Fraud, Phishing and Financial Misdeeds

Lucid Intelligence – A Free Way to Discover IF Your Identity Has Been Stolen!

2009-06-28T03:22:00.000-07:00

Millions of personal and financial records have been compromised in recent years and the criminals involved in trading this information operate worldwide.

"A criminal might be based in Romania, using servers hosted in Russia, stealing data from people in Germany, to buy goods from an American retailer for delivery in the UK, using an Australian credit card," according to a new site called Lucid Intelligence, which seeks to level the playing field for the individual victims of these crimes.

Lucid Intelligence has set up a site that has a user-friendly tool that allows a person to see if their personal and or financial information is in the hands of criminals. It then provides resources – that are free for the most part – a person can use to protect themselves. The Lucid Intelligence Database contains the information of over 40 million people who have already been compromised.

Although, the site freely admits they can't do anything about getting your information back, the truth is that an aware person can take measures to make the information useless (and maybe more dangerous) for criminals to use.

Some of the ways the site suggests protecting yourself is setting up a Google Alert (detailed instructions included), getting a free credit report, finding some free identity theft protection and protecting your computer. Free options of doing this are identified on the site.

All of the records in the Lucid database have already been compromised by criminals and made available on the Internet. These stolen details were found in chat rooms, bulletin boards or FTP sites, which are used as underground forums to sell stolen information. Recently, two major reports indicated there is so much stolen information available, the law of supply and demand is causing prices to go down. This would suggest there is a glut of stolen information out there.

The information is stolen in a variety of ways. It can be stolen by hackers, who compromise a retail or banking system, dishonest employees at a wide variety of places or malicious software delivered by the botnets that "virtually phish" the digital world with billions of spam e-mails. Information can also be stolen when you pay a bill using a card or when an irresponsible employee throws it in trash. Please note, there are other ways information is stolen and I am only listing the more well-known methods.

A lot of the information in the database has been obtained by the highly skilled operators behind Lucid, who seek out and engage cyber criminals and beat them at their own game. These operators, who come from all walks of life, are volunteers and most (if not all of them) have put a few scammers behind bars.

There is little doubt that the amount of information in this database is going to grow and, whenever possible, Lucid records exactly where they discovered the information.

The information you input to do the searches is not maintained by Lucid until you request the detailed summary. There are reasons for this, which I will explain below. The site also doesn't use any cookies that are designed to track activity on a computer. From what I can see, everything associated with the site is designed to protect individual privacy and takes the necessary precautions to stop someone with malicious intent from exploiting the Lucid database itself.

If the search reveals your information has been compromised, they provide you with a limited summary. For an administrative fee – and only after your identity has been completely verified – they will provide you with all a detailed summary. The administrative fee of £10 (approximately $16.56) to get the detailed summary covers the costs of pulling the information. Included in the detailed summary is an individual risk analysis based on the information discovered.

In most cases, the limited summary, combined with the protection information, will be sufficient for most people.

In the past four years, Lucid has turned over the details of every credit card they've discovered to the “Dedicated Cheque and Credit Card Unit” in London and APACS. In turn, this information is turned over to the credit card issuer. Lucid has already provided the details of several hundred thousand compromised credit cards and it is estimated they have saved more than £200,000,000 (approximately $331,250,263) from being stolen. When considering this statistic, we need to remember that the actual card details came from all over the world.

It should be noted that payment (credit/debit) cards aren't the only type of information available for sale on the Internet. Lucid attempts to report all the information they discover if there is a place to report it to.

There are good reasons that Lucid doesn't turn these credit card details over to the card issuers directly. Replacing credit cards is costly and sometimes card issuers choose to merely monitor known compromised information and then issue a new card if there is suspected fraudulent activity. By reporting it to the authorities and APACS, Lucid ensures a record is maintained should someone run into complications with an issuer after they have been victimized. Despite all the zero liability ads out there, the sad truth is that not all victims come out of these schemes without losing money (sometimes a lot).

Another thing the Lucid database might reveal is synthetic identity theft before it comes back to haunt a person. Credit reports don't necessarily catch all forms of identity theft. Sometimes different parts of people's identities are used to forge a synthetic one. In these instances, because a lot of the information doesn't match, the credit bureaus don't pick it up.

Other examples where a credit bureau might not reveal identity theft are medical benefit fraud, employment fraud, government benefit fraud, some forms of check fraud and when it is used to commit crimes of other than a financial nature.

Another thing to consider is that since not all compromised information is used or used right away, the risk is there, but it will not show up on a credit report.

The people behind Lucid are also active in dealing with advance fee fraud (419) and the different varieties of this are covered on the site, also.

Last but not least, if you need further information they have a way to contact a member of the group.

The site is largely the work of Colin Holder, a retired Detective Sergeant from the United Kingdom, who is considered one of the leading experts in the world on advance fee fraud and identity theft. This isn't the first Web site Colin has set up, either. In 2001, he set up the Metropolitan Police Fraud Alert site and came up with the idea that later became the "KYC" and "Money Laundering" compliance database. His full biography, which is both impressive and extensive, can be found on the site.

Are Anti-Aging Products Containing Resveratrol Scamming Innocent People?

2009-06-14T06:47:00.000-07:00

Getting old happens to the best of us – and ever since Juan Ponce de Leon went to Florida in 1512 on a quest to find the fountain of youth – many have searched for a miracle that would stop, slow or reverse the aging process.

The marketing of Resveratrol is the latest chapter in this saga and has inspired some greedy and not very honest entities to hawk Resveratrol products over the Internet they claim are "guaranteed." The only guarantee with some of these products is that the person buying them might end up spending a lot of money for nothing.

The sad truth is that there are companies selling Resveratrol supplements that appear to be using deceptive marketing practices. If you see a come-on for Resveratrol, I would carefully consider, whether or not, it appears a little too be too good to be true and follow the principle of "caveat emptor" (buyer beware). Of course, it always pays to read the “fine print” (as you will see below), also.

Please note, I'm not here to dispute the possible health benefits of Resvervatrol or recommend if people should use it. The research on it is pretty exciting and I truly hope the results are positive.

There is research showing that Resveratrol has the ability to cure diseases caused by aging and increase life spans. 60 Minutes, Oprah and many other media sources have done stories on it – but although it is being studied seriously – it still hasn’t been approved by the FDA.

Unfortunately, seeming credible evidence is often twisted by greedy people with the intent of making a quick buck, who make it appear they are legitimate when they are not.

Horror stories are starting to pop in Internet forums from ordinary people – who buy Resveratrol and end up paying a lot more than they should have. Even worse, they might end up buying something that isn’t really Resveratrol. A lot of supplements are hawked via spam advertising, where the source might be slightly questionable. The latest estimates are that over 90 percent of all e-mail is spam. Spam is known to contain a lot of deceptive and outright criminal come-ons.

Of course, spam advertising isn't the only venue where Resveratrol is being marketed. Dr. Oz has talked about Resveratrol on Oprah and the article on this from Oprah.com has put in a disclaimer that Harpo productions is pursuing companies that are claiming an affiliation with Dr. Oz or Oprah. I even found an ad page from a "Dr. Os" (note the spelling difference), which is hawking Resveratrol. The page has a YouTube video with the real Dr. Oz talking about Resveratrol. Didn't go so far as to confirm it, but I would be careful about buying anything on this site, which offers up to two free bottles of Resveratrol.

Sadly enough the Oprah.com article – with the disclaimer – is buried by all the other sites using Dr. Oz and other assorted mainstream media stories about Resveratrol. If you want to see what I am talking about, a simple search for "Resveratrol" pulls up an amazing amount of Internet marketing selling Resveratrol. Some of the advertising has "warnings" that Resveratrol products might be harmful to someone's health or a scam. Most of these ads lead to the product the advertiser putting out the warning is selling.

The sheer volume of advertising on Resveratrol makes it hard for the average person to determine what is legitimate and what is not.

Besides the disclaimer being made by Oprah, there is some interesting buzz on her forums about a product called "Resveratrol Ultra.". Many of the people leaving comments on these forums have had their credit cards repetitively charged after signing up for a free trial of this particular product. The true cost is $87.13 for the free trial (if you don’t immediately return it) and they keep shipping you their product and charging you this amount, monthly.

I went to the Resveratrol Ultra site and it has a YouTube clip of the 60 minutes story. One thing I noticed is there is a disclaimer on the site, which states:

The 15 day Free Trial offer is designed to display the quality and effectiveness of Resveratrol Ultra. This gives you the opportunity to try this remarkable program for FREE (just pay shipping and handling) so you can come to a decision for yourself if this is the right product for you.

We want you to be pleased with our products. If it is not all you expected it to be, or you're unsatisfied in any way just return the unused portion 15 days from the date that the product was originally shipped to you for a refund. We are committed to providing superior products and service to our customers. If you are not completely satisfied, contact us and we will make it right for you. Guaranteed!

If you read the complaints this seems to allow them to start charging you $87.13 a month starting with the free offer unless you return the product in 15 days. Based on the comments in Oprah's forum and on a personal conversation I had with a victim -- good luck getting any cooperation from Resveratrol Ultra in getting a refund once this happens. Other complaints state it is even hard to get them to stop billing you $87.13 a month.

Of course, Oprah.com isn't the only place where the public is crying foul about a company selling a Resveratrol product. Complaintboard.com is warning people about Resveratrol complaints and there are also YouTube videos about the subject.

I did a search on mainstream drug store sites and found Resveratrol for about $7 to $12 a bottle. This seems to be a more sensible way to go than paying almost $100 a bottle if you choose to try Resveratrol before the FDA approves it. These places won’t keep charging your credit card, over and over again, either.

If anyone reading this has a complaint, the best place to report it would be the Federal Trade Commission. You can do so right on their site. I ran a search on the FTC site and so far there is nothing about Resveratrol companies, but if enough people complain to them, perhaps there will be.

Posting complaints in Internet forums is an honorable thing to do – but my guess is that if the FTC gets enough complaints they will look into it and go after the people doing it – a lot more, effectively!

To close this post, I would like to reach out to all the mainstream sources which have covered Resveratrol. Their stories are being used to market these products. It sure would be nice if they took the time to cover this aspect of the story more effectively. The few warnings out there about this are easily buried by all the people selling Resveratrol!

My inspiration to write this post came from a Nurse Carol, who spent a career working in Public Health and holds a Master's Degree. She fell for the free trial part of this and has gone through hours of pain and suffering trying to get her money back. Despite cancelling the product after realizing what it was all about, her credit card is still be billed by Resveratrol Ultra as I write this. Although Nurse Carol isn’t a celebrity like Doctor Oz, I can guarantee she recommends that anyone considering using Resveratrol exercise caution before handing over a method of payment.

Trust Caller ID, Become a Crime Victim!

2009-06-08T07:01:00.000-07:00

Fraud using the telephone is nothing new; it's probably been around as long as there have been telephones. After all, a telephone is merely a communication device and can be used to dupe someone into doing something they shouldn't have.

Saying that, telephone technology, which has grown rapidly in recent years, has given fraudsters a wide array of new tools to use to depart common people and even large businesses from their hard-earned money.

Take caller ID for instance, which is marketed as a means of protecting our privacy. When I say marketed, it's normally sold for a fee so we can see who is calling us. The irony of the situation is that for a fee, just about anyone can make the caller ID appear to whatever number they desire.

The ability to spoof (fake/impersonate) caller ID has been around for a few years. Collection agencies, private investigators and even law enforcement agencies use it to get people to answer their telephone. In these instances, they are normally paying the telecom company for the service. I guess this means the people selling caller ID and the ability to spoof it are making money on both sides of the fence.

While some might argue the semi-legitimate (?) uses are deceptive in themselves, I'm far more concerned when criminals or malicious beings use it to further one of their schemes.

For instance, caller ID spoofing has been used to dispatch a SWAT team to an unsuspecting person's house, and a Pennsylvania man made obscene phone calls to women and made the caller ID appear as if they were coming from within the house. It has also subjected a lot of people to abusive return phone calls when their number was spoofed and angry consumers wanted to complain.

Of even greater concern is when caller ID spoofing is used by "stalkers." In January, Alexis A. Moore did a very well researched post on her blog about this subject. Moore is a "crime victim advocate and expert in cyber stalking, identity theft, traditional stalking, domestic violence and privacy protection," according to her profile on Blogspot.

Before I move forward, please note that it seems to have worked on a 911 dispatch system. In this case, law enforcement – who is known to spoof their numbers – is being victimized by the same technology they use to cloak calls themselves. Please note that if anyone should be able to legally spoof calls, it’s probably law enforcement. Nonetheless, it is ironic.

More and more frequently, caller ID is being used by organized (and maybe some not so organized) criminals to commit fraud.

Last month, spoofing caller ID was reported to be used as a tool by an international credit card fraud ring that was broken up by the NYPD and the Queens District Attorney's office. The ring was using an easily purchased portable spoofing tool, known as a Spoof Card. Spoof Cards can be bought by anyone who has the money to buy them, right over the Internet! Besides spoofing a number, the cards can be used to disguise a person's voice and gender.

The ring, which was described as stretching from New York to Nigeria, obtained cards and activated them using a number they spoofed as legitimately belonging to the intended recipient of the card. Please note, most banks require you to activate a card from a known number when you receive it in the mail. I wonder how many of these same banks are using caller ID spoofing technology in their collections departments.

While the methods used by this group included counterfeiting, mail theft, taking over accounts and fraud applications to get the cards, using a Spoof Card was obviously a pretty successful tool used in furthering the fraud scheme. The victims were from all over North America and the cards were used worldwide. According to the authorities, the financial impact of this activity was estimated at $12 million in the past year alone.

While devices like Spoof Card are an issue, the problem doesn't stop there. Semi-legitimate (?) marketing firms, such as Voice Touch, Inc. and Network Foundations LLC – ones that the FTC shut down last month – were using robocalls with spoofed caller IDs. Of course, there were a lot of complaints that these warranties they were selling (provided by Transcontinental Warranty, Inc.) were virtually useless if you tried to use them, too.

Spoofing caller ID has led to a rash of vishing (phishing by telephone scams), also. Last year in November, I wrote about a call I was getting offering to lower my interest rate. The calls in question were robo-generated and the intent was to get you give up your credit card numbers to a scammer. As of this month, I received another one of these calls. Besides this particular scam, there have been numerous reports of financial institutions having their telephone numbers spoofed in vishing schemes.

Of course, Spoof Card isn't the only spoofing service out there. Some services offer software programs that can be used to spoof calls over a Web interface. One even calls itself PhoneGangster.com.

The services that allow it to be done over a Web interface enable the activity to be performed on a much larger scale. A simple Google search for "caller ID spoofing" brings up all kinds of Adsense ads selling a wide range of caller ID spoofing services. Of course, I shouldn't single out Google or Adsense; my guess is that any search on most commercial browsers will net the same type of advertising.

With VoIP technology in full vogue and services like Skype, the fraudulent use of caller id spoofing services now can feasibly be done across borders. This will make it much more difficult for law enforcement agencies to investigate and prosecute these cases.

In 2007, two bills were sent to the Senate to address caller ID spoofing. Neither was voted on and as a result no effective law has been put into place to address this issue. This year, Senator Bill Nelson (FL) and three co-sponsors introduced another bill (S.30) dubbed "The Truth in Caller ID Act."

In my humble opinion, the need for this legislation is pretty apparent. Laws are designed to protect people and it there are too many good reasons people need to be protected from caller ID spoofing!

The right place to file a complaint about something like this is the Federal Trade Commission. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). There is also a link on the page to file a complaint on an overseas entity.

You can also write your representatives (elected officials) and encourage them to make 2009 the year that they finally pass some legislation on this issue.

FTC Shuts Down Internet Provider Specializing in Kiddie Porn, Fraud & Spam

2009-06-04T20:15:00.000-07:00

The Federal Trade Commission (FTC) announced yesterday that a federal judge shut down a rogue ISP (Internet Service Provider), that knowingly participated in a wide array of illegal activity.

Pricewert LLC, which operates under several names like 3FN and APS Telecom, was allegedly colluding with and catering to criminals who distribute a wide range of malicious content fueled by botnets. These spam e-mails contained illegal porn, spyware and phishy e-mails containing malicious code (malware, crimeware). So far as the illegal porn, it included pictures of minors, bestiality, violence and incest.

The company allegedly even advertised in underground I nternet forums set up to facilitate communication between cyber criminals. The FTC also alleges that shielded their clients by ignoring take-down requests by the online security community and shifting activity to their other Internet protocol addresses to hide it.

Although the service is registered in Oregon, the ISP is believed to actually be based in Eastern Europe and operated out of California. It is unknown at this point if the owners will be extradited to face justice here in the United States.

The FTC also alleges in the complaint that Pricewert LLC recruited bot herders and deployed botnets – large numbers of compromised computers formed into a supercomputer – by hosting the command and control servers that send instructions to the compromised computers (zombies). The filing also alleges that 3FN controlled more than 4500 malicious software programs capable of logging key strokes, stealing passwords, stealing data and (of course) sending out a lot of spam. There is little doubt that these people are responsible for stealing a lot of money and catering to undesirable members of society.

The NASA Office of the Inspector General (one of the victims); University of Alabama; The National Center for Missing and Exploited Children, The Shadowserver Foundation; Symantec and the Spamhaus Project all were credited with assisting in the investigation.

Security Fix (Washington Post) and the Sunbelt blog mentioned tracking malicious activity back to Pricewert LLC or one of their affiliates in the past several months. Information Week was able interview Vincent Weafer, VP at Symantec Security Response, about Symantec's involvement in the investigation. Brian Krebs at Security Fix interviewed Christopher Barton at McAfee about his perspective on the case. Both Weafer and Barton said they were seeing the criminals move to other ISPs.

To highlight this, Krebs provided a post from a Russian blog that indicates the criminals are moving to other ISPs. 3FN is also allegedly telling their "customers" they will be up and running soon at a new (undisclosed) location.

We might have already seen the precedent of criminals simply moving to "greener pastures" after an ISP take down. Last year, two other ISPs (McColo and Atrivo/Intercage) were taken down. In the aftermath of McColo, spam volumes fell 50 percent. Sadly enough, the spammers and other criminals simply moved to other ISPs (outside the U.S.) and the spam levels have returned to pre-McColo levels.

According to Symantec's most recent monthly report, spam levels are up to 94 percent of pre-McColo levels and it is estimated that 90 percent of all e-mail is spam. This extremely high percentage of spam causes legitimate e-mail to get caught in spam filters, according to Symantec. I have seen this occurring on my personal accounts, more and more, frequently.
While shutting down rogue ISPs is a good thing and is a trend I hope will continue, catching a few of the human rogues behind this activity might lead to a more permanent fix. We need to remember that these people are responsible for abusing people (notably children), larceny on a grand scale and making everyone's Internet experience less pleasant.

One of the reasons cyber crime has grown into such a big problem is that consequences seem to be lacking for those directly involved in it. Of course, some might point the finger at those who enable it, too. Computers and the Internet do not commit crime, people do! Likewise, most of the enablers are people, too.

Until we address the root of the problem and the people behind it, It will be hard to make much progress by simply shutting down an ISP or two. Of course, this doesn't mean that shutting them down isn't a large step in the right direction.

Extradition and aggressive prosecution would greatly complement this latest take down.

A Call for Action in Addressing Cyber Security

2009-05-31T07:14:00.000-07:00

On Friday, President Obama addressed the nation on the importance of securing cyberspace and the reasons why it could be a danger to both our economy and national security. He also used the term, "weapons of mass disruption" and announced that he will appoint a cyber security czar.

The speech highlighted a 60-day study conducted at his direction, designed to take a look at how vulnerable we are to cyber attacks that could drastically change the whole way we exist.

Is this a far cry from reality? Perhaps not; if you can take command and control of the computer that controls something we use, you can do pretty much anything you want with it. This might be anything from a banking system to the system that controls an electrical grid or a sophisticated weapon. If you really think about, computers control just about everything nowadays.

As I was considering this, it reminded me that there are already millions of computers where some hacker has gained command and control of and formed into a botnet (essentially a supercomputer). All it took to do this was a little social engineering to trick someone into downloading some malicious code on a machine. While some of us might write this off as stupid people doing stupid things, people have even been tricked into doing this at government agencies and Fortune 500 companies. Trust me, not all the people who fall for some of this stuff are stupid. Social engineering is known to cause people to do things they normally would not!

While it takes a little technical sophistication to write malicious code, a person doesn't necessarily have to be a technical whiz to get their hands on it. They can buy it right on the Internet, complete with a do-it-yourself (DIY) kit to execute their intended misdeed. While most of the "misdeeds" seen in the wild have a financial intent, the intent is dictated by the person committing the act. In other words, the intent might be different depending on the person who is executing the deed.

Also mentioned, both in the report and in the speech, was cyber-warfare. For years now, the Chinese have been accused of hacking into government systems, although they always deny it. Also mentioned was an actual use of cyber warfare, or the Russian attack on Georgia that happened in the not very distant past.

Please note that botnets, which I mentioned above, were used to cripple the Georgian infrastructure. The zombie computers used in these botnets didn't come out of Russia, either. Some of them were traced right back to this country. In the current environment, you don't need to be in a physical location to take command and control; it might happen from anywhere.

The report also mentions attacking electrical grids and that the CIA has intelligence that this has already occurred in other countries. Just last month, the Wall Street Journal issued an article stating that Russian and Chinese hackers had mapped the U.S. power grid and left behind software that in theory could be used to attack our electrical grid. The article quoted unnamed officials from within the government. This set off a flurry of articles and in the end, most of the experts concluded that the threat, although real, wasn’t as bad as it was hyped up to be. Nonetheless, hacking certain utilities, such as electricity, water, and sewage could cause a lot of serious problems and there is evidence it has been accomplished in other countries.

While cyber warfare is an ominous subject, the report points out that we have already seen some pretty major events when financial systems were successfully attacked. Examples given were the TJX data breach (45 million payment cards compromised) and the more recent WorldPay payment card breach where a 30 minute exploit netted nine million dollars. This highly coordinated scheme took place all over the United States, Montreal, Moscow, and Hong Kong in a very short time-frame.

There is tangible evidence that so much personal and financial information has been stolen that the laws of supply and demand are driving prices down. Interestingly enough, a lot of this information is traded right over the Internet in anonymous forums using hard to trace forms of payment.

Two recent reports point to this. Symantec released a pretty interesting report on the underground economy and shortly afterwards, Verizon issued another report on the state of personal and financial information being stolen. The Verizon report, pointed out that the 285 million "known" records stolen in 2008 amounted to more than what was recorded in the previous three years. The Symantec report, which breaks down the going prices for information noted that the practice of spoofing (impersonating) financial institutions to steal information grew from 10 percent in 2007 to 29 percent in 2008. The Symantec report stated that 90 percent of the attacks being launched via botnets were designed to steal information and that the number of infected computers had grown 31 percent in 2008 over 2007, also.

Also cited in the report and in the speech was an estimated $1 trillion dollar loss per year in intellectual property. In recent years, the FBI has been busy catching numerous people stealing technology secrets and exporting them out of the country. This brings up another variable in the problem or if a person is given access to a system it is relatively easy to compromise it.

Recently, it was even disclosed that computers in Congress were hacked. It appears that even government intellectual property is being targeted.

When it comes to intellectual property theft, often we do not know what the motive is. Again, the intent is largely dictated by the end user. If you wanted to see a real world example, you might take a look at software piracy. The Business Software Alliance puts worldwide losses at over $50 billion, yearly. If you were to look at counterfeiting in general – which can involve the theft of intellectual property – the International Anticounterfeiting Coalition estimates the losses at $200 to $250 billion just in the U.S., every year.

The report, which is posted on WhiteHouse.gov, also addresses the growing problem of privacy in the digital world. Personal and financial information is worth a lot of money to businesses and criminals alike. Unfortunately, because of this, a lot of people are leery of putting in controls that might make it harder to profit from information. Because of this, a lot of people’s personal and financial information has gone missing.

The American Library Association, the Cato Institute, the Center for Democracy and Technology, Carnegie Mellon University, Consumer Action, the Center on National Security Studies, Cornell University, the Electronic Frontier Foundation, the Electronic Privacy Information Center, George Washington University, Harvard University, Indiana University, Johns Hopkins University, OMB Watch, Ohio State University, the National Security Archive, the University of California-San Diego and the American Civil Liberties Union were all consulted in the initial 60-day report.

While the report isn't clear on how privacy will be dealt with, it nonetheless is calling out that a problem exists. The problem is too much information being stored in too many not very well secured places.

For a real example here, one could refer to the DATALOSSdb Open Security Foundation, which tries to document all the known data breaches. The problem is getting worse all the time, and although some might argue that greater transparency is the reason for this, there are probably many more unknown data breaches that occur out there. After all, it’s unlikely that the hackers or other criminals stealing the information are going to come right out and tell us where they are getting it from. From a business perspective, it isn’t in their best interests.

The real casualties in this part of it are the individual victims, who suffer a lot when their information is used after it stolen. With the sheer amount of victims out there, some could argue we are facing an identity crisis.

To add to the problem, technology is now also being used to produce high-quality counterfeit documents and financial instruments in places, such as garages. This makes the information being stolen all the more dangerous, or easy to abuse.

Another thing the report addresses is the need for education and that laws need to catch up to the technology we are using. An interesting section at the end of the report highlights the history of modern communication technology. There is little doubt that as technology grows at a rapid pace; it is hard for the legal community to keep up with it.

In the end, in my humble opinion, the study is the first step in a positive direction. We have already seen too many examples of the abuse of technology, which has a lot of potential for good, too! The problem is how to deal with those who abuse it. The good news is that a large part of solution can be achieved by using a little more common sense and the clean slate approach (mentioned in the report) will go a long way towards making this a viable effort. In the end, a responsible balance is the key, and this is what it seems the report seems to be calling for.

Charity Scams Busted Nationwide

2009-05-30T04:22:00.000-07:00

Most Americans embrace the philosophy of helping others in their time of need. In every disaster -- whether it is in this country or anywhere in the world -- Americans are there to help those who need a helping hand. Unfortunately, there are those who take advantage of this, which has led to an ever-growing problem with charity fraud.

One of the more popular charity causes is to support the public service organizations, which are on the front lines of protecting the rest of us. Sadly enough, charity fraudsters are impersonating organizations that raise money to support fire fighters, policemen, and members of the armed forces.

Often, the line between an outright scam and the deceptive marketing of charitable causes is a little blurry. There are a lot of services-for-profit that market charitable causes for a cut of the proceeds. Unfortunately, some of them get too greedy when taking their cut.

To combat this growing problem, the Federal Trade Commission, along with dozens of state law enforcement officials, announced Operation False Charity on May 20th. Operation False Charity is a crackdown on fraudulent telemarketers, who claim to be gathering money on behalf of police, firefighters and veteran’s charities.

In keeping with the FTC tradition of educating the public, they are also releasing a lot of educational materials about charity fraud. They even provide a lot of these materials in Spanish.
Warning signs of scams, and what you should do about them:

• High pressure pitches. Reject them: It’s okay to hang up.

• A “thank you” for a pledge you don't remember making. Be skeptical. Scam artists will lie to get your money.

• Requests for cash. Avoid giving cash donations.

• Charities that offer to send a courier or overnight delivery service to collect your money.

• Charities that guarantee sweepstakes winnings in exchange for a contribution.

• Charities that spring up overnight, especially those that involve current events like natural disasters, or those that claim to be for police officers, veterans, or firefighters. They probably don't have the infrastructure to get your donations to the affected area or people.

To assist the public in learning how to avoid being taken when giving money to a charitable cause, the FTC has a lot of tips to identify a potential scam. Here again, these tips are provided in Spanish, too.

Individuals are not the only ones targeted by charity fraudsters. Frequently businesses are targeted, also. One way businesses are targeted is by being solicited to buy advertising in publications that look like they're sponsored by nonprofit groups. Just because the publication may use words like "firefighter," "police," or "veteran" doesn't necessarily mean they are affiliated with these groups. The prudent thing is to check out any unknown charity with a site like NASCO (National Association of State Charity Officials), which provides resources to identify legitimate charities throughout the country.

The results are starting to come in from the efforts put forth in Operation False Charity. On Friday, Jerry Brown, the California AG, announced they have filed eight law suits on 53 people, 17 telemarketers, and 12 charities accused of squandering millions of dollars of charity money intended to support policemen, fire fighters, and veterans. According to the announcement, the so-called agencies involved had bloated overheads and even purchased a 30-foot sail boat with the money they collected.

Thus far, 76 law enforcement actions against 32 fundraising companies, 22 non-profits or purported non-profits on whose behalf funds were solicited, and 31 individuals throughout the United States have been initiated as a result of Operation False Charity. Also included in this total are two FTC actions against alleged fake non-profits and the telemarketers making the calls.

If you want to learn more about how to make your donations count, you can visit the special site the FTC has put up on this subject. Furthermore if you spot what you suspect is charity fraud, contact your State Attorney General or local consumer protection agency.

Other recognized places to ensure a charity is legitimate are the American Institute of Philanthropy, Better Business Bureau Wise Giving Alliance and CharityNavigator.

You also may file a complaint with the Federal Trade Commission by visiting the page on their site, or calling toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

Millions of Potentially Sensitive Records from the Clinton Era Gone Missing!

2009-05-20T04:26:00.000-07:00

A computer hard drive which contained huge amounts of personal and sensitive information from the Clinton administration is missing. Some of this information includes Social Security numbers, personal addresses and even scarier, Secret Service and White House operational procedures.

Yesterday, government officials were briefed about the compromise, which was originally discovered in April. The hard drive held a terabyte of computer data that could contain millions of individual records. A terabyte of data would be enough to fill millions of books, according to this article published by the AP.

The media is reporting that the personal information of one of Al Gore's three daughters was one of the millions of records gone missing – although it is not clear which daughter's information was compromised. Given the amount of information stolen, it's likely a lot of other notable as well as ordinary people have been compromised, too. According to articles I read, authorities are still trying to figure out exactly what was on the hard drive.

The drive was lost sometime between March 2008 and April 2009 from the National Archives and Administrations in College Park, MD, which is a Washington suburb near the University of Maryland.

The drive was left out, unsecured, in a room that is frequently left unlocked for ventilation. According to an unidentified source, a researcher who was converting the information to a digital records system left the hard drive on a shelf for an unknown period of time. When the researcher tried to resume work on the project, it was discovered to be missing.

According to Rep. Edolphus Towns, Democrat-N.Y., chairman of the House Oversight and Government Reform Committee, they are seeking more information on the breach, and the FBI is investigating.

The FBI will have a lot of suspects in this case. One hundred badge holders had access to the area. Additionally,the point of compromise is an area where workers, interns and even visitors pass on their way to the restroom.

This information would normally be stored in a secure area. Thus far, officials are quick to point out that it is unknown whether the hard drive was stolen or accidentally lost, and if any sensitive security information was lost.

At this time, either it isn't clear, or no one is saying, whether or not the data was encrypted. Encrypting data is considered a "safe and sane" security practice when dealing with data in transit and has become a legal requirement in many situations.

The House Oversight and Government Reform Committee have pointed to a problem with government agencies being compromised in the past. In a report released in 2006, the Committee came to the conclusion that the problem with agencies being compromised was government-wide. Other findings in the report include: agencies do not always know what was lost, physical security of data is essential and contractors are responsible for many of the breaches.

The report covers from 2003 to 2006 and, in light of this latest occurrence, it appears the problem still exists.

More recently, President Obama has pointed to another problem which does have national security implications and which involves protecting cyberspace from the threats that exist today. Thus far, a study has been conducted, and is being reviewed. Stories in the media have pointed to a concern with cyber warfare and with hackers from foreign countries (notably China and Russia), who have been suspected of targeting government systems.

If you are interested in learning more about Chinese hackers, there is a well written blog on the subject titled "The Dark Visitor (Information on Chinese Hacking". Another non-government source which covers data breaches in general is the Open Security Foundation.

While the implications of this latest issue have yet to be determined, it is not good news from the standpoint of how easily the information was compromised. Of course, this is merely one incident, and if you follow the news, we get bad news about data compromises all the time.

Update 5/20/09: It has now been confirmed that the missing hard drive had no encryption and a $50,000 reward is being offered for information leading to it's recovery. Source: CNet.

FaceBook Hack Reveals Trend in Targeting Social Networks

2009-05-17T07:57:00.000-07:00

Attacking social networking websites is becoming more common all the time. My guess is that they are being leveraged by criminals, who are after the vast amount of personal information people willingly put up on these sites.

For the past couple of weeks, the ongoing attack on FaceBook has figured prominently in the media. The attack isn't much different than some of the other ones we've seen in recent years – which are to take over a user account – and then use it to trick people into falling for a scam. In this instance, a phishy link is being used to direct the effort.

The intended victim receives a communication from someone they know (who has already been compromised), which directs them to a page that appears to be a FaceBook login. They are then prompted to put in their user name and password. If they do, their information is stolen and will be used to trick even more people into doing the same thing.

Stealing stolen user accounts on eBay has been a problem for years. On eBay, it is a means of using an established seller's credentials to trick people into thinking they are dealing with a "trusted seller." The only difference here is that instead of selling bogus or non-existent merchandise, the intent on FaceBook is probably to trick people into giving up personal or financial information.

This information can then be used to commit financial crimes, using the victim’s identity.

I found some information about the FaceBook attack on Symantec's Security Response blog. Thus far, according to the research conducted on this at their lab, no computers have been infected.

According to Marian Meritt at Symantec, the danger of giving up your FaceBook credentials might go beyond having your account compromised. She believes the hackers behind this are looking to compromise other accounts, where you might use the same credentials. I read some other articles on this and thus far this seems to be the consensus of why the attack is occurring, but no one seems to know for sure.

Whether this is the intent, or not – the advice given in the post is something that should be considered when dealing with the multiple accounts a lot of us have.

First and foremost, you should pay attention to the address in the bar at the top of your page. If it is not exactly the address of the legitimate site, you are probably being tricked into thinking that it is. For instance, www.faceboot.com is not www.facebook.com. Even better, if you spot a suspicious link, hover your mouse on it (without clicking on it) and the actual address will appear at the bottom left-hand of the page. Entering the legitimate address in your address bar is always smarter than clicking on a link, too.

Of course, it's also wise to check out the address at the top of the page after arriving at your destination, also. You should also stop and think when something pops up instructing you to enter your user and password information.

Also recommended is to use complex and unique passwords for each of your accounts, maintain an up-to-date browser and operating system and use updated security software from a reliable vendor.

When purchasing security software, ensure you are not buying counterfeit software or being tricked into purchasing scareware. Scareware is bogus security software that normally prompts a user to run a scan of their system, which reflects all kinds of bad things going on. The problem is that the problems normally do not really exist and the protection they are selling doesn't really protect you, either.

So far as buying counterfeit software, it normally doesn't protect you very well and it might even have some malicious code built right into the program.

While the FaceBook attack is the flavor of the week, it’s not the only social networking site that has been targeted in the recent past. Twitter and MySpace have been the targets of recent attacks, too. SC Magazine did a recent article where a security researcher from Websense was quoted as saying they have detected more than 200,000 sites impersonating the above mentioned social networking sites.

Going beyond social networking sites, financial, auction, e-commerce are frequently attacked, too. The common denominator is sites where criminals can harvest information and turn it into money. Please note that people interested in doing a little bit of due diligence on you personally might see what you are putting up on these sites. I’ve recently seen this presented as a “best practice” when doing background checks on people.

The key is to adopt the known best practices if you enjoy using these sites. Another wise thing to do is to be extremely thoughtful about what information you post on them and how it might be used against you.

Anything you post on these sites can and will be used against you if the wrong person gets their hands on it. In the end, being mindful of the information you are posting on a social networking site is probably the best defense you have. After all, you never know who is looking at it!

Craigslist Shuts Down Erotic Services Section

2009-05-15T06:24:00.000-07:00

Craigslist has given in to the immense media attention regarding its "erotic services" ads and announced they are shutting the section down. In its place they are now adding an "adult" section, which appears to hawk the same type of personal adult services.

A lot of this occurred after it was discovered that a killer used Craigslist to stalk his victims, who were offering adult services. Since then the nasty subject of teenage prostitution on Craigslist has been covered in the mainstream press and the site has been referred to as an "online bordello."

Of course, Craiglist isn't the only place that advertises "adult services." They can be found in newspapers, alternative weekly rags, and a whole slew electronic venues besides Craigslist.

Craigslist announced the change on their blog and made some points in their defense. At the same time, they announced they will be charging for the ads in the new section and the proceeds will go to charity. All of the new ads will be reviewed by Craigslist employees before they are posted.

The post refers to statistics that the chances of a predator abusing their forum are less likely than a predator using print ads to commit a foul deed. Also pointed out was that Craigslist has safety features built into the site that most "classified advertising" venues don't have. These include blocking, screening, telephone verification, and a community flagging system. The company also claims they cooperate (at a high level) with law enforcement and that predators can be tracked electronically back to the computer they are using. Last but not least, they point to safety tips prominently posted on all forums. These safety tips run the gamut of illegal schemes commonly found on the Internet.

Investigations are normally confidential matters, but if someone was tracking a sexual predator some of these forums could provide real-time investigative capabilities to resolve the case. They could literally track everything to a particular location given the right circumstances and cooperation by the forum and the ISP. Quite often, the frustrations voiced by those tasked with investigating internet crime are that the site and or the ISP do not cooperate as much as they should. If these sites aren't going away, then maybe the solution is to make is easier to tag the offenders?

Craigslist claims they do cooperate with investigative inquiries, but thus far no one is publishing any of these stories. It does state that law enforcement personnel provided feedback on how to design their new "adult section." Again, I'm not sure, but I imagine they couldn't claim this unless there was some truth to it; there is probably an army of lawyers monitoring this situation.

I doubt a flurry of media attention directed at Craiglist is going to solve the "people abuse" problem caused by anonymous venues. The problem will merely move from one anonymous venue to another one. The key will be the ability of the people doing the abuse to remain anonymous, or at least think they are. When sites and ISPs cooperate, it really isn't hard to track a lot of these individuals.

Since none of these sites are going away anytime soon, perhaps the best solution is to make it easier for the authorities to obtain cooperation from them when abuse is suspected or occurred, which is exactly what Craigslist is claiming to do. But Craigslist is hardly the only place where people are victimized by those with sinister intent on the Internet or via advertising in the print media. We need to begin to take a realistic look at the entire issue.

NFCC Launches New Site to Assist Consumers in Financial Trouble

2009-04-28T03:02:00.000-07:00

The National Foundation for Credit Counseling (NFCC) has revamped their web site to provide consumers in financial trouble with a wide array of e-tools designed to help them solve their problems. The site also provides access to an NFCC-certified counselor to work with them on a more personal (human) level.

“It can be argued that there has never been a time when consumers needed financial tools more. And, when you need help, you want it fast. You don’t have time to waste going from site to site. You might say the NFCC is the HOV lane of the Information Highway,” said Gail Cunningham, spokesperson for the NFCC.

Sadly enough, the current economic crisis continues to spawn a lot of too-good-to-be-true financial rescue schemes. These offers -- which frequently put the consumer in even more financial distress -- are being hawked via spam e-mails and other advertising venues at an alarming rate. The NFCC, which has been around for over fifty years, and is one place where a person can reach out for some legitimate help without getting themselves in even more financial hot water.

The newly redesigned site has a lot of practical tools including a printable budget worksheet for tracking monthly expenses, access to financial calculators to help understand how long it will take to pay off credit card debt, what amount of mortgage debt can reasonably be sustained, or how long it’s going to take to save enough money for that special purchase.

There are also consumer tips on relevant everyday topics such as saving, credit, debt, and job loss, among others; consumer resources such as NFCC publications and videos and useful links; and videos of financial fast facts along with real life success stories, and a “Tell Us Your Story” area for consumers to voice how they’re faring in today’s economic environment.

Consumers in financial distress can reach out to a live person at the NFCC Member Agency closest to them through a secure online portal. NFCC counselors can provide assistance and advice with credit counseling, housing counseling and bankruptcy counseling and education.

On a lighter side, there is even a poll where someone can express their opinion about the current financial issues and see how they compare with the rest of the country.

The NFCC has been in the news in the past few days for striking a deal with credit issuers to help consumers facing overwhelming credit balances get out of debt. Thus far, ten of the top credit issuers have agreed to roll out two special needs repayment plans, and the NFCC hopes more will follow suit.

Last month, according to Moody's credit card index, uncollectible credit card debt surged to a 20-year high at 8.82 percent. Additionally, the Fitch Credit Card Index reported credit card delinquencies have increased 36 percent in the past six months.
Michelle Singletary covered this story at the Washington Post. The NFCC also has more information on this in a press release they put out on April 15th.

The NFCC marked April as Financial Literacy Month and has launched a lot of events designed to promote financial responsibility. The newly designed site is one of them. The climax of their efforts is on April 28th when they present the National Survey Results on Consumer Financial Literacy to Congress.

Another event scheduled on April 28th will be a special MSN Message Board Event, where NFCC-certified counselors will be on-hand from 9 a.m. to 9 p.m. (Eastern Standard Time).
Besides providing e-tools to promote financial education, the NFCC can also be reached at 1-800-388-2227 to speak to a counselor near you. Para ayuda en Español Ilama al 1-800-682-9832.

Scammers Exploiting MoneyGram Money Order Verification System

2009-04-25T05:01:00.000-07:00

If you were scammed recently with a money order, the counterfeit might have been an instrument spoofing the MoneyGram brand. These money orders have been known to appear in all the too good to be true/don’t exactly make sense come-ons being passed by spam e-mails or via a direct solicitation in a chat room.

In case you are not familiar with all the variations of these come-ons, they include , but aren't limited to (new lures surface frequently), the secret shopper, romance, lottery, work-at-home and auction scams.

The common denominator in most of the scams is there will be a request to send the money you receive via wire transfer (if you don’t get caught), to the fraudster sending you this garbage for a small cut of the total amount. That is unless they are buying goods from you. In this case, the item you are selling is what they want.

In the past, a simple call to MoneyGram’s verification line (1-800-542-3490) normally was all that was needed to reveal the fact that the item was fraudulent. Unfortunately, this is no longer the case. The criminals producing these instruments are now taking advantage of a flaw in the automated verification system, which is tricking people into believing that the money orders are good.

When a MoneyGram money order is called in for verification, the system prompts the user to enter all the particulars of the instrument, including the serial number and dollar amount. If the system doesn’t spot a discrepancy, it gives out a standard disclaimer stating there are no stops or holds on the item. If the system catches a discrepancy, it directs the caller to a live operator during their business hours.

In recent weeks, I’ve received reports of this being exploited in two ways. In the first instance – a legitimate money order is purchased for a small amount (normally $1.00) –then is chemically washed and altered to reflect a large dollar amount. It is then passed before it registers in the verification system – and since the system doesn’t recognize the dollar amount – it gives out the standard disclaimer then tells the caller there are no stops or holds on the item. According to the people, I’ve asked, money orders do not register in the system for anywhere between 24 and 96 hours after being issued by a MoneyGram agent.

In these instances, since the item was printed on actual paper, it contains all the known security features. These include a heat sensitive circle, which changes color when rubbed.

A second variation of this scam has also been seen. In this variation, the instrument is a copy of a money order purchased for a small dollar amount. These will pass muster in the system as described above, but the security features will not be present. In this second version of the scam, the dates were printed to make it appear as if the item had been purchased several weeks before the legitimate item actually was. I suspect this was to trick people, who had already discovered the "washed instrument" mutation of this scam.

When I first started getting reports on these variations of the scam, I thought it might be only targeting a limited geographical area. Normally when washing items occurs, this is the case. Since then, I've discovered this is happening throughout North America and the items are being shipped using overnight services, such as Federal Express and UPS.

I have also had reports that these are being passed not only via online come-ons, but also by professional groups who specialize in passing counterfeit instruments.

I went to the MoneyGram site to see if there were any warnings about this specific scam and found none. They do have a consumer protection area on their site, which refers to all the come-ons to trick people to cash these items. They also have information on how to verify their product in the FAQ area for customers on their site.

The sad fact is that money order companies do not take a loss on these instruments. When the items is discovered to be a fraud – they return it to the institution who cashed it and the institution goes after (if they can find them) – the person who cashed them. With any money order, it is nearly impossible to be made whole by the issuing company, itself. In fact, many experts will tell you that accepting a money order is more risky than accepting a personal check. If you listen to the disclaimer on the verification line it tells you exactly that.

So far as getting these instruments in too good to be true online scams – with the sour economy – I am seeing more and more people who really want to believe they have come into a financial windfall. When they fall for these scams – one thing is for certain – which are they are going to be held liable for cashing the items when the scam is discovered. This will certainly include being held financially liable, but can also mean facing criminal charges.

So far as counterfeit MoneyGram instruments – although a lot of them seem to be out there – they are not the only items being counterfeited. U.S. Postal Money Orders have been seen frequently in the past, too. Recently, the U.S. Postal Service redesigned their product and has a new page on their site to help consumers verify their product. Counterfeit cashier's checks, money orders, gift and travelers cheques are also known to be frequently counterfeited and used in these types of scams.

If you want to learn more about these scams, I recommend going to fakechecks.org, where you can see some highly visual demonstrations of these schemes. Another good resource on this subject – particularly if you are a victim – is FraudAid. The folks at FraudAid actually provide resources and advocate for people falling for these scams.

Twin Reports Suggest We are Losing the Cybercrime War

2009-04-17T04:41:00.000-07:00

According to Symantec, malicious activity in 2008 amounted to 60 percent of all the activity they have recorded since they started keeping records. Last year, they recorded 1.6 million new malicious code signatures and blocked 245 million malware attacks from their users every month.

Many of these attacks – when the words malware or malicious code are used – are designed to steal information (preferably financial) or take command and control of a computer. Once command and control of a computer is accomplished – it’s called a zombie and networked into a botnet. A botnet works as a super computer and is used to spam the electronic universe. Some of these spam e-mails contain even more malware, which infects more unprotected systems.

In 2008, Symantec saw a 31 percent increase in the number of zombie computers. In 2008, Symantec observed an average of more than 75,000 active bot-infected computers each day, a 31 percent increase from 2007. Symantec's latest report, which covers January to December of 2008, suggests that 90 percent of these attacks are designed to steal information. Attacks using key loggers – which log a computer's keystrokes and send them to the criminals who installed the malicious code – grew from 72 to 76 percent of the activity observed by Symantec's security lab.

Many of these attacks use a technique known as phishing, which is normally delivered in a spam e-mail. Phishing either tricks people into giving up their information (social engineering) or gets them to download malicious code, which makes the process automatic. Last year, Symantec detected 55,389 phishing website hosts, which is where you are sent if you click on a link in a phish-mail. Spoofed financial services companies accounted for 76 percent of these lures compared to 52 percent in 2007.

Spam, which delivers most of this activity, continued to grow, too. This equated to 349.6 billion spam messages in 2008 compared to 119.6 billion spam messages in 2007, which is a 192 percent increase. According to the monthly spam report from Symantec, last month's spam social engineering themes included mortgage rescue, tax season, terror and scareware (fake antivirus solutions) for the much anticipated Conficker worm that was designed to hit on April Fool's Day. Please note that Conficker a.k.a. Downdaup is still a problem, but it didn't spread it's gloom and doom on April 1st to the degree it was expected to.

Cybercriminals have always been quick to exploit the headlines and with the sour economy in the news have been targeting the financial industry. Here also, Symantec saw an increase of personal and financial information being stolen by using financial institutions as bait. In 2008, this amounted to 29 percent of the activity compared to 10 percent in 2007.

In their latest report, Symantec leveraged information from their recent Report on the Underground Economy which points to an organized criminal community that specializes in the sale of stolen personal and financial information. They noted that the economic principle of supply and demand has come into play with this underground economy due to a glut of stolen data – causing prices to go down.

Most of this stolen information is sold in electronic forums, such as websites and Internet Relay Chat (IRC) channels. These forums enable information to be sold worldwide and make the activity anonymous. Because the activity is anonymous, it is very difficult to investigate or shut-down. Credit cards go anywhere from less than a dollar to about $30 and bank account credentials sell for anywhere from $10 to $100. Much of the cost depends on the perceived value of information and the amount of it, which is purchased.

Symantec isn't the only one releasing a report showing an alarming increase information theft. Verizon just released a report showing that 285 million information records were compromised in 2008, alone. While the Symantec report focuses more on individual attacks, the Verizon report studies the impact large scale attacks on businesses and organizations. When combined, the information in these reports is pretty revealing.

According to the Verizon report, the 285 million records stolen are greater than what was known to be stolen in 2004 to 2007. I say "greater" because I've often speculated that the most valuable information stolen is the data no one knows has been stolen. After information is known to have been stolen, measures are taken to protect it. This makes it useless or at least a lot harder to use.

Recently, underground services have also popped up in these underground forums, which allow information thieves to see if the information they are buying hasn't been compromised (pun intended).

Verizon, who investigated 90 data breaches last year, noted that malware is now being designed to steal debit card and PIN information. The report also breaks down the point of compromise by industry and how the data was breached. For instance, in the past year 93 percent of the activity compromised was at financial institutions. Also cited was that most attacks were accomplished by external entities (73 percent) taking advantage of procedural flaws, but that when the breach was assisted by an insider (20 percent) more data was stolen.

The trend towards compromising debit cards and PINS is likely because these instruments are the quickest route to obtaining cash. Obtaining cash is normally the ultimate goal of an information thief and stolen debit card information accomplishes this with a minimum of effort.

Also covered are breaches caused by partners (32 percent), which are external entities providing services to a business. Please note these percentages add up to more than 100 percent, which means that multiple points of compromise can be attributed to any one incident in some cases.

Both reports are an excellent read and point to the fact that there is a glut of stolen information for sale on the black market, which isn't good news. The fact that more information is being stolen than ever before – even when security procedures are ramped up on a regular basis – is not good news, either.

Perhaps both of these reports suggest the obvious, which is we are not winning the war against cybercrime and the problem is getting worse. Historically, these losses have been written off and the cost is passed to the consumer. With the sour economy and the fact that a lot of the financial industry is already on the brink of bankruptcy, writing off these losses might no longer be a realistic solution.

The reason criminals can easily exploit this information is that we are storing it in too many places that are too easy to access. The reason this has happened is because a lot of people are making a lot of money by using and selling this information. Making the information easy to access makes it easier to make money from it. I'm all for making money, but at what point does it prove to be irresponsible?

No security fix is going to solve this problem without a healthy dose of common sense being infused into the scheme of things!

After all, the economy is already in a lot of trouble because of some of same people making a lot of money, irresponsibly. My guess is we are getting to the point, where we will no longer be able to write-off the cost of being irresponsible to the consumer, as well as, the taxpaying public.

Counterfeit Documents Enable Dangerous Criminal Activity

2009-03-28T08:12:00.000-07:00

For the past few weeks, the news has focused on all the blood being shed on our southern border. While there is no doubt that this activity is scary and real, these gangs have to be a little more low key when they perform their day-to-day operations.

In order to do this, they need to blend in with the rest of us. When setting up residence to operate their illegal businesses, these criminals need to appear legitimate. The way they do this is with a wide variety of counterfeit documents. These counterfeit documents enable the rest of the illegal activity to occur, which makes them a weapon that could be a lot more dangerous than an assault rifle, IED or RPG.

Although the news media is drawing attention to this problem (yet again) because of the violence on the border, the violence and resulting concerns about border security are nothing new. Neither is the use of counterfeit documents by the criminals crossing over the border and setting up residence in the United States.

A PBS Frontline story from 2001 illustrates the worst case scenario of this problem. It details how terrorists are specifically trained to use counterfeit documents to move across borders. The story states that using counterfeit documents is part of the security training of Al Qaeda operatives. This story also states that the terrorists affiliate themselves with organized criminal syndicates that smuggle humans and provide counterfeit documents to accomplish this.

If an undesirable person has documents that appear to be legitimate, it’s no problem to cross a border or set up residence in a neighborhood just about anywhere.

Because of this, the plea bargain made with Pedro Castorena-Ibarra — who allegedly masterminded the production of high quality counterfeit documents from coast to coast — is an interesting chapter in the long running border security saga. Quite simply, these counterfeit documents enable all kinds of criminal and some say, potential terrorist activity.

At one time, Pedro Castorena-Ibarra was considered one of ICE's most wanted fugitives. A five year investigation uncovered his involvement in the production of millions of counterfeit documents, which were sold to anyone with the money to buy them. The plea bargain stipulates that Castorena will testify against other people in the counterfeit documents trade. When doing the research on this, I noticed that there isn't very much public information on exactly who he is going to testify against.

One of the problems with prosecuting Castorena came about when a lead ICE agent assigned to the case, Cory Voorhis was indicted for using a government intelligence system in an unauthorized manner. While working the Castorena case, Voorhis decided to take a look at former Denver District Attorney Bill Ritter's plea bargains with illegal immigrants.

This information was subsequently used in an attack ad on now Governor Bill Ritter. The specific information used in the ad was about an illegal alien, who received one of these plea bargains after being accused of dealing heroin, and was allowed to plead guilty to trespassing. Voorhis discovered this same illegal immigrant had been previously arrested (but never convicted) on sex charges in California under a different name. How much do you want to bet he had access to counterfeit documents? Ritter called for an investigation and Voorhis ended up getting tried in federal court.

Voorhis was accused of accessing information he wasn't authorized to see in a government database (NCIC), which was later found to be incorrect. The National Crime Information Center is a database maintained by the FBI that records data on crimes. It came out in the trial that he actually used the web based link to this system instead of the TECS (Treasury Enforcement Communication System) that he was accused of accessing. This came out in testimony from a government witness and was corroborated in a FBI forensic analysis of his government computer. Because of this, it was determined that Voorhis never exceeded his authorized level of access.

Additionally, the information he accessed was in the public domain and could probably been found using other tools besides NCIC, some of which are available to anyone.

Voorhis has maintained he was trying to force change in what he considered questionable legal proceedings. There might be a few people out there that agree that it doesn't serve the best interests of justice to allow a heroin dealer to plead guilty to a trespassing charge (?). This person wasn't here legally and we might not even know his true identity.

Voorhis has since lost his job – and despite the outcome of the trial – was not allowed to testify in the Castorena trial. Many believe the attempt to prosecute Voorhis isn't much different than the much more public cases of Ignacio Ramos and Jose Compean.

In a recent article, former Congressman Tom Tancredo wrote about this, he points out that it seems to be more dangerous to be a federal officer charged with protecting our borders than to be one of the criminals crossing it. Please note that in the Ramos/Compean case, as well as, the Voorhis case — the immigrants involved were not here to find honest labor. Voorhis has a website, which has a lot of information on this case.

This includes a press release by Congressman Tancredo calling for ICE to give him his job back. The press release points out that the charges against him were found to be incorrect and he was exonerated. This would lead most of us to believe that this is a reasonable request (?). If it only took two hours to acquit Voorhis, there is a pretty good case that the prosecution's evidence in this case was pretty weak (opinion). It’s ironic that the effort to prosecute Castorena was dealt a death blow when Voorhis wasn’t allowed to testify against him even though he was found innocent.

The Voorhis site has an area, where people can donate to help him pay for the considerable legal costs incurred to defend himself. Of course, there might be another reason for making the deal with Castorena. In the world of plea bargains, deals are sometimes made to go after a bigger fish in the pond. Just who Castorena is going to testify against is open to speculation, but it might be against the Leija-Sanchez organization.

The Leija-Sanchez arm of the counterfeit documents trade operated out of the Chicago area and is reputed to be tied in with the Castorena organization. The step-daughter of the boss of this organization (Manuel Leija-Sanchez) has provided a lot of evidence on the scope and wide reach of this organization to the authorities. Please note, that like the drug cartels in the news recently, this cartel has also been found to be capable of violent activity when someone gets in their way.

Suad Leija is the step-daughter of Manuel Leija, who involved her in the counterfeit documents trade from an early age. Suad was recruited by a mysterious gentleman with obvious ties to the intelligence community, who is now her husband. The intent was to leverage the organization to identify potential terrorists, who had used their services.

The deal fell through and Suad headed north to assist the government in identifying the scope of the operation in North America. Since then there a lot of the key players in the organization have been identified and arrested, but the case is ongoing and ICE will not comment on it in public. Saud’s stated motivation in this effort is to prevent terrorists from using these documents to commit harm against the general public.

The Suad Leija story, which has been covered extensively in the mainstream media, is chronicled on her own site, Paper Weapons. If you want to see how widespread the problem of counterfeit documents is, the site is a good place to start. Suad provided a lot of the information, which tied in the Castorena branch with the Leija-Sanchez organization. The ties are pointed out on her site.

Please note that this is a very brief overview of the Suad story and if you are interested, her site covers it in great detail. The problem with counterfeit documents is a tendency to associate them with illegal immigrants trying to make a better life for themselves or teenagers sneaking into bars. The real issue is that they are sold to anyone and used by criminals who have a more sinister intent than to make a better life for themselves or sneak into a bar.

No matter where you stand on the illegal immigrant issue, the fact that the trade is controlled by criminals often leaves those with dreams of a better life open to a wide-array of abuse. This includes being enslaved and forced to commit crimes by the people, who bring them over the border.

Another common misconception is that these documents are being sold exclusively to our Hispanic neighbors to the south. The truth is they are being sold to anyone with the money to buy them. Our southern border has become the preferred route for anyone who wants to illegally enter the United States. All the resources needed to gain entry (illegally) seem to be readily available there.

On Friday, Sara Carter released an article in the Washington Times about the ties between the drug cartels on the border and Hezbollah joining forces to smuggle drugs and humans into the country. Although not mentioned in the story, these people obviously would need documents to set up shop once they cross the border. In fact, in theory at least, they might use them to cross the border.

Because, I found the story interesting, I made contact with Suad Leija’s husband, who told me that he gave this information to Carter a few years ago and pointed out that Lou Dobbs has also covered aspects of this story. Both Carter and Dobbs have covered the Suad story, and interviewed her, personally.

During this conversation, he told me that the specific information given was about an operation he proposed called “Tag.” Tag predated his involvement in the Leija-Sanchez operation and was designed to set up a means to provide documents to people illegally entering the country and then "chip" them so that specific targets could be tracked.

The original intent of the Leija-Sanchez operation was to get the cartel to cooperate in identifying and monitoring potential terrorists coming into the United States, illegally. Tag might have become part of this operation, if it had ever taken place, according to Suad's husband.

He told me the Hezbollah connection was nothing new and confirmed it comes out of the tri-border area in Paraguay, which hosts a large Islamic population. The residents in this area emigrated from Lebanon primarily in the aftermath of 1948 Arab-Israeli and the 1985 Lebanese civil wars.

He also mentioned that, according to Suad, the Islamic immigrants were paying $5,000 each to be brought across the border when the Leija-Sanchez organization was involved. Complete sets of counterfeit documents were included in the deal.

Parts of this story have surfaced before; MSBC did a story on the tri-border area of Paraguay and the Hezbollah connection. This story covers the terrorist financing aspect and potential threat to the United States. Michelle Malkin also did a post on her blog mentioning that FBI director Robert Mueller mentioned Hezbollah members crossing the border in testimony before Congress in 2006. She also mentions Mueller referring to terrorists assuming Hispanic identities and crossing the border, while in Texas in 2007. In October of last year, the Los Angeles Times did a story about Hezbollah laundering the proceeds of Colombian Drug Money. The story mentions that the cocaine being sold was going to the United States and other destinations.

Carter, who covers the border situation on a regular basis, has also done stories on the Mexican military crossing the border in support of drug smugglers and even firing shots at U.S. law enforcement. In one of the stories about this, which I saw on YouTube, Carter stated she got some of this information for the harder working illegal immigrant types. She mentioned that they hide from these groups in order to avoid being victimized by them.

Maybe these hard working illegal types are trying to tell us something?

Even more ominous, was President Obama's recent revelation that Al Qaeda was planning attacks on U.S. soil from their hideouts in the tribal belt in Pakistan. If this is true, the first thing these terrorists will need when they enter our country are counterfeit documents so they can blend in with the rest of us.

If you take a look at any aspect of the insecure situation on our border, counterfeit documents are more than likely involved in one way or another.

After all, it is a known fact that the last time a terrorist attack was carried out on U.S. soil; it was accomplished by individuals who used fake documents to enter the country to commit their dirty deeds on 9-11-2001.

Symantec Indian Call Center Employee Selling Credit Card Details (Shocking)!

2009-03-22T07:57:00.000-07:00

A story of an undercover investigation by the BBC shows how dishonest employees at call centers — who collect plastic payment card details on clients — might be making a little extra pocket change by selling them.

The focus of the BBC story is centered on an Indian call center employee for Symantec Security Corporation stealing payment card information. It is also centered on UK customers, which is understandable given it is the BBC, but the reality is that information is stolen then sold from countries all over the world.

Payment card details are handled by telephone at call centers in a lot of places and the calls come from all over, too. A lot of companies have different tiers (levels of personnel) handling calls, depending on the difficulty or nature of the call. At a lot of major companies, these tiers are located in different centers, which are in different countries. Any call might start in one country and, given the nature of the call, it could be transferred to another center located in another country. Given this, payment card information can be sent and then illicitly recorded over a fairly wide geographical area.

Besides that, dishonest employees are caught on a regular basis in a lot of different places. They don't all necessarily reside in India and call centers there are not the only place payment card information can be compromised. In fact, payment card information can be compromised anywhere (not just call centers) where they are used at a point of sale.

Information crooks are recruited and some think even planted anywhere financial information can be stolen. Even if they are not, payment card details are being bartered in forums on the Internet. It probably wouldn't be very hard to find a place to sell credit/debit card information when all it takes to do it is a click of a mouse.

The BBC story, which aired on video, chronicles an investigative effort by their reporters on the streets of Delhi. In the segment, it shows reporters making contact with the underground broker, who offers them payment card details from "all over the world" for $10-$12, each. It then shows a buy being made and money changing hands.

When the information was checked, it revealed that only one in seven card numbers were actually usable. They were able to trace some of the good numbers to a call center handling Symantec (Norton) products. The story stated that there has only been one successful prosecution in India for this type of crime and that it netted a non-custodial sentence. It also stated that the laws regarding the protection of data are not as stringent as they are in some places. The story mentions that Symantec's official comment was that it was an isolated incident and that the employee was removed.

Since one to seven card details turned out to be real, I guess we can assume the underground broker wasn't being completely honest. I've also seen reports of credit card details being sold for a lot less and you don't have to travel to India to find them.

In November, Symantec — the point of compromise in the story — issued a report on the underground economy, which focused on this very subject. "Credit cards are also typically sold in bulk, with lot sizes from as few as 50 credit cards to as many as 2,000. Common bulk amounts and rates observed by Symantec during this reporting period were 50 credit cards for $40 ($0.80 each), 200 credit cards for $150 ($0.75 each), and 2,000 credit cards for $200 ($0.10 each)," according to the report.

If this report is anywhere near accurate and the BBC was buying card details at $10-$12 each — if only one to seven was good in the Delhi exchange — the BBC was getting ripped off!

According to the 68-page report by Symantec, these details can be bought anywhere that has an Internet connection. Counterfeit instruments (ready to use) are often sent through the mail, too. The information is sold via IRC (Internet relay chat) channels in forums designed to market stolen financial information. Although credit/debit card details seem to dominate the scene, a lot of other information is sold that can be used to commit financial crimes and identity theft in these forums, too.

If you don't want to believe the Symantec report, the FBI took down one of these forums not very long ago. This forum known as Dark Market was responsible for about $70 million in fraud, worldwide. My best guess is that the information in the report is pretty accurate.

Although dishonest insiders are the cause of a portion of it, we should remember that hackers breaking into business systems, phishing, malicious software and even the trash can be sources of stolen information. The places targeted for information can be merchants, restaurants, goverment organizations, charity organizations, universities, medical facilities or anywhere payment card information is used at a point of sale.

Keeping up with all the points of compromise is difficult, but one place that attempts to is the DataLossDB site. Please note that the unknown data breaches are the most lucrative for the criminals behind this activity. Once a breach is discovered, measures are enacted to disable the stolen data.

It can be extremely difficult, if not impossible, to identify the point of compromise in most individual cases. The reason for this is there are too many different places where information might have been stolen from.

Maybe that's the problem, or we are storing and transmitting too much information all over the place? Since everyone is making money by transmitting information, I doubt this practice is going to stop anytime soon. So far as outsourcing, I doubt this is going to stop in the near term, either. Companies save a lot of payroll by outsourcing jobs. Payroll is a big expense for corporations and cutting payroll seems to be in vogue these days.

Nothing is going to change until laws are passed that force everyone making money from this information start doing the right things. This includes laws that prohibit people from being irresponsible (my opinion) to laws that punch the criminals stealing the information where it hurts.

Until then, the rest of us will have to batten down the hatches and weather the storm. I highly recommend making sure your information is protected as well as it can be (there are no guarantees) by protecting your own electronic transmissions. Monitoring financial activity — from your financial statements to information on your credit report and the Internet — is a good idea, too. Of course, while doing this, you need to ensure your electronic transmissions are protected by a reliable vendor and that you aren't paying for protection that you could get for free. Sadly enough, everyone claiming they can protect you isn't necessarily being completely honest, either.

FTC Warns FreeCreditReport.com is NOT FREE

2009-03-15T18:37:00.000-07:00

Identity theft is a serious subject, and according to recent reports, it's a growing problem. Because identity theft is out of control (personal opinion) and has victimized a lot of people, it's spawned a cottage industry that sells protection at a price. Critics, including the FTC, believe a lot of these identity theft companies are selling services that are supposed to be free.

If you've watched TV in the past year, you've probably seen the ads for FreeCreditReport.com. These ads have urban minstrels (guitar dudes) singing about the woes of people who have had their identities stolen or made poor credit choices. The idea is to get you to go to FreeCreditReport.com, which isn't exactly free. If you read the fine print when you sign up at this site for your free credit report, you are actually authorizing them to bill your credit/debit card $14.95 a month for eternity. This ads up to $179.40 a year.

That doesn't exactly sound like it's free, does it? You can cancel within the first seven days, but given their immense advertising budget, it appears not very many people do or seem to have a problem cancelling the service. Even worse, a lot of people who signed up for their service probably aren't even aware that they could have actually gotten their credit report for free elsewhere.

Under federal law, anyone is entitled to get their credit report for free. To bring attention to this, the FTC (Federal Trade Commission) has launched an awareness campaign entitled "FTC Releases Humorous Videos with a Serious Message About AnnualCreditReport.com."

AnnualCreditReport.com is the only source authorized to give out free credit reports under federal law. The law, which is part of the Fair Credit Reporting Act, guarantees anyone access to a free credit report from each of the big three credit reporting agencies — Experian, Equifax, and TransUnion — every twelve months.

The reason for this campaign was the large volume of complaints from consumers, who thought they were getting something for free, but were not. The FTC is warning the public not to be fooled by TV ads, e-mail offers, or ads on the Internet.

Please note that little to nothing is done to make sure these ads and or spam messages offering protection are legitimate. These ads and spam e-mails might actually come from fraudsters. Answering one of them might lead to a person having their identity stolen.

There are other reasons not to hand over your personal information to the wrong organization. We live in a world where hackers and identity thieves breach databases with an alarming frequency. If you are handing over personal information to one of these companies, they might be maintaining it in a database where it could be stolen. Also, there is no guarantee that your personal information isn't going to be stolen by a dishonest insider. Because information is often outsourced and electronically transmitted all over the world, a lot of people can end up having access to it. All it takes is one dishonest person to decide to steal it and sell it to someone else.

Information is worth a lot of money, and besides dishonest insiders, data brokers and the credit bureaus sell it all the time for marketing purposes. Having information in too many places is a common denominator in a lot of people who become an identity theft victim.

AnnualCreditReport.com is the only place to get a free credit report authorized by the government. I would trust my information with them a lot more than some of the places I see advertising identity theft protection.

Free reports can be requested online, by phone or by mail. To get your free credit report online go to AnnualCreditReport.com, call 1-877-322-8228, or fill out the Annual Credit Report Request form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You have the option of requesting all three reports at once or you can order one report at a time. A lot of users of this service order one every few months to monitor their credit on a more frequent basis without having to pay for it.

If you see items on your report that are inaccurate, the FTC provides a tutorial on their site on how to dispute credit errors. If you think you have become an identity theft statistic, you may need to place a fraud alert on your credit report, close compromised accounts, file a complaint with the FTC, or file a police report. A tutorial is also provided to help consumers do this on FTC’s identity theft Web site.

Besides the FTC site on identity theft, I recommend the Identity Theft Resource Center and the Privacy Rights Clearinghouse as excellent free resources to learn how to prevent identity theft and recover from it.

If you think you've been tricked to paying for a credit report, the FTC is asking that you let them know about it by filing a complaint. Additionally, if you receive any spam e-mails offering free credit reports, the FTC asks that you send them to spam@uce.gov.

Spam e-mails offering free credit reports can be phishing attempts, which are designed to trick you into giving up your personal information. They can also contain malicious software, which will steal all the information off your computer, automatically. Either way, answering one or even clicking on a link in one can make you an identity theft victim.

Credit reports don't necessarily catch all forms of identity theft. Sometimes different parts of people's identities are used to forge a synthetic one. This phenomenon has been dubbed synthetic identity theft. Quite often, because a lot of the information doesn't match, the credit bureaus don't pick it up.

Other examples where a credit bureau might not reveal identity theft are medical benefit fraud, employment fraud, government benefit fraud, some forms of check fraud and when it is used to commit crimes of other than a financial nature.

In the recent past, this has been discovered by many during tax season, when they get a bill for taxes that an identity thief never paid to the government. A lot of experts recommend that you watch your yearly Social Security statement carefully because of this. Identities are stolen to file fraudulent tax returns or used to obtain employment.

As a bonus, I am going to include what I consider an interesting post from Kelly Sonora over on the e-Justice blog. In this post, Kelly provides 25 tools that can be used to monitor information about yourself, see what is being said about your business, search for information about yourself and find public records that relate to your personal information. A prudent person can even set up alerts on some of these tools so they are automatically notified of any new information.

Please note, Kelly's blog post is not sanctioned by the FTC, but nonetheless, I think it's a neat set of tools that a lot of people might find useful.

As a final bonus — here is a parody (courtesy of the FTC) warning us all the the guitar dude's free credit report isn't free:

Downadup/Conficker Worm Disables Computer Security

2009-03-14T18:53:00.000-07:00

If you were a hacker or a e-scam artist with malicious intent, would it be valuable to disable a machine's security system? Most of them find it relatively easy to take command and control of unprotected machines, but fully patched and protected machines pose more of a challenge.

Since late last year, hackers have developed a new tool that attacks protected machines, known as the Downadup/Conficker worm. This worm is being called a complex piece of malicious code that is able jump network hurdles, hide in the shadows and even defend itself against security measures, according to a recent report by Symantec.

Symantec has documented its blog posts on this subject in this report, which are available on their site. They also have a blog post by Ben Nahorney that attempts to put this complex threat into terms that can be understood by the general public.

Just this month, Symantec identified the third version of Downadup/Conficker, which has an even more powerful punch designed to take down computer security systems. This version has been dubbed the W32.Downadup.C variant and is still under analysis. The payload from W32.Downadup.C is set is to be triggered on April 1st, and if it is, the damage from it could be huge. SC Magazine aptly summed this up in an article called, "No Joke — Conficker Worm set to explode on April Fool's Day."

Since Downadup/Conficker has the ability to replicate itself — even on USB drives and network shares — by cracking passwords, it can spread like wildfire and wreak havoc on systems.
The report concludes that this is only the beginning of the Downadup/Conficker threat. If you take the time to read through the report, it shows how this malware is evolving and changing to avoid attempts to stop the spread of it.

It is being reported that Downadup Conficker has enabled one of the largest botnets to be formed on the Internet because of the number of systems that aren't protected from it. Of course, it appears that once infected, the worm itself might prevent the patches from be downloaded on a machine.

Botnets generate all the spam we see in our in boxes and are the vehicle of most fraud, phishing and financial misdeeds seen on the Internet. They consist of infected computers that have been taken over and form a super computer capable of spreading a lot of garbage. Of course, becoming infected can also mean that all your personal and financial information will be data-mined and used by less than honest people to steal money or commit other types of crimes.

Information can be stolen to commit espionage or even provide a fake identities, which are then used to support other more serious criminal activity. Although a lot of espionage is industrial, it is on record already that Downadup/Conficker infected computers at the U.K. Ministry of Defence and the Houston Municipal Courts which suggest a more sinister intent than merely committing financial crimes.

Since the beginning of the year, there are different estimates of how many computers are infected, but all them seem to agree it's somewhere around nine million.

Microsoft has announced a $250,000 reward for information leading to the arrest of the authors of this code. It has also announced an industry-wide coalition to fix the threat that Downadup/Conficker poses. Included in this coalition are ICANN, NeuStar, Symantec, CNNIC, Afilias, Public Internet Registry, Global Domains International Inc., M1D Global, AOL, Verisign, F-Secure, ISC, researchers from Georgia Tech, the Shadowserver Foundation, Arbor Networks and Support Intelligence.

Microsoft also provides information on patches and the latest developments on Conficker/Downadup on its site. It also has another page where you can learn more about these types of threats and how to stay safe online.

Don't Bail Out a Scam Artist

2009-03-14T18:26:00.000-07:00

Recently, I've noticed all kinds of ads and spam e-mails promising to deliver a bail out of one kind or another. While we're finally going to see a few average people bailed out, most of these ads and spam e-mails have one purpose and one purpose only — to provide a revenue stream to a scam artist.

On March 4th, the FTC issued a warning that consumers might get stung by one of these bail out schemes and that these scams are showing up in many different forms.

A lot of these scams claim they can assist someone in qualifying for a bail out and all you need to do is to provide them with a little information or a small payment (preferably using a plastic instrument) to reap a too-good-to-be return on your investment. Plastic is quickly becoming the preferred payment option of criminals and semi-legitimate marketing gurus, alike.

Common spam e-mail messages ask for your banking information so the money can be direct deposited into a bank account. In most of these scams, the exact opposite occurs, or the money in the account is stolen. There are also a lot of spoofed spam e-mails that appear to come directly from a government agency, which ask you to verify that you qualify for a payment by providing them with personal/financial information. If responded to, they either clean out your financial resources or use your good name to steal from a financial institution.

The FBI, IRS and Federal Reserve have recently reported their names being spoofed (impersonated) in a variety of spam e-mails designed to scam people of their hard-earned resources. Of course, a lot of the e-mails and e-ads use the names of Barack Obama and Joe Biden to make their come-on appear more legitimate, too.

Some of these e-mails contain links, which lead to websites that download all kinds of malicious software and spyware on a machine. Normally, the intent in these instances is to steal personal information or take command and control over a machine.

Not all these come-ons come in spam e-mails, either. Much to my dismay, I did a search on the word "Stimulus" and found several ads offering a questionable bail out. After doing this, I went to my local coffee house and picked up some of available free magazines and found questionable bail-out offers in them, also.

When it comes to advertising dollars, those accepting the money aren't required to perform any due diligence on what is being advertised.

In some of the so-called semi-legitimate come-ons (my personal opinion), there might be a clause in small-print that allows them to charge your card a small fee over a long period of time.

While these so-called legitimate marketing ploys are nothing new, they are being seen used in some of the pay for bail out products being hawked all over the place.

If you've signed up for any of these deals, it might pay to review your statements, carefully. Of course, in today's world, it pays to do this on a regular basis, anyway.

If you see any of these scams and want to complain about them, the FTC provides an electronic means of doing so. I've provided a link for anyone, who might be interested in doing this. You can also complain by calling 1-877-FTC-HELP (1-877-382-4357).

Last, but not least, I'll point to a site called the Bank of Obama (Because Everybody Deserves a Bail Out). On this site — which appears to be somewhat of a parody — you can send your friends an imaginary check. At least this site delivers what it claims to — an imaginary check.

FTC Site Teaches Public How to Avoid Bad Deals

2009-02-27T03:44:00.000-08:00

March 1st through the 7th is Consumer Awareness Week. This year, the Federal Trade Commission (along with an army of partners) are providing a user-friendly set of free e-tools designed to help the average "Joe or Jolene" safely navigate the murky waters they face in the current economic environment.

Besides teaching us how to make the most of our financial resources, the tools also teach how to avoid the underground army of not very honest people who are spreading more economic doom and gloom with too-good-to-be-true schemes designed to take advantage of the grim economic situation.

The Web site for the 11th annual National Consumer Protection Week is now up and running. Launched by the Federal Trade Commission and its NCPW (National Consumer Protection Week) Steering Committee partners, the site gives people free tools to make smart business decisions in today’s economy. The information on the site is designed to help the average person get the most value for their money, whether they are trying to improve their credit history, tell the difference between a real deal and a rip-off, or protect their mortgage from foreclosure or foreclosure rescue scams. It explains their rights under various laws and tells how to file a complaint or seek assistance from the appropriate government agency.

According to the Federal Trade Commission, scam artists, fraudsters, hackers and flim flam artists follow the headlines and use the current economic downturn to part people from their hard-earned (and ever-dwindling) financial resources. The NCPW Web site has tools (educational resources) to teach people how to recognize a ripoff, sniff out a scam and ensure they are getting value for their dollar in today's marketplace.

The site has tips on a wide range of topics from partner organizations. These tips include from how to get a free credit report to how to spot a telemarketing scam and how to deal with debt to how to deter and detect identity theft and from how to avoid home and auto repair scams. Also included is detailed information on how to file a complaint with the appropriate agency if you do run into an issue.

Of course, on a personal level, I always recommend reporting them if you spot a problem and are able to avoid becoming a statistic, also. This can prevent a less educated person from becoming a victim and is a good deed.

The FTC partners involved in providing this information include the AARP, the Comptroller of the Currency, the Consumer Federation of America, the Council of Better Business Bureaus, the Federal Citizen’s Information Center, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Association of Attorneys General, the National Association of Consumer Agency Administrators, the National Consumers League, the U.S. Department of the Treasury, the U.S. Postal Inspection Service, and the U.S. Postal Service.

The FTC also just released the top complaints they received in 2008. For the ninth year in a row, identity theft came in at number one. 1,223,370 complaints were received in 2008. 313,982 (26%) were related to identity theft.

Not surprisingly, with all the data breaches seen recently, credit card fraud was the most common form reported. This was followed by government documents/benefits fraud at 15%, employment fraud at 15%, phone or utilities fraud at 13%, bank fraud at 11% and loan fraud at 4%.

Other complaint categories included Third Party and Creditor Debt Collection, Shop-at-Home and Catalog Sales, Internet Services, Foreign Money Offers and Counterfeit Check Scams, Credit Bureaus, Information Furnishers and Report Users, Prizes, Sweepstakes and Lotteries, Television and Electronic Media, Banks and Lenders, Telecom Equipment and Mobile Services, Computer Equipment and Software, Business Opportunities, Employment Agencies and Work-at-Home, Internet Auction, Advance-Fee Loans and Credit Protection/Repair, Health Care, Auto Related Complaints, Travel, Vacations and Timeshare Plans, Credit Cards, Magazines and Buyers Clubs and Telephone Services.

Please note these are statistics where people were victimized. The information on the NCPW site is designed to keep people from becoming one (a statistic).

Crimes Against Businesses Contribute to Job Losses

2009-02-26T04:23:00.000-08:00

Organized retail crime costs retailers billions of dollars. In an era, where retailers are closing stores or going completely out of business, it's logical to assume that organized retail crime is a contributing factor to retailers shutting their doors and people losing their jobs. With the sour economy inspiring more and more theft and fraud, it is becoming more critical than ever before for companies to control their losses in their struggle to remain viable.

When retailers lose money to theft, the end result can be (assuming they don't go bankrupt) that jobs are cut. Payroll is normally the largest and most controllable expense in any business. When businesses start to show negative earnings — like a lot of them are right now — payroll is normally the first place they look to cut when trying to avoid shutting their doors.

In an effort to fight what experts say is a $30 billion a year organized retail crime issue, the National Retail Federation is welcoming legislation being introduced to give them more tools to fight this problem. Yesterday, three bills were introduced in Congress to assist retailers and law enforcement in this effort.

The three bills introduced are "the Combating Organized Retail Crime Act of 2009, sponsored by Senate Majority Whip Richard J. Durbin, D-Ill.; the Organized Retail Crime Act of 2009, sponsored by Representative Brad Ellsworth, D-Ind.; and the E-Fencing Enforcement Act of 2009, sponsored by House Judiciary Committee Crime, Terrorism and Homeland Security Subcommittee Chairman Bobby Scott, D-Va. The measures are similar to legislation first introduced last summer" according to the press release and podcast on this matter by the National Retail Federation.

In case you are unfamiliar with "Organized Retail Crime," it involves organized retail theft activity for profit. Once the merchandise is stolen, it is fenced (sold) to get a cash value out of it. Traditionally, this merchandise was sold at flea markets/dishonest retailers, but more and more often nowadays, retail crime rings are turning to auction sites to unload their stolen goods.

The reason for this is if they sell it on an auction site, they make a lot more money than in the more traditional fencing venues. Experts believe they net 70 percent of the retail value by selling their stolen wares on an auction site versus the 30 percent of retail value they receive in more traditional fencing venues.

Another possible factor contributing the problem is that consumers — who are operating with ever-decreasing personal budgets — are flocking to these sites to stretch their buying dollars. Without knowing it, they might be adding fuel to the fire and unknowingly buying this stolen merchandise.

Even if the retailer can prove that merchandise on an auction site is stolen, it can be extremely difficult for them to get the site to cooperate in going after the criminals selling it. Due to a lot of red-tape imposed by these sites to release information, it requires a lot of time/effort to get the site to cooperate in an investigation. Because of this, the crooks are normally long gone before any effective investigative action is taken.

Another phenomenon called phishing makes the activity even more anonymous/hard to track on auction sites. Phishing is where a person (user) is tricked into giving up their credentials to an account. For years, eBay and PayPal have ranked as some of the most phished brands out there. Criminals use this information to take over an account and commit fraud using someone else's selling account. When investigating auction fraud, time is of the essence, otherwise the trail is often too cold to track. The crooks use one of these accounts for a short period of time and then move on to another phished account to avoid detection.

Organized retail crime is also taking advantage of the identity theft/financial crimes phenomenon and working with the hacking element that has been attacking the financial industry. Counterfeit payment cards (credit/debit), checks and identification are all being used to electronically boost merchandise and walk right out the store with it. In the TJX data breach — which was the largest hack of financial data to date — a group was caught using cloned payment cards to buy $8 million worth gift cards from Walmart. In the more recent data breach at Heartland Payment Systems — which looks like it might surpass TJX in the amount of data stolen — the only arrests made thus far were a group using the stolen data to clone gift cards. Since gift cards are redeemed at retailers, this is yet another example of how the financial hackers and organized retail crime types are working together. To me, this is evidence that organized retail crime is becoming more sophisticated in their theft techniques, which will likely make this problem get even worse than it already is.

The three bills being introduced will force auction sites to cooperate with retailers and law enforcement, define organized criminal activity as a federal offense and establish stricter sentencing guidelines for criminals convicted of organized retail crime. Too frequently, under current laws, criminals involved in this activity are treated like petty thieves and get a slap on this wrist when they are caught. Last, but not least, it will hold auction sites more accountable for the sale of stolen merchandise if it could have been prevented.

Besides fencing, there is a lot of other fraud on auction sites that isn't necessarily tied in to fencing and victimizes auction customers/sellers, more personally. Legitimate e-commerce sellers are frequently ripped off with bogus financial instruments. Buyers are also defrauded in a wide variety of scams on these sites. Like the major retail types, who are behind this legislation, the more ordinary victims are often hung out to dry when they try to get any assistance from the auction sites. There is little doubt (my opinion) that auction sites need to clean up all the fraud that occurs on them. While they do provide value and a fun way to buy things, there have been too many innocent people victimized on them.

While this legislation primarily focuses on fencing, it's a start in the right direction. Perhaps other groups should join in and support this legislation, which if passed, will likely set some needed legal precedents. It will also make it a little harder for the criminally inclined to operate on auction sites.

Supporting this legislation makes a lot of sense for a lot of different reasons. These are not victimless crimes and the consequences are being felt by innocent consumers and businesses.

Are E-Commerce Merchants at Risk in Mystery Data Breach?

2009-02-22T05:04:00.000-08:00

Days before the Heartland Data Breach was announced, volunteer computer security experts at the Open Security Foundation had already figured out what had occurred. Many believe Heartland is going to become the largest data breach in history and will surpass the TJX caper. At this point, only time will tell.

Now the folks at the Open Security Foundation are predicting another data breach at a card processor/acquirer that hasn't been announced to the public yet. For over a week, they have been speculating about this mysterious data breach based on a tip, which was corroborated by other anonymous sources.

In their latest post, they state they knew it was a card not present breach at a processor/acquirer, but didn't initally report it. They are now reporting this development based on it being revealed by another source.

On February 21, 2009, databreaches.net revealed evidence of this data breach based on information sifted from two credit union sites (TVACU.com and Pennsylvania Credit Union Association CardNet).

The only data elements at risk are account numbers and expiration dates. No track data, PIN, CVV2/CVC2 data or cardholder-identifying information was captured. The period of exposure being reported is from February to August of 2008.

It has also been written that the exposure was enabled by malicious software that was placed on the unknown acquirer/processor's system. Both of the credit union sources also state that it is being left up to the card issuers, whether to issue new cards or monitor the accounts for fraud. Reissuing cards has become a major expense to the card issuers after a data breach is discovered.

This makes me wonder if we will discover that the acquirer/processor was PCI DSS (Payment Card Industry Data Security Standards) compliant? PCI DSS is the payment card industry's own set of standards to protect data. In many of the recent breaches, the "breached" met this standard, which has led to questions as to whether it is really effective or not.

Both articles also indicate that Visa/Mastercard are not revealing the source of this breach until the "mysterious source" of it makes their own announcement on the matter.

Given these reports, my speculation is that this information could be used in e-commerce type transactions. If only primary account information and expiration dates were exposed — counterfeiting it on cloned cards is unlikely. It simply wouldn't be feasible to do so by the criminals involved.

This doesn't mean that there are no financial risks involved to businesses in this data breach. E-commerce fraud is a big problem and its estimated impact on merchants last year was $4 billion. To fight this problem, most e-commerce merchants manually review orders to detect fraud, which can be a substantial payroll cost. The percentage loss to fraud in e-commerce has been stable for about three years, but since sales have increased, the dollars lost to it are growing.

Card-not-present chargebacks are frequently returned to merchants as chargebacks. The best way of avoiding these types of chargebacks is to verify transactions using the address verification service (AVS), the card verification value code 2 (CVV2), the card validation code 2 (CVC2), and the card identification (CID) when processing transactions. Smaller merchants — who ironically are charged the highest interchange fees for accepting card payments — are at the most risk because fraudsters count on the fact that they do not verify a lot of this data because of the associated costs and their ability to afford doing so.

Perhaps this one of the reasons why there is no rush to reissue cards. If the only information stolen can be used in card-not-present transactions, the card issuers are at little risk of suffering any financial losses. They will simply charge them back to the merchants, who failed to ensure the transaction wasn't fraudulent. It might be a good time for e-commerce merchants to be more cautious.

From what I can gather, this matter isn't exactly confidential; having said that, it appears that primarily financial institutions are being warned and not the e-commerce merchants who logically will be the primary target if this stolen information is used. The costs in the aftermath of data breaches are substantial and who bears the brunt of them is becoming a hot topic.

To close this post, I will refer to a good information source on preventing chargebacks from Wells Fargo. There are a lot of other sources, but a lot of them are selling something. If anyone has any other good sources, please feel free to leave a comment and share them with everyone!

RSA Report Points to an Increase in Cyber Crime

2009-02-20T03:34:00.000-08:00

According to a recent report from RSA Security, phishing attacks increased 66 percent last year when compared to 2007. One reason cited for this are the increased availability of DIY (do-it-yourself) phishing kits, which are available for sale on the Internet.

Some of these kits even come with tech support. In the past few years, these kits have enabled a lot more people to get into the phishing game.

The statistics compiled in the Anti-Fraud Command Center Phishing Trends Report recorded 135,426 phishing attacks compared to 90,000 detected in 2007. Despite these ominous numbers, the report showed a marked decrease in the number of attacks between June and July. The amount of attacks then increased steadily until the end of the year and then dropped again in December. The RSA team attributed this to a drop in activity by a notorious gang of phishermen, known as the Rock Phish.

Although, no one seems to be exactly sure, the Rock Phish are a phishing gang that are allegedly of Romanian origin. Experts believe they are responsible for up to 50 percent of the phishing seen in the wild (on the Internet) today. To avoid detection, Rock Phishing attacks often update DNS records during an attack and change URLs, which confuse take-down efforts and allow them to bypass spam filters. They also use images in their spam e-mails, which make their work harder to be detected by spam filters. A lot of spam filters do not use OCR (optical character recognition) because it slows down the filtering process.

The (temporary?) reduction in attacks was attributed to the Rock Phish upgrading their infrastructure and switching to the use of a new botnet, called the "Asprox botnet."

A lot of the newer botnets — which spew out spam in the millions using zombies (compromised computers) — are using what is known are using fast flux technology. Fast flux is a DNS technique used to hide spam e-mails behind a constantly changing network of compromised computers (zombies), which have been taken over using malicious software to send out spam. Since these spam e-mails recruit new zombies all the time, it makes shutting down this type of activity pretty difficult. According to the report, fast flux attacks now comprise about half of all the activity out there.

From a global perspective, the United Kingdom (40 percent) was the most attacked country followed by the United States (37 percent). This was attributed to a focused attack on a number of financial institutions in the UK in 2008. The report also acknowledges increased activity in Latin America and the Pacific. A lot of experts believe we will see increased activity in other parts of the world as more people from these regions are introduced to the Internet. As this takes place, more computers will be compromised (become zombies) in these countries and the statistics will shift.

It should be noted that despite the increased activity in the United Kingdom, the United States still holds the dubious honor of being number one in hosting phishing attacks. They are also number one in brand names being attacked.

Of no surprise is the statistic that financial instituions are the favorite target in these attacks. It makes sense that the phishermen will continue to go where the money is and with the sour economy, there are a lot of social engineering lures that are ripe for exploitation. Fear is a time-honored social engineering lure, which gets people to click on links they should not have.

The conclusion of the report is that online crime continues to evolve, is becoming more dangerous, and new tools are being used to further the effort. My guess is that it will continue to grow as long as we focus on defending against it instead of going after the source of it! Of course, this is merely the opinion of this observer.

Sending Children to the Slammer for Profit

2009-02-15T07:29:00.000-08:00

On February 12, 2009, two judges appeared in federal court to plead guilty to $2.6 million in income tax and wire fraud. The crimes they were charged with resulted from locking up teenagers for profit in Scranton, PA.

Judge Michael T. Conahan and Judge Mark A. Ciavarella Jr. were the two barristers, who received kickbacks to send teens to privately run detention centers. Apparently, Conahan secured the contracts and Civarella kept them filled with fresh prisoners (victims?) from his docket (court calendar). The privately run centers in questions were PA Childcare and its sister organization, Western PA Childcare.

A press release on January 28th from the Administrative Office of the Pennsylvania Courts announced the two judges' removal from the bench. The release goes into detail about the charges that were brought against them.

In one example cited by the NY Times, a teenager was given three months for setting up a MySpace page mocking her assistant principal at a Wilkes Barre, PA high school. The student in question, Hillary Transue, was a stellar student and had never been in trouble before. At the end of the hearing, with her parents watching, she was handcuffed and taken away. In another case, a teenager got three months for giving another teenager a black eye.

This is scary in a society where Paris Hilton and Lindsay Lohan get a few days for doing a lot more than putting up a MySpace page or giving someone a black eye!

Senior Judge Arthur Grim has been appointed by the State Supreme Court to figure out what to do with the estimated 5,000 juveniles who have been sentenced by Judge Ciavarelli since the scheme started in 2003. A lot of these children were first time offenders and some of them are still locked up.

The case has shocked local residents, already strained by recent losses of a lot of industrial jobs and the shutting down of coal mines. It has also brought up a debate about how children are represented in the legal system when they face charges.

Just last year, a motion was filed by the Philadelphia-based Juvenile Law Center in behalf of 500 juveniles who had appeared in front of Ciavarelli without representation. The motion was originally denied, but it has now been reopened. Statistics show that about 50 percent of the children who waived their right to counsel in front of Ciavarelli went to the slammer. The Supreme Court ruled in 1967 that juveniles have a right to counsel, but in some states, including Pennsylvania, they are allowed to waive it.

Given the reduced tax base in the area, the money stolen in this instance could certainly have been put to better use, too.

Even worse, although Judge Ciavarella admitted to the kickbacks, he is contending that the juveniles in question deserved what they got. This is pretty arrogant, especially considering that the facts show that he sentenced a lot more of his cases (25%) to these privately run detention facilities than the state average of of 1 in 10.

I'm frequently amazed how people who have obviously done something terribly wrong rationalize their behavior.

If Ciavarella and Conahan (Judge titles intentionally removed) accept the plea bargain being offered by the government, they will get 87 months in the slammer, lose their pensions, and be disbarred. The executives running the privately run detention centers haven't been charged yet, but are expected to be.

I first saw a mention of this story on Alex Eckelberry's Sunbelt blog. His comment was "how sick." In closing, "I second that motion."

Spammers Love to Hurt Internet Users

2009-02-08T17:50:00.000-08:00

Love is a many splendored social engineering tool and spammers are busy sending out a whole lot of their particular brand of love across the electronic universe.

An interesting blog post (Love Hurts) by Kevin Haley at Symantec points out that malicious code writers are busy spreading their work in attachments hidden in the millions of spam messages being spewed out by zombies (compromised computers). If you click on one of these attachments — and your machine isn't bulletproof — it also can become a zombie and used as part of a botnet to send out more spam. Botnets are groups of compromised computers used to form a super computer. Of course, downloading malware can also mean that all your personal and financial information will be stolen, too. Please note (as you will see below) that some forms of malware currently being sent out can do both.

Kevin's blog post came out at almost the same time Symantec issued it's monthly Spam Landscape Report. With Valentine's Day coming up, love is a predictable lure and it's probably a good idea to make sure you know who loves you before clicking on any links in an e-mail.

Another predictable finding in the report is that spam levels are continuing to rise to normal levels after they fell when McColo was shut-down. McColo (a Web service hosting provider) was shut down in November after it was discovered they were the source of a large number of botnets, which are used to send out spam. Last month, 79 percent of all e-mail was spam. The report also notes that the point of origin for spam is shifting a little. Although the United States is still number one, the number of active zombies in other countries is rising. While some of this is being attributed to McColo, the report points out that this might point to the fact that some of these countries have an increasing number of users accessing the Internet.

From a spam-commerce point of view, the report indicates weight loss products, counterfeit drugs, cheap watches and porn top the list of items available at super-cheap prices as Valentine's Day approaches.

Besides Valentine's Day, President Obama also continues to be used as a spam lure, according to the report. A lot of this spam contains malware with files names such as usa.exe, obamanew.exe, statement.exe, barackblog.exe and barackspeech.exe. The malware being spread in these spam e-mails is called the W32.Waledac, which is capable of both stealing sensitive personal and financial information and turning a machine into a zombie. It also establishes a backdoor to a machine so it can be remotely accessed.

Current events (and holidays) have been and probably will continue to be used as social engineering lures to snare the unwary.

Also noted was a rise in Russian spam hawking goods and services. With cheap long distance services using VoIP, the Russians have actually set up telephone numbers for their intended victims to call. My guess is that they will entice someone to send money, which can't be recovered when the person sending it discovers they've been scammed.

Chinese gambling spam is also mentioned as a new phenomenon in the report. It appears to be patterned after English language gambling spam, but is written in Chinese.

Last, but not least, Nigerian spam is mentioned. Nigerian or 419 spam is named after the section of the Nigerian penal code dealing with fraud. It normally is a come-on for lost riches or winning a lottery and has a lot of spelling and grammatical errors. Typically known as advance fee fraud, the victim is enticed in sending money across a border (wire transfer is preferred) to secure their fortune. Of course in the end, the victim never receives anything and is often left in financial ruin.

There are many twists to advance fee and one of them is to send a bogus financial instrument to a person with instructions to cash it. If the person doesn't get arrested for presenting it, they are instructed to send the money back to the scammer. Of course, the cashing institution eventually figures out the instrument is bogus and the victim is held liable for it.

A lot of people think that advance fee all comes from Nigeria, which isn't true. I've personally traced it to a lot of other places and called some of the telephone numbers. The person answering didn't sound Nigerian and I've spoken to a few people from Nigeria in my time. Naturally, this doesn't mean that scam activity is not coming from Nigeria and just that not all of it does.

Pam Dixon, of the World Privacy Forum, went on record recently that the spelling and grammatical errors aren't being seen as much in advance fee lures anymore. Obviously, advance fee scammers, wherever they hail from, are being more careful and have discovered spell check?

To close, the Anti-Phishing Working Group's recent report on phishing, which is delivered via spam, has noted that the number of crimeware-spreading URLs out there has increased 258 percent versus the same time period last year. It also noted a record high in the amount of hijacked and victimized brand names. Last but not least, it noted another record in the amount of malicious application variants being seen in the wild (on the Internet).

This would suggest that spam is getting more dangerous and the people sending it are becoming more sophisticated. The smartest thing to do with all spam is to delete it. Making sure your computer's security is updated with a known and reliable vendor is also a smart thing to do. After all, as I've speculated many times before, most fraud, phishing and financial misdeeds on the Internet start with spam.

The $9 Million Electronic Robbery at RBS WorldPay

2009-02-08T05:00:00.000-08:00

With the Heartland Data Breach still fresh in the news, word of a $9 million heist using data from another payment card processor (RBS WorldPay) has hit the air waves. RBS WorldPay reported in December that their payroll card system was hacked and 1.5 million financial and 1.1 million personal records were compromised. Payroll cards are used by employers to pay their employees by loading their pay onto a debit card.

A Fox News investigation has now revealed that on November 8th, a coordinated attack netted $9 million using cloned cards in 49 cities, worldwide. The attack occurred all over the United States, Montreal, Moscow, and Hong Kong in about 30 minutes.

Another scary aspect to this attack was that the hacker was able to remove the daily withdrawal limits of the cloned cards. According to the Washington Post, 100 cards were used and fake deposits were used to refuel the balance on the cards. Large withdrawals were then made again and again on the cloned cards. Please note this represents that a very small percentage of the total cards compromised were used in scheme. No information was available on how they refueled the accounts.

I've seen accounts refueled using bogus checks, however in this instance, I would suspect it occurred in a more electronic manner. This leads me to believe we will see more disclosures regarding this case as time goes on.

According to official reports, there are no primary suspects in the case. Photographs of some of "lower level soldiers" used to withdraw the money have been released in the hope that (if caught) they will provide information on the people, who provided them with the cloned cards. Unfortunately, with the anonymous nature of the Internet, coupled with the fact that chat-rooms are often used to facilitate the distribution of stolen data, the lower level soldiers might not know the identities of the main players, themselves.

In the recent Heartland breach, it was disclosed that they met PCI DSS (Payment Card Industry Data Security Standards). According to Visa's list of PCI DSS certified vendors, "RBS Lynk" (Royal Bank of Scotland) is certified. PCI DSS standards are the payment card industry's solution to protecting their data from being misused.

I also discovered that RBS World Pay and TrustWave put out a press release in 2007 announcing they were providing level 3 and level 4 merchants with a specialized data security service to identify their risks and vulnerabilities. The idea behind this service is to help these merchants become PCI DSS compliant.

Interestingly enough, TrustWave also certified Heartland in 2008, according to the article I read in Dark Reading.

PCI DSS has been criticized as being expensive for merchants and now we are seeing it compromised, too. The sad thing is that despite a lot of money being shelled out to become PCI DSS compliant, the people shelling it out seem to be just as vulnerable as they were before. In fact, someone might conclude that PCI DSS is giving everyone a faux sense of security (opinion).

As usual, in these cases, a class action law suit has been filed against RBS WorldPay. WorldPay has also announced the cardholders will not be held liable for the charges, according to the page on their site about this matter.

Thus far, according to all the sources I read, no identity theft has occurred. My guess is that because the 1.1 million people compromised are monitoring their credit, none will occur in the short-term. In most of the many breaches I've read about, very little of the information was used after the breach was disclosed. If you think about it, this makes sense because measures have been taken to make the information useless to criminals.

To close, I would like to add another thought. The fact that payroll information — which included personal information — was hacked might point to another example of how storing too much personal information in too many places is the root cause of the problem.

There has been a push to put everything from payroll to government benefits on payment cards. When this occurs, personal information as well as the financial data used to produce the debit card accounts is stored to process the transactions. Since employers (and the government) use vendors (card issuers) to accomplish this task, this means we have sensitive information being transferred to third parties. It wouldn't surprise me if these third parties transfer the information somewhere else when they outsource it, all over again.

Perhaps, what is needed is a common sense solution to the problem. As long as we keep sending information all over the place, it creates too many points where it can be compromised. The bottom line to all this is we appear to be making it too easy for criminals to take advantage of the situation.

The costs are getting out of control, too. Although I've never seen any information on how much of this is going on, the Washington Post quoted a source from the security industry (Ori Eisen, 41st Parameter) as stating $50 million was lost in one month in New York City alone last year.

I wonder if any of our bail-out (taxpayer) money is being used to cover these losses. Although, I can't say for sure, the people it was given to can't seem to say where it has gone, either. Granted, it might be a long shot, but the money had to be given to cover losses caused by people who were a little too greedy in the first place. We need to wake up and realize that there is no free lunch and the costs of all these types of scenarios are passed to all of us when history is written.

There is no such thing as zero fraud liability!

Increase in Scams Attributed to Economy

2009-02-03T04:21:00.000-08:00

I just finished reading an interesting article in the Wall Street Journal by M. P. McQueen, which suggests that the bear market is creating a bull market for fraudsters. According to the numerous experts cited in the article, the reason for this is economic gloom and doom with a healthy dose of anxiety.

This shouldn't be surprising because gloom, doom, and anxiety make effective social engineering tools that can be used to part people and businesses from their money.

The article references phishing expeditions that lead to fake Web sites — which often spoof a financial institution or government entity — and entice people into giving up enough of their personal details to drain their financial resources. It also mentions that some of these sites leave behind malicious software on a person's machine, which steal all these details automatically.
Also mentioned is the use of VoIP (Voice over Internet Protocol), caller-ID spoofing and cell phone technology to mount texting and vishing attacks. Vishing is merely another method of tricking people to give up personal and financial information via the telephone. In these attacks, the caller ID is spoofed to make it appear as if it is coming from a legitimate institution.

Apparently telephone technology is being used to commit other types of crimes, too. Many of our 911 centers cannot identify spoofed calls coming from computers using VoIP technology. This has led to S.W.A.T. teams being tricked into deploying in full battle gear to residential neighborhoods when no emergency existed. Of course, businesses use the same technology to trick people who have caller ID into picking up their telephones. You can even buy a card to do this at will from any telephone right over the Web.

It sometimes amazes me how much irresponsible technology there is out there, which is being sold legally. There are even Web sites, with disclaimers, that specialize in making this technology available to the general public. Of course, there are also complete DIY (do-it-yourself) phishing kits being sold over the Internet. Some of these even come with tech support. The phishing kits are illegal, but can be found for sale in chat rooms if you know where to look for them. Sadly, the truth is that these chat rooms aren't very hard to find. The fine line between legitimate enterprise and scams is often a little blurry.

The WSJ article quotes a lot of experts, including Gartner, the FBI and the National White Collar Crime Center, who all seem to agree that scams are on the rise. An interesting phenomenon called out were small fraud charges being found on accounts. I guess taking small amounts, which might be mistaken for bank fees, is a good way to stay under the radar. A lot of people don't realize how many small fees are being charged to their account and it can be quite confusing at times. I guess the crooks are trying to make themselves look like bankers (speculation) and it's probably a good time for all of us to review our statements, carefully.

Speaking of fees, which are used as revenue streams by a lot of businesses, the WSJ put out another article this entitled, "In the Fight Against Bill Creep, Every Extra Fee Is the Enemy." Besides being on the look out for cyber scammers, this article points out other reasons it is smart to review our financial statements with a keen eye these days.

Another notable trend in the past 12 months is executives being targeted. In this trend, specific people within organizations are being targeted and tricked into downloading malicious software on machines. In one of these scams last April, the targets were led to believe they were being subpoenaed to testify in federal court.

Last, but not least, the article points out that job scams are on the rise. It's a well established fact that job sites from Monster to Craigslist have scammers operating on them to recruit people to launder money, cash bogus financial instruments or give up all their personal and financial information. Adding fuel to this fire, it was disclosed recently that Monster.com had been hacked.

Capping off this interesting article — which is a pretty good recap of recent scam activity — is Pam Dixon of the World Privacy Forum pointing out that scammers have learned how to use "spell check." In the past, one of the best ways to identify a scam was it's lack of proper spelling and grammar. While the scammers might have have learned to use spell check, it might also point out that there are more and more people out of work (with better grammar skills), who are becoming scammers.

The WSJ quoted a lot of experts that agree with them that scam activity is on the rise. Another interesting read supporting this (not mentioned in their article) is the recent report that was commissioned by McAfee. This report points to all the unsecured data out there that is fueling the rise in cyber crime. They estimate, at this point, that the financial implications have reached $1 trillion. They also have some interesting information about social engineering and how it is being currently used to commit scams in the current economic environment in another set of articles on their main site.

In my opinion, it makes sense that scams of all kinds are on the rise. There is a lot of confusion going on and people are getting desperate. It might be desperation that is causing more people to get involved in scams on both sides of the fence. For the majority of us, who just want to ride these times out and survive the mayhem, the best thing to probably do is be extra diligent in our financial matters and use a little good old fashioned common sense.

Having dealt with a few scammers in my life, I've found that most of them aren't the most intelligent people around. The best thing to do is to think carefully before jumping in anything of a financial nature these days.