Bank of America faces landmark online fraud case

This case about a Miami businessman is suing Bank of America over $90,000 he says was stolen from his online banking account by Latvian cybercriminals.

The 42-year old businessman says the cash was transferred from his account to Parex Bank in Latvia without his approval. About $20,000 of the money was withdrawn before the account was frozen. A subsequent Secret Service investigation detected the presence of the 'coreflood' keylogging Trojan on the businessman's computer.

Bank of America maintains that it cannot be held responsible for the loss since its systems were not hacked into and that all appropriate measures were taken to complete the transfer. In a complaint filed with the Miami Circuit Court on Thursday, the businessman alleges that Bank of America was negligent and failed to protect him from a known online banking risk.

Resource: http://www.finextra.com/news/fullstory.aspx?newsitemid=13194

Comments: The action could become a test case for determining bank liability in phishing frauds. Lawyers representing the victim have told the Miami Sun-Suntinel that the complaint could evolve into a class action suit to include other online banking customers who have had smaller sums rifled from their accounts.

Cybervigilism Helps Crack Online Fraud Case

With the dramatic rise of online fraud cases over the past several years, ecommerce sites and law enforcement agencies are finding themselves playing "catch-up" in an effort to stop the increasingly clever scams of Internet con men. Frustrated by the apparently widening gap between good guys and bad guys, many victims are banding together to share information to help bring Cybercriminals to justice.

Some term these groups "Vigilantes." But, somewhere between "vigilante" and online fraud "victim" is a phenomenon that perhaps needs its own term: Cybervigilism. Being vigilant is to be watchful. When it comes on online fraud, here's one more case that proves that Cybervigilism is alive and well.

The "Shaes"

Mark and Nancy Shae offered Web-site design services and belonged to an online community of Adult Webmasters in 2002. After participating in discussion forums for 5 months, Nancy revealed in October that her husband was sick with cancer.

When Nancy Shae later wrote to fellow Webmasters in an online forum that her husband had died from the disease, members of the community reached out a helping hand. Some members donated services, while others sent Nancy money. Little did they know that the woman they thought was Nancy Shae was really Nancy Dreksler, half of a husband-and-wife team wanted for fraud by officials in Nevada and Arizona, according to authorities.

But while many members pitched in to help their colleague, one member was skeptical.

Initially, "Blaze" (his online handle) received angry responses when he questioned the truth of Nancy's claims. However, a little research uncovered some glaring inconsistencies in Nancy's story. Determined to know the truth, Blaze hired a private investigator to visit the Shaes' home in Mesa, Arizona.

"It was too late. We had apparently missed them by hours," Blaze said. "But we kept our eyes out for them and saw their next scam on eBay. We knew it was just a matter of time before they tried to take the Webmaster community again."

The "Myers"

While Blaze was correct in thinking the Shaes were serial offenders, he was unaware of another online community scammed by the couple 10 months earlier. Authorities believe that the Drekslers defrauded members of a site set up for marine and reef aquarium hobbyists in January 2002. They believe the Drekslers used the alias Johanna Myers to sell aquarium equipment on eBay and to ReefCentral.com members. The User ID they used on eBay had been registered in October 2001, and negative feedback began rolling in on the account on January 12, 2002. eBay ultimately suspended the account, but the Drekslers popped up again on eBay.

The "Boselis"

In February 2003, members of an online-auction chat board noticed suspicious activity on an eBay account "mylittle1s." The User ID belonged to "Renee Boseli," an alias for Michael and Nancy Dreksler. One victim alerted Arizona law enforcement officials in March, and Detective Bruce Cornish of the Coconino County Sheriff's Dept. contacted eBay. On March 5, eBay suspended mylittle1s, but it was too late: Det. Cornish found the Drekslers' residence abandoned, with a post office box full of cashier's checks and money orders made out to Renee Boseli.

AuctionBytes' coverage of the mylittle1s case caught the attention of Rachel Konrad, a reporter with the Associated Press. Blaze and his colleagues read Konrad's AP article on CNN.com on March 26, and saw similarities between the Drekslers and Mark and Nancy Shae. They were a husband and wife team, the wife was named Nancy, and the eBay ID mylittle1s was a variation of a password used on the Webmaster community bulletin boards. But the CNN article reported the Drekslers had fled their Munds Park, Arizona residence.

Source: http://www.auctionbytes.com/cab/abn/y03/m05/i27/s03

Comments: I believe that with the information that is available on the Internet and the ability to connect to each other instantly is just naturally going to lead to people working together to find people that wronged them. However I wouldn't necessarily go as far as calling it vigilantism. There is a distinct difference between someone that tracks down another person and presents the information to the law enforcement, compared to someone who tracks down another person and proceeds to "enforce" law on them."

NEW CYBER-BULLYING LAWS GOING INTO EFFECT JANUARY 1, 2012

With the explosion of social media, teenagers have been handed immediate access to an open cyber-battlefield. Too many negative comments are blasted online with a high possibility of being seen by many.

During my generation we hung out at the mall, rode bikes to the skate-park or school to explore. We socialized outside, played outside, and of course fought outside. Today the internet has become the playground for the generation of young. This is where kids come to socialize, surf the net, and where some come to, verbally attack students, teachers, principals or even parents.

Anyone can set up a Facebook account, MySpace, or blog, and can easily post hurtful comments. Because not all comments show the author’s name, these comments are difficult to track.

The National Crime Prevention Council defines cyber-bullying as “the process of using the internet, cell phones or other devices to send or post text or images intended to hurt or embarrass another person.”

What may seem like a student’s right to privacy and free speech, very well may be defamation of character with potential legal consequences. Many students have no idea what challenges they could face. This should make it a priority moving into the 2012 school year to continue recognizing Cyberbullying and how states should respond.

The consequences can range from violation of school code leading to possible suspension from school or not being allowed to participate with afterschool sports. Cyber-bullies beware; the New Year brings new laws to many states.

Two examples are California and Illinois:

1) California passed Assembly Bill 9 this year and it will go into effect January 1, 2012. This bill will “require the policy adopted by the local educational agencies to prohibit discrimination, harassment, intimidation, and bullying based on actual or perceived characteristics.” This bill also gives school districts the right to suspend and in some cases, expel students who are caught.

2) Illinois passed HB3281 amending current School Code. PA 97-0340 is also becoming law January 1, 2012. This bill provides that “the gross disobedience or misconduct for which a school board may expel pupils includes that perpetuated by electronic means.” This includes making explicit threats on an internet site against school employees, students, or any school-related personnel.

Cyber-bullying is still a threat to student’s safety, however, due to the efforts by ikeepsafe.org; the hard work is paying off. Many school districts see the tremendous value in promoting responsible digital citizenship.

Happy New Year to all, and let’s make an impact!
Source:http://www.ikeepsafe.org/educational-issues/new-cyber-bullying-laws-going-into-effect-january-1-2

Comment: Around 10 percent of all adolescents in grades 7-9 are victims of internet bullying. 'This type of bullying can be more serious than conventional bullying. At least with conventional bullying the victim is left alone on evenings and weekends', says Ann Frisén, Professor of Psychology at the University of Gothenburg.

'Victims of internet bullying or cyber bullying have no refuge. Victims may be harassed continuously via SMS and websites, and the information spreads very quickly and may be difficult to remove. In addition, it is often difficult to identify the perpetrator.'

Education can help considerably in preventing and dealing with the consequences of cyber bullying. The first place to begin an education campaign is with the kids and teens themselves. We need to address ways they can become inadvertent cyber bullies, how to be accountable for their actions and not to stand by and allow bullying (in any form) to be acceptable. We need to teach them not to ignore the pain of others.

Online Credit card fraud on E-Bay

This case is about the modus operandi of the accused was to hack into the eBay India website and make purchases in the names of credit cardholders. Two persons, including alleged mastermind Debasis Pandit, a BCA student, were arrested and forwarded to the court of the sub divisional judicial magistrate, Rourkela. The other arrested person is Rabi Narayan Sahu. Superintendent of police D.S. Kutty said the duo was later remanded in judicial custody but four other persons allegedly involved in the racket were untraceable. A case has been registered against the accused under Sections 420 and 34 of the Indian Penal Code and Section 66 of the IT Act and further investigation is on.

While Pandit, son of a retired employee of Rourkela Steel Plant, was arrested from his Sector VII residence last night, Sahu, his associate and a constable, was nabbed at his house in Uditnagar.

Pandit allegedly hacked into the eBay India site and gathered the details of around 700 credit cardholders. He then made purchases by using their passwords.

The fraud came to the notice of eBay officials when it was detected that several purchases were made from Rourkela while the customers were based in cities such as Bangalore, Baroda and Jaipur and even London, said V. Naini, deputy manager of eBay. The company brought the matter to the notice of Rourkela police after some customers lodged complaints. Pandit used the address of Sahu for delivery of the purchased goods, said police. The gang was involved in train, flight and hotel reservations. The hand of one Satya Samal, recently arrested in Bangalore, is suspected in the crime. Samal had booked a room in a Bangalore hotel for three months. The hotel and transport bills rose to Rs 5 lakh, which he did not pay. Samal was arrested for non-payment of bills, following which Pandit rushed to Bangalore and stood guarantor for his release on bail.

Comments: The Internet serves as an excellent tool for us, allowing us to easily and inexpensively search the information we want, but the Internet is also provide an excellent tool for fraudsters.

Man Gets 3-Year Sentence for EBay Fraud

In the largest EBay case ever prosecuted in Los Angeles County, a man was sentenced Friday to a three-year term for taking hundreds of thousands of dollars from people who never got computers they bought online. Chris Chong Kim, 28, will be incarcerated at night at a state facility but will be allowed to work during the day, with part of the money he earns going to repay his victims.

Kim, who pleaded no contest to grand theft, agreed to pay restitution of about $600,000 to his victims, said Deputy Dist. Atty. Jonathan Fairtlough. Kim was sentenced by Superior Court Judge David Horwitz.

Kim had a business site on EBay called CalvinAuctions.com and had been selling high-end computers, laptops and other equipment for two years. But he stopped shipping merchandise in April 2002, prosecutors said. More than 170 customers around the world have registered complaints against Kim and his company, authorities said.

In addition to losses of about $180,000 to individual buyers, the Internet payment service PayPal, which EBay owns, paid $360,000 to reimburse Kim's customers, Fairtlough said. Bank of America and EBay also lost money, the prosecutor said.

Comment : keep these tips in mind when considering online transactions:

  Verify with a credible source before you send any money;

  Ask questions and do not ignore any suspicions you may have;

  Do not share your personal or financial information with someone you do not know;

  Never give out personal information in an email or over the telephone; 

Internet fraud's U.S. price tag put at $550 million

U.S. citizens reported losing more than $550 million in 2009 in Internet fraud, falling prey to a variety of increasingly sophisticated scams, according to a report by the Internet Crime Complaint Center.The loss was more than twice that reported in 2008, according to the agency, a partnership of the FBI and the privately funded National White Collar Crime Center. Based in West Virginia, the center tracks Internet crime around the world."Criminals are continuing to take full advantage of the anonymity afforded them by the Internet. They are also developing increasingly sophisticated means of defrauding unsuspecting consumers," said Donald Brackman, director of the National White Collar Crime Center.

Typical of the cases reported last year was a scam in which a Miami Beach man advertised vacation rentals on Craigslist.org but stopped communicating with customers after they paid thousands of dollars in down payments, according to the report. Police arrested a suspect in that case, saying he stole more than $30,000 from 16 victims. Another common fraud in 2009 was the "hit man scam," in which threatening e-mails were sent to victims. The e-mails purported to be written by hit men who had been paid to kill the victims. They said they would let the victims live if they paid them thousands of dollars. Many of those threatening e-mails were traced to West Africa,

"Internet crime keeps going up. It's cheaper. It's faster. It beats the old method of knocking on your door and trying to get you to give them money," "If you send out 1 million e-mails and even a minimal number of people return money, you'll make more money than a working person would in a very long time in a legitimate job."Computer viruses capable of secretly downloading passwords and account numbers are also a problem. Spread through e-mail attachments, the viruses enable criminals to steal from bank and credit card accounts.

In April 2009, the Internet Crime Complaint Center linked 103 cases in which victims reported paying for vehicles and motorcycles that did not arrive. The victims lost a combined $360,000 that was sent to a fraudulent financing center suggested by the seller, the report said.
Source: http://articles.latimes.com/2010/mar/15/business/la-fi-cybercrime15-2010mar15


Comment: Consumers can take precautions to avoid being victimized, so they should install up-to-date computer firewalls, use only reputable payment centers to make purchases online, and not respond to unsolicited e-mails or pop-up ads.

Pyramid cases at peak of online fraud

The Federal Trade Commission has closed down an online pyramid scheme that had allegedly bilked investors of $6 million, one of many operations that the FTC claims is being run by companies using the Net as a home base for their scams.

The allegations against Fortuna Alliance constitute the 12th and the largest online fraud case to date, according to the federal agency. The FTC issued a temporary restraining order against Fortuna after city officials in Bellingham, Washington, reported suspicious activity on the company's Web site."What if you paid $250 a month which produced a minimum of $5,250 income each month for you, while you watched?" asked an offering on Fortuna's site. "Well that's exactly what would happen if you hired Fortuna Alliance as your personal Marketing Expert."No fewer than 17,000 people signed up, sending the online company between $250 and $1,750 each for a total of $6 million.

The FTC has sued the five officers who run the nine-year-old Fortuna for operating an investment program that the agency described as a classic pyramid scheme. Typically in such operations, a handful of people at the top of the "pyramid" make their money from unsuspecting investors at the bottom--who are often left with nothing but debt to show for their contributions.

In the Fortuna case, the FTC accused the company of transferring at least $3.55 million of the investors' money to a bank in Antigua, West Indies. If the court finds the company guilty, the investors will be reimbursed
Source: http://news.cnet.com/Pyramid-cases-at-peak-of-online-fraud/2100-1023_3-213769.html

Comment: consumers need to make themselves aware of such scams, despite all the positive things the Internet has to offer, there's no reason not to think that bad guys will be there. It's much harder to find perpetrators in cyberspace than in real space and even harder to track them across international borders.