Earlier this week the Feds cracked down on one of the largest credit car theft rings ever. The ring created 7,000 false identities to obtain 25,000 credit cards. Then they ran the scam through real businesses in on the whole thing, in addition to 80 bogus companies using more than 1,800 addresses, according to the FBI.
Through a series of identity theft and fraudulent actions, they were swimming in the hard-earned cash of millions of other people and business owners like Scrooge McDuck did backstrokes in piles of gold.
“This is, as far as we can tell, one of the largest, if not the largest, credit card fraud cases ever prosecuted by the Department of Justice,” U.S. Attorney Paul Fishman said at a news conference earlier this week in Newark, New Jersey. “We have already documented losses of $200 million, and that number could quite well go higher.”
Most inside fraud is committed using the barbecue approach – “low and slow.”
A recent study conducted by Carnegie Mellon University’s CERT Insider Threat Center examined 80 instances of insider fraud. What researchers discovered is that the most damage to companies and their clients was done when criminals pilfered small amounts over extended periods of time. This makes it easier for them to evade detection and cause serious harm.
If you’ve never watched the Food Network, low and slow is the best way to cook barbecue. Really, it’s the only way. You get the juiciest meat and best flavor. When miscreants apply this approach to fraud, they get the same result. There’s no sudden flare-up that catches anyone’s attention and they can usually make off with more of your money than if they tried for one big score. Fraud detection efforts have to account for this if they are to be successful.
Insider fraud struck again yesterday, this time resulting in charges being filed by the U.S. Securities and Exchange Commission (SEC).
According to the SEC, a former executive in the Stamford, Connecticut offices of a New York-based broker-dealer deceived clients when selling them mortgage-backed securities (MBS). He allegedly told them that his firm paid more for the MBS than it actually did, or made up a fictional seller and arranged supposed trades, when in reality he was selling out of his company’s own inventory at higher prices to bank a better profit.
In the SEC filing, the former exec was said to have swindled his clients and brought in nearly $3 million in additional profits. While the duplicitous activity went unnoticed for a time, his star rose within the company and so did his bonuses.
Do you know what’s behind the masks your employees may wear? A staggering number of businesses falter and even fail because someone on the inside – an employee, vendor or even a partner – steals money, goods, data or intellectual property from the organization. Will yours be one of them? Not if you learn about the warning signs of fraudsters and the weaknesses in your current hiring procedures.
The strongest indicator that your business is at risk? Denial. If you have ever said to yourself, “My people would never do that,” or “were too small to be worth a fraudster’s time”, you are caught in a cycle of self-delusional naiveté. Most inside theft happens at the hands of a “trusted” team member. In fact, insider theft and fraud aren’t generally committed by experienced criminals.
The havoc wrought by insider fraud can have far-reaching consequences for both your company and clientele. Several recent examples have proven how damaging fraud can be in the financial sector. But, in truth, there isn’t a single industry today that can afford to forego implementing safeguards.
According to an article at online news source Bank Info Security, one such incident in Ohio earlier this month lead to the collapse of a credit union and a man being sentenced to 37 months in prison for loan fraud and money laundering. About a week prior, two former employees of Chemung Canal Trust Company Bank pleaded guilty to masterminding a seven-year embezzlement scam that cost the bank roughly $325,000.
Insider fraud, also known as friendly fraud, is a difficult topic for many businesses to tackle because it involves trusted employees betraying the companies they are supposed to be – and often appear to be – loyal to. However, the dangers are far too real to be ignored, and fraud detection must be a top priority.
Is there a chance that someone could be stealing your most profitable business secrets? Competitive intelligence isn’t new, but it certainly has gotten easier with the introduction of ubiquitous high resolution cameras (smartphones), miniature storage devices that hold massive amounts of data (USB drives) and advanced tools of human manipulation (social networking).
Dyson, the British engineering firm behind the popular bagless vacuum cleaners and Airblade hand dryers, accused their German counterpart, Bosch, of planting a mole, or corporate spy, inside their headquarters for two years to steal vital research and development information. Bosch has denied any wrongdoing and refuses to return the technology or intellectual property. In an odd twist, Bosch hasn’t publicly denied planting an inside spy to siphon competitive intelligence from their rival.
In a world of highly competitive and rapid technological advancements, this sort of news brings to mind three crucial questions for businesses wanting to protect their intellectual property:
It’s time for young adults to head off to college or move away from home for the first time. This is by far the highest risk group for identity theft for several reasons. When these kids leave the nest, it’s the first time they are getting true financial independence, which they might never have been trained to handle. They have access to credit cards, new bank accounts, and they’re managing it themselves. That may be a huge red flag that there’s going to be trouble. Secondly, they’re going into an environment where their stuff is not particularly protected. They’re in a dorm room or apartment, they’ve got roommates that may need extra cash; they know they can take advantage of them. So it’s a high risk environment. The third reason is because they do so much online. There’s so much social media interaction and that’s where tons of information is stolen. Take the steps listed below and talk to your newly-independent kids about implementing them. It will help them out not just this year but will also help them build their financial future going forward. Your identity is pretty much everything in terms of your net worth. You’ve got to take care of it now.
Dropbox Has Been Hacked, And You Should Change Your Password Right Now
Dropbox has admitted that hackers have compromised some of its user accounts.
The company says that hackers got user names and passwords when they broke into other websites. They used them to sign into “a small number of Dropbox accounts.” Dropbox didn’t say how many accounts were affected. It has already contacted the users it knows were compromised.
In more bad news, a hacker also used a stolen password to break into a Dropbox employee’s account which contained a document with a list of Dropbox users’ email addresses. Lo and behold, those email addresses started getting spam. Users complained to Dropbox about it and that’s how the company discovered the security problem. Full Story.
Satisfaction with social-networking powerhouse Facebook has slumped, according to the latest survey from the American Customer Satisfaction Index — hitting a new record-low score in the social media category that placed it in the five lowest-scoring companies out of more than 230 surveyed. There are several immediate factors that undermine user trust:
Inconsistency. Facebook’s user interface changes constantly (think Timeline) and this inconsistency leaves users feeling like they don’t know what to expect next from the social media site. Consistency builds trust, but Mark Zuckerberg doesn’t seem to have much vision for consistency.
Lack of Transparency. The average user has very little comfort with or knowledge about how Facebook is collecting, analyzing, using and selling their personal data. While Facebook has a range of privacy and security settings, most users still don’t comprehend the enormity of the information that Facebook collects on them. This lack of transparency leaves users with a bad taste in their mouth, like they are being cleverly deceived for the sake of profit.
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