Data analytics uncovers a sales force fraud using prepaid credit cards to boost commissions.
April 10, 2026
6 min read
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"I specialize in high-crime, low-income areas, where the average household is on government assistance." These were the exact words of Erin Turner, one of the top sales representatives at a home security company who was now under investigation for fraud. Bruce Dwyer, the company's forensic auditor, sat baffled by the comment, wondering how so many people living on government assistance could afford a home security and automation system with a $50 monthly monitoring fee. During the interview, Turner produced a purse full of prepaid credit cards and explained to Dwyer how she obtained them, what they were used for, and how she provided the numbers to some of her customers to facilitate installation of a security system.
Dwyer's investigation was the result of an analysis of a national summer promotion. The premise of the offer was a limited time, deeply discounted installation with a three-year monitoring agreement. The marketing analysis had produced mixed results. The company had made a lot of deeply discounted sales but many of the units were already being discontinued for nonpayment. Some of the sales representatives had disproportionate disconnect rates. Management suspected fraud. Dwyer was tasked with conducting the investigation. He decided to start with what appeared to be the largest offender, Turner, who also happened to be one of the top sales representatives.
Turner built her book of business using the company's promoter program, where sales representatives are encouraged to develop a network of professionals and small businesses, promoters, that would refer potential customers to them. If a referral turned into a sale, the sales representative earned a commission and the promoter earned a referral fee. Turner was working with one primary promoter in a handful of large apartment complexes. A quick review of her personnel file revealed the promoter to be Turner's sister.
During the interview, Turner told Dwyer that her sister was going door to door and convincing the neighbors to install a security system. Her sales pitch was that the system was free to install, they could try it for six months without making a payment, and if they were not satisfied with the service they could simply stop making payments. There were no strings attached. Turner's sister provided customers with a prepaid credit card to get the installation completed.
On Dwyer's flight home, he made a list of all the sales representatives and wondered if they also were abusing prepaid credit cards. A prepaid credit card is activated when the cardholder pays a small fee and "loads" the card by putting a set amount of money on it. Once a prepaid credit card is activated, the number is live until the card's expiration date or the holder cancels the card. When a transaction occurs, the balance on the card is reduced. Dwyer discovered that the company's billing and collection system could only validate that a credit card presented was "live." In other words, the system could not determine if the credit card presented for installation charges and recurring payments was a credit card, gift card, or prepaid credit card. Furthermore, if it was a prepaid credit card they could not validate that enough funds were available for the installation charges, let alone the recurring monthly monitoring fees.
As luck would have it, Thomas Border, the IT specialist responsible for credit card transactions, had noticed a pattern of abuse with prepaid credit cards. Together, Dwyer and Border analyzed all credit card transactions for a six-month period to identify and quantify a pattern of abuse. To conduct the investigation, credit card transactions had to be matched to a bank identification number (BIN) database to identify prepaid credit card usage. The 16 digits on credit cards are the result of a complex algorithm. The first six digits are referred to as the BIN. The BIN can determine what institution issued the card and the type of card it is. Dwyer and Border obtained the customer account numbers associated with the cards and the names of the sales representatives who made the sales to identify who had either provided or accepted prepaid credit cards.
Based on the findings, Dwyer then conducted investigations of the other sales representatives and discovered a similar pattern of abuse. In some cases, Dwyer identified sales representatives who signed up 25 to 30 customers on a single prepaid credit card. Most of these accounts would immediately default on their payments, but the sales representatives collected commissions on each sale, regardless. At one point, Dwyer estimated that the scheme was costing the company almost $5 million annually over the course of two years. The sales representatives involved in the scheme were immediately terminated.
