Not sure what a telephone relay is? A telephone relay is a tool used to help the hearing impaired make phone calls to businesses and other entities that may not have a tele-typing device to communicate with them. The hearing impaired can contact a special operator that will stand in the middle of the conversation to “speak” the words of the caller to the receiver. Unfortunately, the service has become a new weapon for fraudsters to commit fraud.
The exploit of the service is that the caller and origin of the call are protected from disclosure to the receiver by law, which allows scammers to hide their identity. The scam being employed is a variant of an overpaying scam where the fraudster places a call through the telephone relay service. The customer then explains that the delivery service they prefer to use doesn’t accept credit cards and asks the business to wire money to the shipper and to charge their credit card for the total plus shipping. The business ends up burned on both ends through the loss of goods and whatever funds were transferred to the shipper/fraudster. Importantly, companies must educate their employees on this type of attack and to take all precautions even if they feel bad for the customer.
Friday, June 12, 2009
Supply Chain Attack Targets Chip and PIN
What was once regarded as the final solution to credit card and debit fraud has become a valuable lesson learned in the creativity, resources and capability for organized fraudsters to overcome fraud barriers. This is not another article talking about the shift in fraud from card present carding to cross border eCommerce fraud. According to US National Counter Intelligence, hundreds of chip and pin machines in stores and supermarkets across Europe have been rigged by fraudsters to send sensitive information overseas to fraudsters. The doctored machines were highly sophisticated and believed to have been infected when being built in China, before they left the production line. Security experts stated the scope of the crime was once only believed to be executed by a nation state’s intelligence service. What some may still regard as a full-proof system is anything but…
The Ill Will Effect on Business
In an article by Glenn Derene entitled "The Ill Will Effect: Who really likes their Telco Provider" in popular mechanics the author discusses a phenomenon called the “Ill Will Effect” and how it can have serious consequences for businesses.
In short the "Ill Will Effect" describes a market condition where consumers don't trust, or like, a company they are doing business with but feel they have little choice but to use them. At this point I am sure you are scratching your head to figure out what this has to do with eCommerce, but I think we can all gain some strategic insight from this article.
The article primarily focuses on telcos and cable companies and how individuals perceive and attach value to their brands. The author points out how some industries (i.e. telecoms and media) have benefitted from high initial establishment costs which limit competition and thus provide consumers with few options. This market dynamic has allowed these companies to be less worried about losing customers to competition, and subsequently suffer from poor customer service and brand risk.
The risk to the brand comes from consumers who may start to view their carrier companies as the “least evil” option. Once consumers become tired of the poor service they start looking for alternatives that provide similar services for similar costs. In this case large incumbents become vulnerable to smaller start ups that are more in-tune with consumer demands. Large incumbents that want to hold market share must protect their strategic positions by listening and addressing consumers’ concerns and demands.
Netflix, a little mail-in DVD online service, took Blockbuster by storm by offering a more convenient way to rent movies without late fees. Similarly, Skype has utilized low-cost VOIP to gain a substantial market share in the long-distance calling market.
All it takes is a disruptive technology and a small nimble firm with a bright motivated entrepreneur to take their big idea and turn an industry on its head. If you aren't willing to solve your customer's problems with your business model or an industry's business model, all it takes is one great idea to flash inside the head of an entrepreneur to remove the problem from your bottom line.
In short the "Ill Will Effect" describes a market condition where consumers don't trust, or like, a company they are doing business with but feel they have little choice but to use them. At this point I am sure you are scratching your head to figure out what this has to do with eCommerce, but I think we can all gain some strategic insight from this article.
The article primarily focuses on telcos and cable companies and how individuals perceive and attach value to their brands. The author points out how some industries (i.e. telecoms and media) have benefitted from high initial establishment costs which limit competition and thus provide consumers with few options. This market dynamic has allowed these companies to be less worried about losing customers to competition, and subsequently suffer from poor customer service and brand risk.
The risk to the brand comes from consumers who may start to view their carrier companies as the “least evil” option. Once consumers become tired of the poor service they start looking for alternatives that provide similar services for similar costs. In this case large incumbents become vulnerable to smaller start ups that are more in-tune with consumer demands. Large incumbents that want to hold market share must protect their strategic positions by listening and addressing consumers’ concerns and demands.
Netflix, a little mail-in DVD online service, took Blockbuster by storm by offering a more convenient way to rent movies without late fees. Similarly, Skype has utilized low-cost VOIP to gain a substantial market share in the long-distance calling market.
All it takes is a disruptive technology and a small nimble firm with a bright motivated entrepreneur to take their big idea and turn an industry on its head. If you aren't willing to solve your customer's problems with your business model or an industry's business model, all it takes is one great idea to flash inside the head of an entrepreneur to remove the problem from your bottom line.
Finding Real Value in a Stolen Card
Criminals are obtaining more tools to sort through the massive amount of card data to determine which cards are good and bad. Several commercial sites have sprung up that offer services to cybercriminals to check balances and limits on cards. They even offer volume discount! It’s estimated by experts that about 25,000 debit and credit cards are checked daily. These sites provide valuable information to the crooks and the only obstacles are the ability to read Russian and pay with virtual currencies, such as Webmoney.
How can they do this?
Well, many of these sites are able to hack the credit card payment networks to conduct “pre-authorization requests”. As you know the preauth places a temporary hold on the account, to make sure there is enough money to pay the bill. This happens all the time from restaurants to hotels. The cybercriminal have no intent on settling the transaction, they just want to see how much money is available on the card.
The cybercriminals also have designed their sites to check the cards using legitimate high jacked merchant account numbers and using unrelated merchant names. There have been incidents where merchants have complained to state governments about customers calling saying, “I didn’t buy that! Why are you charging me?” However, the state has been unable to do anything because the merchants have not experienced any financial loss. The accounts are changed frequently and the criminals bank on companies using different financial processing systems that don’t share data.
How can they do this?
Well, many of these sites are able to hack the credit card payment networks to conduct “pre-authorization requests”. As you know the preauth places a temporary hold on the account, to make sure there is enough money to pay the bill. This happens all the time from restaurants to hotels. The cybercriminal have no intent on settling the transaction, they just want to see how much money is available on the card.
The cybercriminals also have designed their sites to check the cards using legitimate high jacked merchant account numbers and using unrelated merchant names. There have been incidents where merchants have complained to state governments about customers calling saying, “I didn’t buy that! Why are you charging me?” However, the state has been unable to do anything because the merchants have not experienced any financial loss. The accounts are changed frequently and the criminals bank on companies using different financial processing systems that don’t share data.
2008's Record Year for Data Breaches
According to Verizon's 2009 Data Breach Investigations Report, the total number of consumer records compromised in 2008 exceeded the combined total from 2004 to 2007, which has resulted in cheaper black market credit card data. In terms of actual street price the value of stolen card information has dropped from $10 to $16 per record in mid-2007 to less than $.50 per record today.
The primary target for cybercriminals is still the retail and financial sector which represented 61% of the 285 million records compromised. According to the report, while the absolute number of attacks was smaller, the cyber criminals and methods utilized were very determined, very complex and extremely successful. 3 out of 4 data breaches came from an outside entity, not an insider.
The primary target for cybercriminals is still the retail and financial sector which represented 61% of the 285 million records compromised. According to the report, while the absolute number of attacks was smaller, the cyber criminals and methods utilized were very determined, very complex and extremely successful. 3 out of 4 data breaches came from an outside entity, not an insider.
Tuesday, April 7, 2009
FBI Ramps Up Probes of Financial, Mortgage Fraud
Red Bank, April 7, 2009/The FraudBlog Newsletter/- FBI probes into financial and mortgage fraud are growing at exponential rates. John Pristole, FBI Deputy Director, said that the bureau has more than 2,000 open investigations into mortgage fraud and about 566 corporate-fraud investigations. Corporate and financial-institution failures have forced the FBI to focus on accounting fraud, insider trading and financial-statement manipulation. The director has expressed concern that the amount of fraud that has begun to surface has actually put a strain on the FBI’s resources for investigating white-collar crime.
Credit Card Details Freely Available on Web
Red Bank, April 7, 2009/The FraudBlog Newsletter/- Details of up to 19,000 Visa, Mastercard and American Express customers were found publicly available on the web. Speculation is fraudsters posted the data with the intent to sell it to other fraudsters. Numerous internet security experts have voiced concern that it was a rare event to have such a complete set of credit card data to be publicly posted for anyone to access.
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