CJ 316 Seminar 4 1-31-11 Introduction Technology has made it much easier for the fraudster. – Fake identities – False businesses – Virtual storefronts Law enforcement has been forced to learn new ways to detect high-tech fraudsters.
CJ 316 Seminar 4 1-31-11 Introduction, Con’t The high-tech frauds discussed in this chapter include: – Credit card fraud – Auction fraud – Cellular/phone fraud
CJ 316 Seminar 4 1-31-11 Credit Card Fraud Most common way identity theft victim information is used. An epidemic with no signs of a real cure. Biometrics, the “science of life measurement,” is a good vaccine for the problem.
CJ 316 Seminar 4 1-31-11 Biometrics Three primary types: – High biometrics – Low biometrics – Esoteric biometrics
CJ 316 Seminar 4 1-31-11 High and Low Biometrics High biometrics — the most reliable; measures physical characteristics of high accuracy (e.g., retina, iris, and fingerprints) Low biometrics —measure distinct features that have a reasonable level of accuracy (e.g., hand geometry, face recognition, voice recognition, and signature recognition)
CJ 316 Seminar 4 1-31-11 Esoteric Biometrics Are still in early development and include vein measurement or analysis of body odor. 56—91% of the general public supports the use of biometrics. Citizens must be assured that “Big Brother” and others will not abuse customer biometric information.
CJ 316 Seminar 4 1-31-11 Credit Card Fraud Thieves obtain credit card information by: – Dumpster diving – Shoulder surfing – Social engineering – Inside access to credit card information – Credit card generating software – Skimming – Internet chat rooms – Email/Web Site scams – Stealing it
CJ 316 Seminar 4 1-31-11 Credit Card Fraud, Con’t Skimming — the electronic lifting of the full track data encoded on the magnetic stripe of a valid card and transferring of that data to another magnetic stripe on a counterfeit card. – Most commonly occurs at point of a legitimate sale where the card is skimmed with a handheld skimmer.
CJ 316 Seminar 4 1-31-11 Is Skimming a Problem? Skimming 15 or 20 accounts can generate $50,000 to $60,000 worth of fraud, and nobody is going to be aware of it until the victims get their bills, 30 to 60 days after the crime. In the U.S., it cost $1.2 billion, and, everywhere, the cost is going up.
CJ 316 Seminar 4 1-31-11 Common Security Features Holographic industry or trade emblems Clear, uniform, evenly spaced, and raised credit card number embossing Standard three-digit validation numbers Tamper proof/resistant signature panels Micro printing
CJ 316 Seminar 4 1-31-11 Internet Auction Fraud The use of the Internet in an online transaction between buyer and seller to defraud the seller through deceptive means, including, but not limited to, failure to deliver merchandise, intentionally delivering defective merchandise, or delivering merchandise other than what was promised or purchased (of a lesser quality).
CJ 316 Seminar 4 1-31-11 Common Forms of Auction Fraud Bid siphoning Shill bidding Bid shielding
CJ 316 Seminar 4 1-31-11 Bid Siphoning Con artists lure bidders off legitimate auction sites by offering to sell the “same” item at a lower price. Their intent is to trick consumers into sending money without proffering the item. By going off-site, buyers lose any protections the original site may provide, such as insurance, feedback forms, or guarantees.
CJ 316 Seminar 4 1-31-11 Shill Bidding When fraudulent sellers or their “shills” bid on “sellers” items to drive up the price. This is also sometimes referred to as “Phantom Bidding.”
CJ 316 Seminar 4 1-31-11 Bid Shielding When fraudulent buyers submit very high bids to discourage other bidders from competing for the same item and then retract those bids so that people they know can get the item at a lower price.
CJ 316 Seminar 4 1-31-11 Auction Fraud Suspect Profile 75% male 25% female Most likely residing in California, New York, Florida, Texas, Illinois, or Ohio Average loss between $252.50 and $285.00 Average victim age 38.6 years
CJ 316 Seminar 4 1-31-11 Auction Fraud Prevention Be familiar with auction site Know available recourse action offered Examine seller feedback Know where the seller is located Note any warranties or return policies Avoid overpriced shipping costs
CJ 316 Seminar 4 1-31-11 Auction Fraud Investigation What is the name of the Web Site and/or web address (Uniform Resource Locator — URL) of the site that the purchase was made from? Did you save a copy of the screen that documented the transaction? Did you save any email in connection with the transaction? Did you save any electronic payment receipts in connection with the transaction?
CJ 316 Seminar 4 1-31-11 4.3 Cellular/Phone Fraud
CJ 316 Seminar 4 1-31-11 Phone Phreaking The art and science of cracking the phone network. Some phreak to explore the phone system, while others do it to make free phone calls. The Captain Crunch whistle was the earliest phreaking device. Phreaking can take place on land lines and using cellular technology.
CJ 316 Seminar 4 1-31-11 Cellular Phones Each cellular phone has a unique pair of identifying numbers: – Electronic Serial Number (ESN) – Mobile Identification Number (MIN) The assigned ESN or MIN can be viewed on most cell phones by removing the battery cover and battery.
CJ 316 Seminar 4 1-31-11 Cellular Phreaking A police scanner can be used to capture the ESN or MIN. The captured ESN or MIN can then be loaded onto another cellular phone, creating a clone. Readers are also sold on the Internet. PINs were introduced to combat cellular fraud, but are not common today.
CJ 316 Seminar 4 1-31-11 Cloning Fraud It occurs when criminals use scanners to obtain legitimate MIN/ESN/PIN combinations and then program them into illegitimate phones. (Recall, PINS are not used very often today.)
CJ 316 Seminar 4 1-31-11 Cloning Fraud, Con’t A legitimate serial number is programmed into an imposter’s cell phone. Crooks get the numbers because they are broadcast with every cellular call and can be picked up by ordinary radio scanners.
CJ 316 Seminar 4 1-31-11 Cloned Phone A cell phone has two basic ways it identifies itself to the cell phone company it wants to use — its own telephone number, which can be changed, and a special secret number embedded into the silicon inside the phone called the ESN. When the phone wants to make a call, it sends these numbers and the cell carrier uses them to check if the call is authentic.
CJ 316 Seminar 4 1-31-11 Types of Cell Phone Fraud Counterfeit “clone” phones Counterfeit “lifetime” phones Counterfeit “tumbler” phones
CJ 316 Seminar 4 1-31-11 Counterfeit “Clone” Phones The criminal puts into a phone a computer chip that can be programmed with both the ESN and MIN of a legitimate user. The criminal obtains valid number combinations, either through illegally used test equipment or through an unscrupulous employee of a retail agent or carrier.
CJ 316 Seminar 4 1-31-11 Counterfeit “Lifetime” Phones Thieves reprogram a special wireless phone through its own keypad so that wireless bills are charged to someone else. With the “lifetime” counterfeit phone technology, numerous legitimate MIN/ESN pairs can be stored in each phone.
CJ 316 Seminar 4 1-31-11 Counterfeit “Tumbler” Phones Thieves alter a wireless phone so it tumbles through a series of ESNs and makes the caller appear to be another new customer each time a call is made.
CJ 316 Seminar 4 1-31-11 Common Types of Cellular Fraud Subscriber fraud Roaming fraud
CJ 316 Seminar 4 1-31-11 Subscriber Fraud Occurs when someone signs up for service with fraudulently obtained customer information or false identification. Subscription fraud and identity theft go hand-in-hand and are the most common types of telecom fraud today. The cellular industry estimates that carriers lose more than $150 million per year due to subscriber fraud
CJ 316 Seminar 4 1-31-11 Roaming Fraud With the fraudulently obtained phone in hand, the phreaker goes to another cell area outside of the provider’s network. The phone then enters the roaming mode, utilizing cell towers from another provider. By the time this other provider bills the original provider for the roaming fees on its towers, the thief has racked up significant charges. Since the phone was obtained with false information, locating the criminal is extremely difficult.
CJ 316 Seminar 4 1-31-11 Cell Industry Prevention Roamer Verification/Reinstatement (RVR) Radio Frequency Fingerprinting (RFF) Data-mining
CJ 316 Seminar 4 1-31-11 Roamer Verification/Reinstatement When a visited server (provider) does not recognize a number pair (EIN/MIN), RVR “hot- lines” the caller to an operator who can verify his or her identity. Once this is satisfactorily done, the caller’s ability to roam in that market is reinstated.
CJ 316 Seminar 4 1-31-11 Radio Frequency Fingerprinting Each phone has a unique radio wave pattern that is recorded by the phone company when it is first used. Whenever a mobile purporting to be that phone attempts to access the network, its emissions are tested to see if they match the characteristics previously recorded. If the match is close, the call is completed.
CJ 316 Seminar 4 1-31-11 Data Mining The practice of automatically searching large stores of data for patterns. The cellular industry uses data- mining programs to monitor and detect fraud by creating customer profiles that track average call duration, percentage of no-answer calls, percentage of calls to/from a different area code, percentage of weekday calls (Monday—Friday), percentage of daytime calls (9a.m./5p.m.), average number of calls received per day, and the average number of calls originated per day.
CJ 316 Seminar 4 1-31-11 Investigative Uses of Cell Phones Cell signals can be used to track victims. Cell signals can be used to track suspects. Cell phone records can reveal phone numbers called and lead to a suspect or associates, especially when investigating identity theft complaints.
CJ 316 Seminar 4 1-31-11 Consumer Fraud Prevention 1.Locking phones or removing handsets and wireless antennas (to avoid drawing attention to the vehicle). 2.Protecting sensitive documents, such as subscriber agreements, which include electronic serial numbers. 3.Immediately reporting a stolen phone to the wireless phone carrier. 4.Using the lock code.
CJ 316 Seminar 4 1-31-11 Consumer Fraud Detection 1.Looking for unusual call activity on monthly wireless phone bills. 2.Reporting frequent receipt of wrong numbers or hangups on the wireless phone. 3.Asking the wireless provider to eliminate overseas toll or North American toll (long distance) dialing capabilities. 4.Immediately contacting the wireless phone company if fraud is suspected.
CJ 316 Seminar 4 1-31-11 Computer Network Attack Involves malicious code (i.e., a virus), used as a weapon to infect enemy computers to exploit a weakness in software, in the system configuration, or in the computer security practices of an organization or computer user. Other forms of CNA are enabled when an attacker uses stolen information to enter restricted computer systems.
CJ 316 Seminar 4 1-31-11 Reasons for Using Cyberterror Vulnerability Fear factor Anonymity Attention Availability and low cost Safety Expertise
CJ 316 Seminar 4 1-31-11 Organized Crime Organized crime groups are also turning toward technology. Organized crime is crime committed by criminal organizations whose existence has continuity over time and across crimes and that use systematic violence and corruption to facilitate their criminal activities.
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