Archive for the ‘financial crime and fraud’ Category

Taking Charge: What to Do if Your Identity Is Stolen

August 7, 2012 Comments off

Taking Charge: What to Do if Your Identity Is Stolen (PDF)
Source: Federal Trade Commission

Identity theft happens when someone steals your personal information and uses it without your permission. It is a serious crime that can wreak havoc with your finances, credit history, and reputation – and it can take time, money, and patience to resolve. The Federal Trade Commission (FTC), the nation’s consumer protection agency, prepared this guide to help you repair the damage that identity theft can cause, and reduce the risk of identity theft happening to you.

If you suspect that someone has stolen your identity, acting quickly is the best way to limit the damage. Setting things straight involves some work. This guide has tips, worksheets, blank forms, and sample letters to guide you through the recovery process. It covers:

  • what identity theft victims must do immediately
  • what problems may crop up
  • how you can reduce your risk of identity theft

Measuring and Fingerprinting Click-Spam in Ad Networks

August 6, 2012 Comments off

Measuring and Fingerprinting Click-Spam in Ad Networks
Source: Microsoft Research

Advertising plays a vital role in supporting free websites and smartphone apps. Click-spam, i.e., fraudulent or invalid clicks on online ads where the user has no actual interest in the advertiser’s site, results in advertising revenue being misappropriated by click-spammers. While ad networks take active measures to block click-spam today, the effectiveness of these measures is largely unknown. Moreover, advertisers and third parties have no way of independently estimating or defending against click-spam.

In this paper, we take the first systematic look at click-spam. We propose the first methodology for advertisers to independently measure click-spam rates on their ads. We also develop an automated methodology for ad networks to proactively detect different simultaneous click-spam attacks. We validate both methodologies using data from major ad networks. We then conduct a large-scale measurement study of click-spam across ten major ad networks and four types of ads. In the process, we identify and perform in-depth analysis on seven ongoing click-spam attacks not blocked by major ad networks at the time of this writing. Our findings highlight the severity of the click-spam problem, especially for mobile ads.

The LIBOR Scandal The Fix Is In—the Bank of England Did It!

August 6, 2012 Comments off

The LIBOR Scandal The Fix Is In—the Bank of England Did It!
Source: Levy Economics Institute at Bard College

As the results of the various official investigations spread, it becomes more and more apparent that a large majority of financial institutions engaged in fraudulent manipulation of the benchmark London Interbank Offered Rate (LIBOR) to their own advantage, and that bank management and regulators were unable to effectively monitor the activity of institutions because they were too big to manage and too big to regulate. However, instead of drawing the obvious conclusion—that structural changes are needed to reduce banks to a size that can be effectively regulated, as proposed on numerous occasions by the Levy Economics Institute—discussion in the media and political circles has turned to whether the problem was the result of the failure of central bank officials and government regulators to respond to repeated suggestions of manipulation, and to stop the fraudulent behavior.

Just as the “hedging” losses at JPMorgan Chase have been characterized as the result of misbehavior on the part of some misguided individual traders, leaving top bank management without culpability, politicians and the media are now questioning whether government officials condoned, or even encouraged, manipulation of the LIBOR rate, virtually ignoring the banks’ blatant abuse of principles of good banking practice. Just as in the case of JPMorgan, the only response has been to remove the responsible individuals, rather than questioning the structure and size of the financial institutions that made managing and policing this activity so difficult. Again, the rotten apples have been removed without anyone noticing that it is the barrel that is the cause of the problem. But in the current scandal, the ad hominem culpability has been extended to central bank officials in the UK and the United States.

FTC Alerts Consumers Who Want to Help Colorado Movie Theater Shooting Victims

July 27, 2012 Comments off

FTC Alerts Consumers Who Want to Help Colorado Movie Theater Shooting Victims

Source: Federal Trade Commission

The Federal Trade Commission, the nation’s consumer protection agency, has tips for anyone who may want to donate money to the victims and families of the Aurora, Colorado, movie theater shooting.

One opportunity for giving, the Aurora Victim Relief Fund, has been established by Colorado Governor John Hickenlooper and the Community First Foundation to meet immediate and long-term needs of victims and their families. Donations are being accepted through the Foundation’s program, which describes how various nonprofit organizations are offering direct support to those affected.

Unfortunately, legitimate charities face competition from fraudsters who either solicit for bogus charities or aren’t entirely honest about how a so-called charity will use your contribution. It’s wise to be wary of charities that spring up overnight in connection with current events, like the theater shooting.

Urgent appeals for aid that you get in person, by phone or mail, by e-mail, on websites, or on social networking sites may not be on the up-and-up. The agency’s Charity Checklist has tips for guidance on donating wisely.

Fraud Insights Derived from Stories of Auditors of Financial Institutions

July 25, 2012 Comments off

Fraud Insights Derived from Stories of Auditors of Financial Institutions (PDF)

Source:  Journal of Forensic & Investigative Accounting
For decades, fraud information was difficult to find, as companies would shy away from the negative publicity associated with fraud (Albrecht and Schmoldt, 1988). As a result of SAS 99, auditors now consider and test for fraud; prior to SAS 99, the auditor’s obligation was to inform management if fraud was found during the ordinary course of the audit (AICPA, 2002). The use of non-financial performance measures can serve as a tool for fraud discovery (Brazel, Jones, and Zimbelman, 2009), which suggests that fraud scenarios are not always foretold by mere numbers or financial statistics alone. Much can be learned from a review of real world fraud cases.
The analysis of fraud risk factors is a proactive audit tool in today’s environment. The current study used hindsight to analyze fraud risk factors from a convenience sample of one audit partner’s recollections of the financial institutional environment of credit unions. The first part of the study used content analysis to uncover emerging themes in a sort of ethnographic study of five fraud and five non-fraud stories pertaining to credit unions. Only after this part was completed was a more grounded audit tool utilized to expand the qualitative study. The tool was a published fraud risk assessment checklist that was applied to the fraud stories. The research question of interest in this study was how can the frequency and patterns of fraud risk factors tell us about the likelihood of fraud in the form of misappropriation of assets? Secondly, what lesson or moral of the story emerge that are relevant to auditors, management, and perpetrators?

FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies

July 11, 2012 Comments off

FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies

Source: Financial Crimes Enforcement Network

Pressing forward in its efforts to address a wide range of criminal risks, particularly in the residential real estate market, the Financial Crimes Enforcement Network (FinCEN) today released its first targeted study analyzing reports indicating suspicious activities involving the Real Estate Title and Escrow Industry.

The study identified thousands of instances where financial institutions, particularly banks and Money Services Businesses (MSBs), filed suspicious activity reports (SARs) involving title and escrow companies, often in connection with mortgage fraud. FinCEN does not currently require title and escrow companies themselves to file SARs, but many have reported suspicious activities by annotating the Report of Cash Payments Over $10,000 Received in a Trade or Business (FinCEN Form 8300) that they are required to file.

"This first baseline study will help inform our ongoing efforts to identify regulatory gaps that criminals look to take advantage of," said FinCEN Director James H. Freis, Jr. "We can now more efficiently and effectively address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action."

+ Full Report (PDF)

Measuring the Cost of Cybercrime

July 4, 2012 Comments off

Measuring the Cost of Cybercrime (PDF)
Source: 11th Annual Workshop on the Economics of Information Security (WEIS 2012)

In this paper we present what we believe to be the fi rst systematic study of the costs of cybercrime. It was prepared in response to a request from the UK Ministry of Defence following scepticism that previous studies had hyped the problem. For each of the main categories of cybercrime we set out what is and is not known of the direct costs, indirect costs and defence costs { both to the UK and to the world as a whole. We distinguish carefully between traditional crimes that are now `cyber’ because they are conducted online (such as tax and welfare fraud); transitional crimes whose modus operandi has changed substantially as a result of the move online (such as credit card fraud); new crimes that owe their existence to the Internet; and what we might call platform crimes such as the provision of botnets which facilitate other crimes rather than being used to extract money from victims directly. As far as direct costs are concerned, we nd that traditional o ences such as tax and welfare fraud cost the typical citizen in the low hundreds of pounds/Euros/dollars a year; transitional frauds cost a few pounds/Euros/dollars; while the new computer crimes cost in the tens of pence/cents. However, the indirect costs and defence costs are much higher for transitional and new crimes. For the former they may be roughly comparable to what the criminals earn, while for the latter they may be an order of magnitude more. As a striking example, the botnet behind a third of the spam sent in 2010 earned its owners around US$2.7m, while worldwide expenditures on spam prevention probably exceeded a billion dollars. We are extremely inecient at ghting cybercrime; or to put it another way, cyber- crooks are like terrorists or metal thieves in that their activities impose disproportionate costs on society. Some of the reasons for this are well-known: cybercrimes are global and have strong externalities, while traditional crimes such as burglary and car theft are local, and the associated equilibria have emerged after many years of optimisation. As for the more direct question of what should be done, our gures suggest that we should spend less in anticipation of cybercrime (on antivirus, rewalls, etc.) and more in response { that is, on the prosaic business of hunting down cyber-criminals and throwing them in jail.

Hat tip: JRB

CRS — Federal Laws Relating to Cybersecurity: Discussion of Proposed Revisions

July 3, 2012 Comments off

Federal Laws Relating to Cybersecurity: Discussion of Proposed Revisions (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

For more than a decade, various experts have expressed increasing concerns about cybersecurity, in light of the growing frequency, impact, and sophistication of attacks on information systems in the United States and abroad. Consensus has also been building that the current legislative framework for cybersecurity might need to be revised.

The complex federal role in cybersecurity involves both securing federal systems and assisting in protecting nonfederal systems. Under current law, all federal agencies have cybersecurity responsibilities relating to their own systems, and many have sector-specific responsibilities for critical infrastructure.

More than 50 statutes address various aspects of cybersecurity either directly or indirectly, but there is no overarching framework legislation in place. While revisions to most of those laws have been proposed over the past few years, no major cybersecurity legislation has been enacted since 2002.

Recent legislative proposals, including many bills introduced in the 111th and 112th Congresses, have focused largely on issues in 10 broad areas (see “Selected Issues Addressed in Proposed Legislation” for an overview of how current legislative proposals would address issues in several of those areas):

  • national strategy and the role of government,
  • reform of the Federal Information Security Management Act (FISMA),
  • protection of critical infrastructure (including the electricity grid and the chemical industry),
  • information sharing and cross-sector coordination,
  • breaches resulting in theft or exposure of personal data such as financial

  • cybercrime,
  • privacy in the context of electronic commerce,
  • international efforts,
  • research and development, and
  • the cybersecurity workforce.

For most of those topics, at least some of the bills addressing them have proposed changes to current laws. Several of the bills specifically focused on cybersecurity have received committee or floor action, but none have become law.

NRF Report Finds No Retailer Immune To Organized Retail Crime

June 24, 2012 Comments off

NRF Report Finds No Retailer Immune To Organized Retail Crime
Source: National Retail Federation

Growing in severity, number and type, retailers are reporting organized retail crime (ORC) has become more troublesome than ever before. Of the 125 retail companies surveyed for NRF’s eighth annual Organized Retail Crime Survey, a record-setting (96.0%) say their company has been the victim of organized retail crime in the past year, up from 94.5 percent last year, and another 87.7 percent say ORC activity in the United States has grown over the past three years.

“What this tells us is that as retailers and law enforcement become more aware of and more proactive in pursuing organized retail crime gangs, criminals have become more desperate and brazen in their efforts, stopping at nothing to get their hands on large quantities of merchandise,” said NRF Vice President of Loss Prevention, Rich Mellor. “Selling this stolen merchandise is a growing criminal enterprise and retailers must remain vigilant as this is an issue that involves everyone’s cooperation when it comes to protecting retailer’s assets, including their valued store associates and customers.”

The silver lining: more companies this year believe law enforcement is aware of and understands the severity and complexity of the issue (40.0% vs. 32.3% in 2011). More than half (54.4%) say top management at their company is aware of the problems associated with organized retail crime.

IC3 2011 Internet Crime Report Released

June 12, 2012 Comments off

IC3 2011 Internet Crime Report Released
Source: Internet Crime Complaint Center (IC3)
he Internet Crime Complaint Center (IC3) today released the 2011 Internet Crime Report—an overview of the latest data and trends of online criminal activity. According to the report, 2011 marked the third year in a row that the IC3 received more than 300,000 complaints. The 314,246 complaints represent a 3.4 percent increase over 2010. The reported dollar loss was $485.3 million. As more Internet crimes are reported, IC3 can better assist law enforcement in the apprehension and prosecution of those responsible for perpetrating Internet crime.

In 2011, IC3 received and processed, on average, more than 26,000 complaints per month. The most common complaints received in 2011 included FBI-related scams—schemes in which a criminal poses as the FBI to defraud victims—identity theft, and advance-fee fraud. The report also lists states with the top complaints, and provides loss and complaint statistics organized by state. It describes complaints by type, demographics, and state.

+ Full Report (PDF)

CRS — Cybercrime: Conceptual Issues for Congress and U.S. Law Enforcement

June 5, 2012 Comments off

Cybercrime: Conceptual Issues for Congress and U.S. Law Enforcement (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Twenty-first century criminals increasingly rely on the Internet and advanced technologies to further their criminal operations. These criminals can easily leverage the Internet to carry out traditional crimes such as distributing illicit drugs and sex trafficking. In addition, they exploit the digital world to facilitate crimes that are often technology driven, including identity theft, payment card fraud, and intellectual property theft. Cybercrimes have economic, public health, and national security implications, among others. For over three decades, Congress has been concerned about cybercrime and its related threats. Today, these concerns often arise among a larger discussion surrounding the federal government’s role in ensuring U.S. cyber security.

Conceptualizing cybercrime involves a number of key elements and questions that include where do the criminal acts exist in the real and digital worlds (and what technologies are involved in carrying out the crimes), why are malicious activities initiated, and who is involved in carrying out the malicious acts?

  • One way of viewing cybercrimes is that they may be digital versions of traditional, real world offenses. They could be considered traditional, or “real world,” crimes if not for the incorporated element of virtual or cyberspace. In some instances, however, it may seem that law enforcement struggles to keep up with developments in the virtual world, which transform routine activities once driven by paper records in the real world. As a result, criminals are often prosecuted using laws intended to combat crimes in the real world.
  • The distinction between cybercrime and other malicious acts in the virtual realm is the actor’s motivation. Cyber criminals can exhibit a wide range of self interests, deriving profit, notoriety, and/or gratification from activities such as hacking, cyber stalking, and online child pornography. Without knowing the criminal intent or motivation, however, some activities of cyber criminals and other malicious actors may appear on the surface to be similar, causing confusion as to whether a particular action should be categorized as cybercrime or not. When referring to cybercrime incidents, terms such as cyber attack, cyber espionage, and cyber war are often loosely applied, and they may obscure the motives of the actors involved.
  • Criminal attribution is a key delineating factor between cybercrime and other cyber threats. When investigating a given threat, law enforcement is challenged with tracing the action to its source and determining whether the actor is a criminal or whether the actor may be a terrorist or state actor posing a potentially greater national security threat. This is highlighted by examining the online collective known as Anonymous. Some refer to Anonymous as a group of online activists, others see the collective as a group of criminal actors, and still others have likened it to online insurgents.

The U.S. government does not appear to have an official definition of cybercrime that distinguishes it from crimes committed in what is considered the real world. Similarly, there is not a definition of cybercrime that distinguishes it from other forms of cyber threats, and the term is often used interchangeably with other Internet- or technology-linked malicious acts. Federal law enforcement agencies often define cybercrime based on their jurisdiction and the crimes they are charged with investigating. And, just as there is no overarching definition for cybercrime,there is no single agency that has been designated as the lead investigative agency for combating cybercrime.

Congress may question whether it is necessary to have a clear definition of what constitutes cybercrime and what delineates it from other real world and cyber threats. On one hand, if the purpose of defining cybercrime is for investigating and prosecuting any of the various crimes under the broader cybercrime umbrella, it may be less critical to create a definition of the umbrella term and more imperative to clearly define which specific activities constitute crimes— regardless of whether they are considered real world crimes or cybercrimes. On the other hand, a distinction between cybercrime and other malicious activities may be beneficial for creating specific policies on combating the ever-expanding range of cyber threats. If government agencies and private sector businesses design strategies and missions around combating cybercrime, it may be useful to communicate a clear definition of cybercrime to those individuals who may be involved in carrying out the strategies.

The United States does not have a national strategy exclusively focused on combating cybercrime. Rather, there are other, broader strategies that have cybercrime components (a selection of which are presented in the Appendix). Policymakers may question whether there should be a distinct strategy for combating cybercrime or whether efforts to control these crimes are best addressed through more wide-ranging strategies such as those targeting cyber security or transnational organized crime. Congress may also question whether these broader strategies provide specific cybercrime-related objectives and clear means to achieve these goals.

Comprehensive data on cybercrime incidents and their impact are not available, and without exact numbers on the current scope and prevalence of cybercrime, it is difficult to evaluate the magnitude of the threats posed by cyber criminals. There are a number of issues that have prevented the accurate measurement and tracking of cybercrime. For one, the lack of a clear sense of what constitutes cybercrime presents a barrier to tracking inclusive cybercrime data. Additionally, much of the available data on cybercrime is self-reported, and individuals or organizations may not realize a cybercrime has taken place or may elect—for a host of reasons— not to report it. Policymakers may debate whether to direct a thorough evaluation of the threats posed by cyber criminals.

FinCEN — The SAR Activity Review – By the Numbers

May 16, 2012 Comments off

The SAR Activity Review – By the Numbers (PDF)
Source: Financial Crimes Enforcement Network

This report covers total Suspicious Activity Report (SAR) filings by covered industries for 2011. This issue of By The Numbers, a staple of FinCEN’s analytical reports, features some significant changes that add value for FinCEN’s audience. Readers will see new pie charts, bar charts, and line graphs. As FinCEN transitions to a new integrated forms environment with improved technology it will continue to develop new, more informative models to illustrate the data. In this edition of BTN, readers will see new interactive tables with geographic summaries at the county level to enhance State graphical displays, or “ heat maps.” Similarly, FinCEN is providing metropolitan statistical area (MSA) summary tables of SAR data as well as spreadsheets illustrating filing rates and percentage changes for 2010 and 2011 in the “Characterizations of SARs” by State and Territories charts. Readers can access the data through hyperlinks embedded in the report.

See also: 21st SAR Activity Review: Trends, Tips, & Issues

Most Taxpayers Whose Identities Have Been Stolen to Commit Refund Fraud Do Not Receive Quality Customer Service

May 9, 2012 Comments off

Most Taxpayers Whose Identities Have Been Stolen to Commit Refund Fraud Do Not Receive Quality Customer Service (PDF)
Source: Special Inspector General for Tax Administration

The Federal Trade Commission reported that identity theft was the number one complaint in Calendar Year 2011, and government documents/benefits fraud was the most common form of reported identity theft. As of December 31, 2011, the IRS’s Incident Tracking Statistics Report showed that 641,052 taxpayers have been affected by identity theft in Calendar Year 2011. The IRS is not effectively providing assistance to victims of identity theft, and current processes are not adequate to communicate identity theft procedures to taxpayers, resulting in increased burden for victims of identity theft.

This audit was initiated because the number of identity theft cases in the IRS has grown significantly over the last few years, overwhelming IRS resources and burdening taxpayers. Taxpayers testifying before Congress stated that they had to talk to multiple IRS employees and were provided conflicting instructions.

Identity theft cases are not worked timely and can take more than a year to resolve. Communications between the IRS and victims are limited and confusing, and victims are asked multiple times to substantiate their identity.

When taxpayers call the IRS to advise it that their electronic tax return was rejected because it appears another individual has already filed a tax return using their identity, the IRS instructs them to mail in a paper tax return with the Form 14039, Identity Theft Affidavit, attaching supporting identity documents. However, the IRS has been processing these tax returns using standard processing procedures.

Identity theft guidelines and procedures are dispersed among 38 different Internal Revenue Manual sections. These guidelines are inconsistent and conflicting, and not all functions have guidelines on handling identity theft issues.

The IRS uses little of the data from the identity theft cases to identify any trends, etc., that could be used to detect or prevent future refund fraud.

TIGTA recommended that the IRS: 1) establish accountability for the Identity Theft Program; 2) implement a process to ensure that IRS notices and correspondence are not sent to the address listed on the identity thief’s tax return; 3) conduct an analysis of the letters sent to taxpayers regarding identity theft; 4) ensure taxpayers are notified when the IRS has received their identifying documents; 5) create a specialized unit in the Accounts Management function to exclusively work identity theft cases; 6) ensure all quality review systems used by IRS functions and offices working identity theft cases are revised to select a representative sample of identity theft cases; 7) revise procedures for the Correspondence Imaging System screening process; and 8) ensure programming is adjusted so that identity theft issues can be tracked and analyzed for trends and patterns.

The IRS agreed with all our recommendations. It has established a governance structure to oversee the enterprise‑wide identity theft initiatives and plans to expand its identity theft indicator codes identifying claims of identity theft. It plans to review its suite of identity theft letters and to update its guidance instructing employees to notify taxpayers acknowledging receipt of documentation. The IRS currently has specialized units in the Accounts Management function working only identity theft cases. Finally, the IRS plans to create a specific quality review for identity theft cases and is currently evaluating options for enhancing its ability to track and analyze the fraudulent identity theft information removed from a taxpayer account.

New From the GAO

April 24, 2012 Comments off

New GAO Reports and Testimonies
Source: Government Accountability Office

+ Reports

1. Urgent Warfighter Needs: Opportunities Exist to Expedite Development and Fielding of Joint Capabilities.  GAO-12-385, April 24.
Highlights –

2. Farm Bill: Issues to Consider for Its Reauthorization.  GAO-12-338SP, April 24.

+ Testimonies

1. Medicare: Important Steps Have Been Taken, but More Could Be Done to Deter Fraud, by Kathleen King, Director, Health Care, before Senate Committee On Finance.  GAO-12-671T, April 24.
Highlights –

2. Cybersecurity: Threats Impacting the Nation, by Gregory C. Wilshusen, Director, Information Security Issues, before the Subcommittee on Oversight, Investigations, and Management, House Committee on Homeland Security.  GAO-12-666T, April 24.
Highlights –

Testimony of Daniel R. Levinson, Inspector General, before the U.S. Senate Committee on Finance – “Anatomy of a Fraud Bust: From Investigation to Conviction”

April 24, 2012 Comments off

Testimony of Daniel R. Levinson, Inspector General, before the U.S. Senate Committee on Finance – "Anatomy of a Fraud Bust: From Investigation to Conviction" (PDF)

Source: U.S. Department of Health and Human Services, Office of Inspector General

Good morning, Chairman Baucus, Ranking Member Hatch, and other distinguished Members of the Committee. Thank you for the opportunity to testify about the Office of Inspector General’s (OIG) role in the prevention, investigation, and prosecution of fraud, waste, and abuse in the Federal health care programs.

In September 2011, the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) announced indictments against 91 defendants, including doctors, nurses, and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing. At that time, this coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history. My testimony provides an inside view of how OIG conducts health care fraud investigations and coordinates national Strike Force takedowns.

CRS — The U.S. Secret Service: An Examination and Analysis of Its Evolving Missions

April 24, 2012 Comments off

The U.S. Secret Service: An Examination and Analysis of Its Evolving Missions (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The U.S. Secret Service has two missions—criminal investigations and protection. Criminal investigation activities, have expanded since the inception of the Service from a small anti- counterfeiting operation at the end of the Civil War, to now encompassing financial crimes, identity theft, counterfeiting, computer fraud, and computer-based attacks on the nation’s financial, banking, and telecommunications infrastructure, among other areas. Protection activities, which have expanded and evolved since the 1890s, include ensuring the safety and security of the President, Vice President, their families, and other identified individuals and locations.

In March 2003, the U.S. Secret Service was transferred from the Department of the Treasury to the Department of Homeland Security as a distinct entity. Prior to enactment of the Homeland Security Act of 2002 (P.L. 107-296), the U.S. Secret Service had been part of the Treasury Department for over 100 years.

During a March 2012 hearing on the FY2013 budget request for the U.S. Secret Service, Director Mark Sullivan highlighted the Service’s increased staffing and traveling demands associated with presidential candidate protection, G-8 and NATO Summits in Chicago, IL, and the Republican and Democratic conventions. Are the two missions of the Service compatible and how should they be prioritized? Is the Department of Homeland Security the most appropriate organizational and administrative location for the Secret Service? These, and other policy questions, have been raised and addressed at different times by Congress and various administrations during the long history of the Service. Additionally, there has been increased interest in the Service due to the recent inaugural security operations and the protection of President Barack Obama. Some may contend that these and other questions call for renewed attention given the recent increase in demand for the Service’s protection function (for example, see P.L. 110-326 enacted by the 110th Congress) and the advent of new technology used in financial crimes.

This report will be updated when congressional or executive branch actions warrant.

The Rise of Financial Fraud

April 18, 2012 Comments off
Source:  Center for Retirement Research at Boston College

The brief’s key findings are:

  • Financial fraud complaints by consumers have surged over the past decade, fueled by the rise of Internet-based scams.
  • This trend will likely continue as scammers target aging baby boomers, who have substantial assets and face cognitive decline.
  • Consumers can help protect themselves by recognizing standard fraud strategies and the disguises used by scammers.
Full Document (PDF)

Consumer Response Annual Report

April 16, 2012 Comments off
Source:  Consumer Financial Protection Bureau
A total of 9,307 consumer complaints regarding credit cards and 2,326 regarding mortgages were filed with the Consumer Financial Protection Bureau in 2011, the CFPB says in its first annual report on its consumer response operation.
Of total credit-card-related complaints, 1,278, or 13.7 percent, were related the billing disputes, the CFPB reports. Another 1,014 (10.9 percent) and 950 (10.2 percent) had to do with identity theft/fraud/embezzlement or APR/interest rate.
Of total mortgage-related complaints, 889, or 38.2 percent, were related to problems face by consumers unable to pay. These can address loan modification, collections or foreclosure. The second-most-frequent complaint about mortgage was just about making payments. A total of 501 such complaints, or 38.2 percent of all mortgage-related complaints, were filed in the month of December, the report shows.
These are the only categories of complaints the CFPB addressed during 2011. It began taking credit-card complaints July 21, when the bureau commenced operation. The CFPB began taking mortgage-related complaints since Dec. 1.

Full Report (PDF)

The Online Romance Scam: A Serious Cybercrime

March 29, 2012 Comments off

The Online Romance Scam: A Serious Cybercrime
Source: Cyberpsychology, Behavior, and Social Networking

The Online Romance Scam is a relatively new form of fraud that became apparent in about 2008. In this crime, criminals pretend to initiate a relationship through online dating sites then defraud their victims of large sums of money. This paper presents some descriptive statistics about knowledge and victimization of the online dating romance scam in Great Britain. Our study found that despite its newness, an estimated 230,000 British citizens may have fallen victim to this crime. We conclude that there needs to be some rethinking about providing avenues for victims to report the crime or at least making them more comfortable when doing so.

See: Online Dating Scammers Looking for Money, Not Love

State Medicaid Fraud Control Units Fiscal Year 2011 Grant Expenditures and Statistics

March 29, 2012 Comments off

State Medicaid Fraud Control Units Fiscal Year 2011 Grant Expenditures and Statistics
Source: U.S. Department of Health and Human Services, Office of Inspector General

In fiscal year (FY) 2011, the combined Federal and State grant expenditures for the State Medicaid Fraud Control Units (MFCUs) totaled $208.6 million, of which Federal funds represented $156.7 million. The 50 MFCUs employed 1,833 individuals.

Collectively, in FY 2011, the MFCUs reported conducting 14,819 investigations, of which 10,685 were related to Medicaid fraud and 4,134 were related to patient abuse and neglect, including patient funds cases.

Investigations resulted in 1,408 individuals being indicted or criminally charged: 1,011 for fraud and 397 for patient abuse and neglect. In total, 1,230 convictions were reported in FY 2011, of which 824 were related to Medicaid fraud and 406 were related to patient abuse and neglect.

+ Medicaid Fraud Control Units – MFCUs


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