Fraud in the News

Data breaches increase merchant losses

According to the new "True Cost of Fraud" study by LexisNexis Risk Solutions, retailers lost, on average, .68 percent of their revenue to fraud in 2014, up from .51 percent in 2013. Thanks to a string of data breaches at major merchants — like Target and Home Depot — retailers are seeing fraud take a significantly bigger chunk out of their profits.

"The average merchant suffered 133 successful fraudulent transactions per month, up 46 percent from last year," writes NBC News staff reporter Herb Weisbaum in his Sept. 29 article. LexisNexis says the spike in fraud is driven by the massive number of credit and debit card numbers compromised in recent data breaches and the growth in mobile shopping.

"Fraud has been going up the last few years, but this was a really big jump — both in the amount of revenue lost to fraud and the sheer number of fraud attempts," says Aaron Press, a fraud expert at LexisNexis Risk Solutions.

Gas pumps tighten security

Visa, the credit card giant, is rolling out software aimed at predicting whether it's you or a thief trying to fill at the pump. The software, Visa Transaction Advisor, gives a risk score ranging from zero to 99. The higher the score, the greater the risk of fraud.

According to the Sept. 25 NorthJersey.com article, "Visa software tackles fraud at the gas pump," by Patricia Sabatini of the Pittsburgh Post-Gazette, "The program uses some 500 pieces of information — including a cardholder's transaction history and real-time reports on hot spots for fraud — to flag high-risk transactions immediately after customers swipe their cards."

If a threshold set by the gas station operator is exceeded, customers get a message at the pump asking them to complete the sale inside, where a clerk can ask for additional verification. A six-month-old analysis of the service showed that fraudsters drove away after seeing the message, but legitimate customers went inside to pay, says Mark Nelsen, Visa's vice president for risk products and business intelligence.

So far, roughly 25,000 gas stations use the technology, including Chevron and Shell, says Nelson. According to Nelson, Chevron experienced a 23 percent drop in card fraud at the pump in a two-month pilot test begun in late January.

Doc's greed trumps care in Medicare chemo scheme

Farid Fata, MD, 49, of Michigan, pleaded guilty to 13 counts of health care fraud, one count of conspiracy to pay or receive kickbacks and two counts of money laundering, reports the Oct. 1 Newswire article, "Doctor Pleads Guilty to Ordering Unnecessary Chemotherapy and Billing Medicare," by Boris Djuric.

"Dr. Fata today admitted he put greed before the health and safety of his patients, putting them through unnecessary chemotherapy and other treatments just so that he could collect additional millions from Medicare," says Assistant Attorney General Caldwell.

According to the article, accusations were based on FBI interviews with employees of the doctor's Michigan Hematology Oncology Centers. In one strange case, a male patient fell down and hit his head at one of the offices, and Fata insisted he receive his chemotherapy before being taken to the emergency room.

His sentencing is scheduled for Feb. 23, 2015. He faces a statutory maximum of 175 years in prison.