Classic Fraud: 6 Scams That Don't Go Away

Classic Fraud: 6 Scams That Don't Go Away

From Check Fraud to Phishing, All the Old Tricks are Back with a Vengeance

June 1, 2009 - Linda McGlasson, Managing Editor

Bank fraud has evolved over the last several years (See: Fraud Update: The 13 Hottest Schemes You Need to Prevent), but some classic variations keep financial institutions busy.

Here are six old fraud tricks that are back with new twists to bedevil fraud departments and information security professionals.

#1. Check Fraud

Last week, New York indicted 18 people in a massive check counterfeiting ring that cashed more than $1 million worth of checks at major New York City banks. This case causes even the best fraud departments in financial institutions to check their own programs and safeguards.

Attempted check fraud at U.S. banks totaled $12.2 billion in 2006, according to the latest biennial survey conducted by the American Bankers Association (ABA). Bank prevention systems caught 92 percent or $11.2 billion of check fraud attempts.

Actual bank losses totaled $969 million, compared with $677 million from the previous survey in 2004. ...

#2. Elderly and Immigrant Identity Fraud

Financial institutions' mortgage and loan officers need to pay attention to this kind of fraud. While not new, elderly and immigrant fraud is regaining popularity, especially in the age of identity theft. In this predatory practice, Jennifer Butts, Director of Operations at the Mortgage Asset Research Institute, explains that elderly and non English-speaking consumers are taken advantage of by fraudsters who steal their identities and use them in straw-buying or other property transactions.....

#3. ATM Fraud/Skimming

This type of fraud made it into President Barack Obama's speech announcing his cybersecurity initiative, when he said "thieves used stolen credit card information to steal millions of dollars from 130 ATM machines in 49 cities around the world -- and they did it in just 30 minutes." The big question is: Can it happen at your institution? The answer is seen in the numbers from a Pulse EFT study (Pulse is one of the leading ATM/debit networks in the U.S.) -- the banking industry lost $662 million to debit card fraud in 2005. Of these losses, 60 percent resulted from ATM transactions, 37 percent from signature transactions, 37 percent from signature debit transactions and 3 percent from PIN point-of-sale (POS) transactions.....

#4. Phishing

Phishing continues to change and grow, and crimeware (or malware) is also growing, says noted phishing and crimeware researcher Dr. Markus Jakobsson, Principal Scientist at the Palo Alto Research Center, Palo Alto, CA. "There is a notable tendency for phishing to become more technical -- for example, using advanced obfuscation to combat anti-spam techniques," Jakobsson notes. At the same time, crimeware (what used to be called malware) is becoming increasingly more reliant on social engineering. "Trojan horses commonly use clever social engineering techniques to improve their success rates," he says.....

#5. Vishing

The increased number of "vishing" - or phone-based phishing -- scams hitting regions is cause for alarm. In the last week, there have been five different regions of the country hit by phishers using phone calls to solicit information about the person's credit union or bank account:

• New England Federal Credit Union in Williston, VT reported that a vishing scam hit residents, and the Heritage Family Credit Union in Rutland, VT also reported a similar scam.


• Customers of the Forward Financial Credit Union in Niagara, WI and the River Valley Bank in Iron Mountain, MI received calls last week from fraudsters asking for account information.


• Asheville Savings Bank, Asheville, NC was alerted last week by its customers that a vishing scam targeting area residents was trying to get debit card numbers.


• The final vishing scam of last week targeted all 22,000 residents of Guilford, CT. The calls started coming on May 24. Guilford Police say they believe by the time they were done every land line telephone in the town of 22,000 residents received a call.....

6. Insider Threat

The threat of a trusted employee or vendor taking sensitive information is not new, but the ways that insiders are getting to the juicy data or dollars is changing, according to Randy Trzeciak, Senior Member of the Technical Staff for the Threat and Incident Management Team in the CERT Program at Carnegie Mellon University's Software Engineering Institute. Collusion is the new way insiders are getting sensitive data. (Full Text at www.bankinfosecurity.com)

To learn more about Identity Theft and what to do if you are a victim, visit www.StopIdTheftCrime.com and subscribe to the newsletter to obtain your free 46 page eBook "Fighting Back Against Identity Theft".

Remember, estimates are that every 2-4 seconds an Identity is compromised. Why take chances? Why not protect yourself and your loved ones with the best suite of services provided (including restoration) by the best NYSE company in the field? Educate yourself and visit the shameless plug below or call me at (909) 208-3728!

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