PacificEast's War on Fraud - Part 1

by Cindy10/1/2015 8:49:00 AM


PacificEast supplies a variety of tools that help arm fraud and risk prevention specialists in their daily battle to control fraud while still keeping sales and commerce humming along. While we may be expert tool builders we have to rely on the advice of fraud specialists in the field who fight these battles every day and are best suited to say how each tool should work. We have convinced one of the best online order fraud specialists, Janice Stedman, to contribute some of that expertise by writing a few blog entries for us.  We believe the expert advice we receive might be helpful for others on the front lines. Janice has over 20 years of expertise fighting mail-order and e-commerce fraud.

Join the Club

I just got off the phone with a co-worker who learned this morning that her identity was stolen.  Because I have worked in Retail eCommerce Fraud for nearly 20 years she wanted to call me for some insight.  So, being the good friend I am, when she delivered the news, I laughed out loud. I know, probably not the best response. Thankfully, she didn’t take offense.  She knew why I laughed: I see it every day and have even been hit three times myself.

My friend began her story by telling me she KNEW who stole her credit card number. Stifling another burst of laughter I ask her how she knows this.  Like most people who are victims of credit card theft she went to the last place she used the card.  “It has to be them!” she declared.  I realized I was taking this too lightly and really needed to be more supportive of my friend and her discomfort.  So, I walked her through some real life situations to show her that more than likely the restaurant she was at Friday night could be, but was probably not, the suspect. 

If you own a credit or debit card, chances are someone, somewhere has all your information. This would include your name, address, city, state, zip/postal code, your phone number, the security code on the card and the expiration date. To get an idea of how popular the buying and selling of credit card information is, one only need to Google “stolen credit card numbers”.  In 0.24 seconds (that’s how fast my browser brought back the information) I had 7,130 results.  The majority of the stories in the news were people getting arrested for their financial creativity.  Try Googling “banks hacked” and you will see a list with almost every bank in existence and when they were hacked. 

Advice for Consumers

To understand this better from a victim’s point of view, an excellent website to review is the Internet Crime Complaint Center. It is a partnership between the FBI, the National White Collar Crime Center and the Bureau of Justice.  Their mission is to serve as a vehicle to receive, develop and refer criminal complaints regarding the rapidly expanding arena of cyber-crime.  The Internet Crime Complaint Center (IC3) gives the victims of cyber-crime a convenient and easy to use reporting mechanism that alerts authorities to suspected criminal or civil violations.  For law enforcement and regulatory agencies at the federal, state, local, tribal and international levels, IC3 provides a central referral mechanism for complaints involving Internet related crimes. 

In 2014 the IC3 received over 250,000 complaints with an adjusted dollar loss of $800,492,073.  A 3.4% increase over the previous year.  The top 5 reported crime types were:

  •  Auto Fraud - Although there are variations, the typical scam involves a consumer finding a vehicle on a legitimate website which is often below market value. The criminal refuses to meet in person, will not allow an inspection of the vehicle, and often attempts to rush the sale. The fraudster keeps the money but does not deliver the vehicle.
  • Government Impersonation Email Scam - Scammers often pose as government or law enforcement officials to give them an appearance of authority, making it easier to convince unsuspecting victims to give their personal information.
  • Intimidation/Extortion Scam - The payday loan scheme involves receiving a call or e-mail notifying a loan is delinquent and must be paid in full to avoid legal consequences. The fraudster purports to be a representative of a legitimate agency and claims to be collecting debts for a specific company.
  • Real estate Fraud - Criminals exploit legitimate online ads listing homes for sale or rent, and repost the ads in an effort to redirect traffic to the subjects. The houses are usually listed below market rental rates to immediately attract potential victims. Victims are typically instructed to wire funds through a wire transfer service. Victims may be asked to fill out credit applications and provide personal identifying information.
  • Confidence Fraud - These schemes involve scammers pretending to seek companionship or romance online. Victims of these scams believe they are in a relationship with someone who is honest and trustworthy without meeting them in person. The criminals present convincing scenarios involving family tragedies, severe life circumstances, and other hardships in an attempt to solicit money.

Advice for Businesses:

If you are an eCommerce merchant it is good to immerse yourself into groups that can help you learn, grow and understand the world wide web of fraud.  The IC3 is one, but there are many more.  Internet Retailer is a great source for news and reporting on what your peers are doing to control fraud.  Sign up for their free emails or magazine or both! It’s free.  They also have a Conference once a year with vendors and other merchants and they focus on payment, fraud, marketing and logistics.  

The Merchant Risk Council is another wonderful organization. Becoming a member is highly recommended as they have members both in the Americas and in Europe.   The MRC is a non-profit organization that connects merchants, law enforcement, and solution providers together.  They offer several webinars per month on various topics related to eCommerce and hold several conferences as well.   You will gain access to the experience and knowledge of over 900 members representing over 300 companies worldwide.  In addition you will have the ability to network with industry peers and exchange information with other merchants through a closed member-only channel.

To summarize the obvious: Fraud is everywhere. From the person who gets back too much change for an item, to the guy who skips out on paying for his lunch.  While it can be just a crime of opportunity like a quick footed dine-and-dash, fraud is often a calculated endeavor run by organized rings that choreograph each hit.   eCommerce merchants must be educated and networked.  No single merchant can do it alone. We all have to work together.


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