate, maybe they try putting varying charges/holds on the card and see when it gets rejected in order to divine the balance?
I'm sure they have a special merchant agreement that allows for this. If the credit card networks refused to play ball they could be accused of hiding criminals.
> Now, the Oklahoma Highway Patrol has a device that also allows them to seize money in your bank account or on prepaid cards.