CiviContribute: transaction rate limiting
Jim,

This is a very common scam, the best way is to add recaptcha; it's worked for all of our clients with this issue.  The new recaptcha "I am not a robot" is very user friendly.  This can be set up from the CiviCRM admin menu.

If your coming to the CiviCRM User summit today, please speak with Steven from iATS, he is very knowledgeable in this space and is giving a talk on security that will include this topic.