Fraud in the News

A strange case of credit card fraud

According to an Oct. 27 Consumer Affairs article by Jennifer Abel, chip-based credit cards might be more secure than magnetic-strip cards, but determined thieves could still find ways to commit fraud. (See 'Replay' lets fraudsters disguise fake credit card charges as legitimate chip-card transactions.) 

"[Chip-based] cards also tend to require a personal identification number (PIN) at point of sale," says Abel. "These features do not make it impossible for hackers to steal money from accounts, but they are supposed to make thieves' lives more difficult by making it harder for them to actually use any account numbers they manage to steal."

Yet thieves are finding ways around this new system. According to the article, a strange case of credit card fraud out of Brazil has American banks and credit-card companies arguing over who's responsible for eating the cost.

As first reported by security blogger Brian Krebs (a keynote speaker at the 26th Annual ACFE Global Fraud Conference, June 14-19, 2015, in Baltimore), at least three unnamed U.S. financial institutions have "reported receiving tens of thousands of dollars in fraudulent credit and debit card transactions coming from Brazil and hitting card accounts stolen in recent retail heists." According to Krebs, as quoted in the article, the unauthorized charges were submitted through Visa and MasterCard's networks as chip-enabled transactions, even though the banks haven't even begun sending customers chip-enabled cards.

However, the question still remains: Who pays for these fraudulent transactions?

Stolen identities lead to stolen tax refunds

According to a Nov. 18 press release from the FBI and U.S. Attorney's Office, 17 individuals were arrested for their involvement in a stolen identity tax fraud scheme that utilized students' financial services accounts. (See Seventeen Charged Today in Connection with Stolen Identity Tax Refund Fraud Scheme Involving Student Financial Services Accounts.)

According to the release, the investigation uncovered a tax refund fraud scheme that accessed more than 1,000 student accounts at Miami Dade College, victimized 644 and resulted in an aggregate intended loss amount of $1.9 million. Twenty-one were charged, and four remain at large.

As alleged in the indictments, the defendants used the students' stolen identities so they or their co-conspirators could submit fraudulent tax returns to the IRS.

"Students attend college to give themselves a better chance for a successful future," says Kelly R. Jackson, special agent in charge, IRS Criminal Investigation, in the release. "These students, however, are accused of federal crimes that could land them in prison and tarnish their records forever."

Read more about identity theft tax refund fraud in the 2014 Fraud Magazine feature articles from March/April and May/June.

Take a closer look at the name on your junk mail

Mabel Seyfried of Lynn Township, Pennsylvania, was left feeling helpless after discovering that she might have been a victim of identity theft. It started when one of her banks called to ask if she had bought airline tickets with her credit card in Spain. She hadn't, and the purchase was fraudulent. 

Around mid-June, she started to receive junk mail addressed to "Noris Ricketts or current resident" that welcomed him to his new home. After more coupons and special offers arrived in her mailbox addressed to Ricketts, she decided to contact the local postmaster and file a report with state police.

According to the Sept. 3 article, Strange mail has woman on edge, by Paul Muschick in The Morning Call, junk mail sent to a strange name at your address could be a sign of identity theft. "Clever crooks know how to set up accounts so bills are delivered electronically," writes Muschick. According to the article, you also should be on the alert if you notice important pieces of mail, such as credit card bills, aren't being delivered. That could mean an identity thief has hijacked your accounts and changed the address so you won't immediately get the bills with the unauthorized charges.

"How do you stop someone from using your address fraudulently? Criminals always know how to work the system, and their victims can't always protect themselves," says Seyfried. "People just need to be aware this is something they shouldn't just shrug off. It's just part of the larger picture."

Advertisers versus the fake-impressions business

"Originating with search ads, and making its way to display, ad fraud has matured and bled its way into the highly lucrative online video ad landscape — and for good reason," writes Tod Sacerdoti in his Nov. 20 AdAge article, How to Fight Traffic Fraud in Online Video Advertising.

According to the article, traffic fraud costs marketers billions of dollars in wasted ad expenditures annually. Since the emergence of the pay-per-click model in the late 1990s, traffic fraud has created expensive problems for advertisers, agencies, intermediaries and publishers.

"Originally, fraudsters hired actual humans to click on search and display ads (remember click farms?), but it was expensive to scale so they began building scripts that simulated humans clicking on ads," writes Sacerdoti. "Today, the fake-impressions business has grown more sophisticated, with hidden and laundered impressions being sold to unsuspecting advertisers through a number of sophisticated technologies."

The AdAge article covers six steps that advertisers and agencies can take to fight fraud including reviewing the URLs your ads run on and using accredited, third-party verification services to validate that campaigns are being delivered to humans.

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