Archive for category: iovation

According to a report released by Javelin Strategy and Research and another by the FTC, the incidence of identity fraud increased in 2012 for the second consecutive year, affecting 5.26 percent of U.S. adults. This increase was driven by dramatic jumps in the two most severe fraud types, new account fraud (NAF) and account takeover fraud (ATF).

Key findings from the FTC’s report:

• Over one million complaints were fraud-related. Consumers reported paying over $1.4 billion in those fraud complaints; the median amount paid was $535.
• Fifty-seven percent of all fraud-related complaints reported the method of initial contact. Of those complaints, 38 percent said e-mail, while another 34 percent said the telephone. Only 9 percent of those consumers reported mail as the initial point of contact.

Key findings from Javelin’s report:

• Identity fraud incidents and amounts stolen have increased. The number of identity fraud incidents increased by one million more consumers over the past year, and the dollar amount stolen increased to $21 billion—a three-year high, but still significantly lower than the all-time high of $47 billion in 2004. This equates to one incident of identity fraud every three seconds.
• One in four recipients of a data breach notification became a victim of identity fraud. This year, almost 25 percent of consumers that received a data breach letter became a victim of identity fraud, which is the highest rate since 2010. The study found consumers who had their Social Security number compromised in a data breach were five times more likely to be a fraud victim than an average consumer.
• Small retailers are losing out. Fraud victims are more selective where they shop after an incident, and small businesses were the most dramatically impacted. The study found that 15 percent of all fraud victims decided to change behaviors and avoid smaller online merchants. This is a much greater percentage than those that avoid gaming sites or larger retailers.

With iovation’s services, when computers or mobile devices with fraudulent histories connect to a retailer’s website, the business is alerted in real time. If velocity or geolocation alerts are triggered, the retailer knows that too, also in real time. The company maintains a living database of device intelligence, sharings the data across its global base of finance, gaming, travel, shipping, dating, and retail clients. Information is shared in order to detect fraudulent activity as soon as possible—before a product is shipped and chargebacks and fees are incurred. iovation calls it device reputation; I call it another bit of common sense for retailers.

Robert is a personal security and identity theft expert contributor to iovation. He is the author of 99 Things You Wish You Knew Before Your Mobile was Hacked!  Disclosures.

Recently, the FBI arrested 13 people in four states. Their crime? Allegedly creating thousands of phony identities with which to steal at least $200 million in one of the largest credit card fraud schemes ever charged by the Department of Justice.

Bloomberg reports that after using 7,000 false identities to obtain 25,000 credit cards, the conspirators ran the scam through real businesses such as jewelry stores, and at least 80 sham companies under more than 1,800 addresses. 

The defendants charged in the complaint allegedly used fake Social Security numbers to fabricate identities and obtain credit cards, doctoring credit reports to pump up the cards’ spending and borrowing power. They would then borrow or spend as much as they could (based on their fraudulently-obtained credit history) and proceed to default on the debts, robbing businesses and financial institutions of more than $200 million in confirmed losses. When the credit card balances went unpaid, there was no one to hold responsible. In the end, however, retailers, merchants, banks, and credit card companies paid the bills.

According to a statement by the FBI, “This elaborate network utilized thousands of false identities, fraudulent bank accounts, fake companies, and collusive merchants to defraud financial institutions of hundreds of millions of dollars in order to facilitate extravagant lifestyles they could otherwise not afford.”

It appears that this scam was particularly lucrative for the criminals because there were no actual flesh-and-blood victims of identity theft to take notice.  One device may be opening a new credit card account—then going to an online retailer and applying for instant credit—all within minutes. Frauds like this, while highly sophisticated in nature, can be detected early with the right tool in place. Through velocity triggers and shared experience across multiple businesses, iovation can proactively detect the activity, alert affected businesses, and thwart the attacks. This is great news for the protected businesses, and also great news for the consumers who would otherwise be dealing with fraudulent charges made under their identities.

Robert is a personal security and identity theft expert contributor to iovation. He is the author of 99 Things You Wish You Knew Before Your Mobile was Hacked! Disclosures.

A week’s worth of news reports shows law enforcement all over the country are battling identity thieves who are stealing our personal information and opening various accounts under our names or taking over existing accounts. From every corner of the U.S. from Ft Lauderdale to Anchorage and San Diego to Queens, busts are happening but more work needs to be done.

Queens NY, CBS New York reports: A South Ozone Park man who portrayed himself as a Harvard graduate with plans to open a medical facility has pleaded guilty to identity theft, the Queens District Attorney’s office announced.

San Diego CA, Imperial Beach Patch reports: Authorities said the defendants ran the ID theft and mail theft ring out of their home. Most of the personal information is believed to have come from stolen real estate files. Investigators found numerous items involved in the ID theft ring at the defendants’ home, including computers, printers, dozens of stolen credit cards and lists describing how to make counterfeit IDs.

Ft Lauderdale FL, Sun Sentential reports: The scheme unraveled after Erskine met with a confidential informant in March to discuss filing for fraudulent income tax refunds. She said Johnson could get a person’s Social Security number, date of birth, and driver’s license information for $150, according to court documents.

Anchorage AK, KTUU.com reports: An Anchorage man is facing 36 federal charges, including aggravated identity theft, in a case involving more than $150,000 in losses to individuals and businesses he allegedly defrauded. Rogers allegedly created fake documents for nearly two years, from late 2007 until mid-2009, which federal authorities say he then used to make fraudulent purchases.

Consumers must:

• Protect themselves from account takeover by monitoring their accounts closely, protect their passwords, and refute unauthorized charges.
• Protect themselves from new account fraud by locking down their credit with a credit freeze or identity theft prevention services.
• Protect their devices with antivirus, antispyware, antiphishing and a firewall.

Identity theft will continue to plague citizens until smart systems are put in place to mitigate new account fraud and account takeover. Businesses are engaging an emerging device identification technology by Oregon-based iovation Inc. that spots cybercriminals by analyzing the reputation of computers and mobile devices used to connect to online businesses. They proactively investigate for suspicious activity and check for characteristics consistent with fraudulent users.

In one major case, iovation helped bust a fraud ring that victimized over 15 people where tens of thousands of fraudulent charges were racked up. The case started when a report of $5,000 in fraudulent credit card charges at a large electronics store and two department stores was reported. It just so happens that the credit issuer was using iovation to flag fraudulent credit card applications and tracking that back to the specific computers and mobile devices used. This information, combined with surveillance photos and other offline detective work, provided the perfect blend of digital and physical data that law enforcement needed to bust the crime ring.