The continuing saga of Vladuz and Phishing on eBay

Here is an update to the ongoing saga of Vladuz versus eBay. Apparently, Vladuz, or someone claiming to be him, accessed eBay's servers and suspended some eBay accounts.

Ina Steiner reports on the AuctionBytes blog:

eBay confirmed that a known fraudster had limited access to a very small number of eBay accounts on the eBay.com site and the company appeared to have reacted quickly to block him on Friday. eBay spokesperson Nichola Sharpe said, "At no point did the fraudster get any access to financial information or other sensitive information." In a strange twist, some users reporting the incident said they had been openly critical of a hacker calling himself Vladuz and had been suspended briefly during the incident.

It is strange that some of the people suspended were openly critical of Vladuz?

Notably, this is the first time eBay has admitted Vladuz accessed their servers.

In another development, eBay, PayPal and Yahoo are joining forces to combat phishing. Phishing is a phenomenon that has caused a lot of eBay and PayPal account holders a lot of grief. Experts maintain that eBay and PayPal are the two most phished brands out there.

Phishing is where an account holder is duped into giving up their access information via social engineering (trickery).

The intent of the phishermen, who target eBay/PayPal accounts is normally to take the account over and commit even more fraud.

This activity gets more sophisticated all the time with crimeware (malware) being used (which steals the information automatically), and DIY (do-it-yourself) phishing and hacking kits being marketed in underground Internet forums.

Reuters, courtesy of the Washington Post is reporting:

EBay and PayPal have upgraded their computer systems to support an emerging technology standard known as DomainKeys invented by Yahoo that authenticates e-mail senders are who they say they are, allowing Yahoo to block fake e-mails.

The technology upgrade will be made available to Yahoo Mail users worldwide over the next several weeks, the company said.

If you are interested in how bad the phishing phenomenon is getting, the National Consumers League has a very well written and informative paper on the subject, here.

They also have an interesting document, which although is a little dated, shows the increase in auction fraud and calls out that eBay severed their ties with them.

It should be noted that auction fraud doesn't only occur on eBay. It can and does happen on all the auction sites. The reason we hear more about it on eBay is because they are the used by more people than the other sites.

For the scammers that means there are more potential victims to harvest there.

NCL article on auction fraud, here.

AuctionBytes blog post on this, here.

Reuters story on eBay/PayPal's efforts to combat phishing, here.

Here is my most recent post about Vladuz allegedly raising his head again:

Did Vladuz hack eBay, or is stockpiled stolen information being used to make it look like he did?

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eBay responds to the alleged Vladuz hacking incident

eBay is responding to the latest (alleged) attack on their site by Vladuz by confirming that the account information was valid, however the credit card numbers were not.

Here is what the Chatter (eBay's blog team) has to say regarding their investigation:

I've been in touch with our operations and security teams, and I have more information I can share with you about yesterday's incident on the Trust & Safety discussion forum. In brief, very early yesterday morning, a fraudster posted contact information and alleged credit card numbers for about 1,200 members on our Trust & Safety discussion forum on eBay.com.

While the issue was very unfortunate, it was clearly falsified to cause public concern. Early on eBay's teams verified that the credit card "data" did not match anything on file for these members on eBay or PayPal. After more investigation, including phone conversations with many of the members, it appears that these numbers were not valid at all.

Each of these accounts was the victim of an Account Take Over, most likely through a successful phishing campaign. eBay has been in contact by phone with many of these members, and there is a My Messages email going out to impacted accounts to further our reach.

1200 successful account-takeovers is a fairly large asset for a criminal to part with, even if the credit card numbers were no good. In the hand of the wrong people, 1200 eBay and PayPal accounts can be used to commit a lot of crime.

Here is a description of how account-takeovers are sometimes used from my original post on this latest incident:

Account-takeovers enable criminals to scam others, using someone else's information. They can also be used to fence (sell) stolen merchandise with a high degree of anonymity. It should also be noted that stolen payment (credit/debit) card details are often used to purchase the merchandise, which is then fenced.

To cover their tracks, the scammers often dupe people into laundering the proceeds of these sales in work-at-home (job) scams and wiring the money, normally across a border.

Although eBay is stating that the credit card numbers in this case were no good, they are for sale, along with account-takeover information on the Internet. Because this information is sold over the Internet, the criminals are able to buy and sell this information (globally) without ever actually meeting each other in person.

As I stated in my earlier post, phishing is a method, where a lot of personal and financial information is stolen, also.

Thus far, all anyone can do is speculate as to how the accounts were compromised. It will be interesting to see if anyone gets to the bottom of what actually occurred.

The Anti-Phishing Working Group tracks phishing activity and many experts claim that eBay and PayPal are the most frequently phished brands. They also have some excellent information on how to avoid being a victim and what to do if you think you've become one.

Auction fraud doesn't only occur on eBay and can happen on any of the auction sites out there. The criminals behind this activity tend to go after what is the most popular, which probably has more to do with why they target eBay than anything else.

If you get phishy e-mails that ask you to provide your eBay, or PayPal account numbers, the Chatter recommends you report them to spoof@ebay.com or spoof@paypal.com. They also recommend to go to their Security & Resolution Center if you encounter a problem.

Another place to report phishy e-mails is CastleCop's PIRT Phishing Incident Reporting and Termination Squad. Please note you can also report this activity on the Anti-Phishing Working Group's site, also.

Reporting a phishing attempt might prevent someone else from becoming a victim. Sadly enough, if you have an e-mail address, you probably see phishing attempts on a daily basis.

Post from the Chatter, here.

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Did Vladuz hack eBay, or is stockpiled stolen information being used to make it look like he did?

(Picture courtesy of Yahoo Group, eBay_scamkillers)

There is a lot of speculation that eBay was hacked once again, and that Vladuz might be behind the latest episode.

Vladuz, who takes his name from a famous Romanian prince, Vlad Tepes, has plagued eBay with a string of hacking attacks in the past. Vlad Tepes was the inspiration for the novel, Dracula. In Internet folklore, Romanian scammers are often referred to as "Vlads."

Of course, eBay is denying that they were actually hacked. I'll let the reader form their own opinion.

Auction Bytes (Ina Steiner) is reporting:

eBay closed its Trust & Safety discussion board for hours on Tuesday after threads began appearing listing the names and addresses of eBay members. eBay spokesperson Nichola Sharpe said, "We think the fraudster obtained the eBay User names and IDs from previous account takeovers." The credit card information that was published alongside 1,200 names, User IDs and addresses were not associated with the financial information on file for those users at eBay or PayPal, Sharpe said.

Unfortunately, with the amount of account-takeovers caused by Phishing, eBay can suggest other ways the information might have been stolen. Phishing is where users are tricked into giving up their personal details, or downloading malware (crimeware), which steals it right off their hard drive.

I don't know which is worse, that they were hacked in this incident, or that all this information was compromised a long time ago? If it were compromised a long time ago, as eBay states, how much more compromised eBay information is out there?

The Cappnonymous Buds Blog has put together a pretty visual demonstration that makes a pretty good argument that eBay was hacked.

Account-takeovers enable criminals to scam others, using someone else's information. They can also be used to fence (sell) stolen merchandise with a high degree of anonymity.

It should also be noted that stolen payment(credit/debit) card details are often used to purchase the merchandise, which is then fenced.

To cover their tracks, the scammers often dupe people into laundering the proceeds of these sales in work-at-home (job) scams and wiring the money, normally across a border.

Whether Vladuz is behind this latest attack remains to be seen. But the fact remains, that there is a lot of fairly organized crime targeting eBay (my opinion) and other auction sites, on a daily basis.

Previous posts, I've written about eBay and auction fraud can be read, here.

In case anyone is interested in the graphic photo at the top, here is a post I did about a Yahoo Group that call themselves the eBay_scamkillers.

They are an all volunteer group, many of whom have impressive credentials, that are responsible for putting a lot of eBay scammers, where the sun don't shine (prison).

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International Phishing Gang, nailed with a little teamwork!

I suppose it's big news when a phishing gang gets caught. Sadly, few of them ever seem to get nabbed, or prosecuted. Phishing is a crime that is committed across borders with the click of a mouse, or "bot," which makes investigating and prosecuting this type of crime, slightly challenging.

Saying that, the times might be changing, especially (more and more) when U.S. citizens are targeted. Besides this latest series of arrests, the FBI recently conducted a very successful operation against bot-herders in an effort dubbed "Operation Bot Roast."

Bot-herders, who run botnets are behind growing amounts of spam. Spam is the preferred method of spreading scams and other questionable activity across cyberspace.

According to the DOJ press release, 33 phishermen have been hooked, in an operation that was truly International in nature:

A federal grand jury in Los Angeles charged 33 individuals in a 65-count indictment unsealed today for their alleged participation in an international racketeering scheme that used the Internet to defraud thousands of individual victims and hundreds of financial institutions. Seven individuals were charged in a District of Connecticut indictment for their roles in an Internet phishing scheme, including two who were also charged in the Los Angeles case.

U.S. law enforcement authorities are executing nine arrest warrants in the Los Angeles area and Romanian law enforcement authorities are executing search warrants in Romania today in connection with the racketeering indictment.

Supporting the "global theory" of this activity, these phishermen operated from six different countries. They also claimed citizenship from several different countries:

The individuals named in the indictment operated from locations in the United States and abroad including Canada, Pakistan, Portugal and Romania, and include both U.S. citizens and foreign nationals. Sonny Duc Vo, Alex Chung Luong and Leonard Gonzales are U.S. citizens. Nga Ngo, Thai Hoang Nguyen, Loi Tan Dang and Dung Phan are permanent legal residents of Vietnam. Hiep Thanh Tran is a U.S. permanent resident from Vietnam. Caroline Tath is a permanent legal resident of Cambodia. Hassan Parvez is a citizen of Pakistan. Rolando Soriano is a Mexican citizen and is currently charged in Los Angeles with illegal entry by an alien following deportation. Ovidiu Ionut Nicola-Roman; Petru Bogdan Belbita; Stefan Sorin Ilinca; Sorin Alin Panait; Costel Bulugea; Nicolae Dragos Draghici; Florin Georgel Spiru; Marian Daniel Ciulean; Irinel Nicusor Stancu; Didi Gabriel Constantin; Mihai Draghici; Marius Sorin Tomescu; Lucian Zamfirache; Laurentiu Cristian Busca; Dan Ionescu; Marius Lnu; Alex Gabriel Paralescu; and Andreea Nicoleta Stancuta are Romanian citizens. An additional four individuals known only by their aliases, “Cryptmaster”; “PaulXSS”; “euro_pin_atm” and “SeleQtor” are believed to be Romanian citizens.

According to an article in PC World by John E. Dunn, stolen financial details (mostly payment card numbers) were stolen using a fake website. The stolen financial details were then sent via SMS (text) messaging to their cohorts in the United States and counterfeit payment (credit/debit) cards were produced.

After the counterfeit cards were produced, we can assume "runners" went to ATM machines and drained the accounts.

Financial institutions targeted included "People’s Bank, Citibank, Capital One, JPMorgan Chase & Co., Comerica Bank, Wells Fargo & Co., and PayPal," according to the DOJ press release. Although, not a financial institution, the DOJ press release mentioned eBay was a phishing target, also.

Two good resources, largely from the private sector that study phishing and provide a lot of relevant information about the activity are the Anti-Phishing Working Group and Artists Against 419. Besides goverment resources, there are private warriors out there dedicated to taking down phishing sites, also. The PIRT Phishing Incident Reporting and Termination Squad run by CastleCops, a site dedicated to computer and internet security, is a leader in this private effort to curb phishing. PIRT goes after phishing as it occurs in the "wild," or on the Internet.

Most of the information gathered by these groups is provided and used as intelligence by law enforcement resources. As a disclaimer, in this case, it is unknown what private resources might have contributed intelligence to this effort.

Law enforcement resources on a local, national and international level contributed to this latest series of arrests. Most experts agree that cybercrime has flourished in the past because of the inability of members of the "white side of the fence" to come together as a team. Sadly, the members of the "black side of the fence" have seemed to embrace teamwork and the result has been devastating, to say the least.

Last month, Attorney General Mukasey announced a "Law Enforcement Strategy to Combat International Organized Crime." This strategy was developed to combat a growing threat to the stability of U.S. interests posed by organized crime groups.

DOJ press release, here.

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Report Reveals That Internet Fraud Threatens E-Commerce

The Center for American Progress just released a report indicating that not enough is being done to protect the public from fraud on the Internet. It's also warning that the convenience, choices and lower prices enjoyed by Internet users are at risk because of this.

They report reveals that high levels of fraud and abuse may cause more and more consumers to lose trust, a key-component of any successful business. Malicious software, phishing and spam were cited as primary causes for the high levels of fraud and abuse on the Internet.

Studies indicate that over 80 percent of all e-mail is spam. It should be noted that spam is the preferred delivery vehicle of fraud and abuse on the Internet. Malware and phishing normally start with a spam e-mail. In Phishing schemes -- which are designed to steal personal and financial information -- the use of malicious software to automatically steal information is on the rise. In the past, phishing normally relied on a social engineering scheme to accomplish this goal.

The Anti Phishing Working Group, an organization that tracks phishing activity, has noted an increase in the use of malicious software to phish information. They speculate that ability of e-criminals to use automated tools to spread crimeware (a.k.a. malware) could be the reason for the increase.

The report states that although the Federal Trade Commission is stepping up enforcement activity, it's resources are limited and more action by the State attorney generals is desperately needed. It cites as an example that over the past three years, only 11 cases against spyware distributors have been brought forward by the States, which is the same number taken for action by the FTC.

The Center for American Progress and the Center for Democracy and Technology asked States to provide data on the complaints they received 2006 and 2007. Thirty six States responded and most of them had a Internet related category listed in their top-ten complaints. It was also noted that overall Internet related complaints increased from 2006 to 2007. Eight of the States listed Internet related complaints in their top-three and four States listed them as being the number-one complaint.

The FTC, who gathers data on a much wider scale noted an increase of 16,000 Internet related complaints in 2007 versus the number received in 2006. When comparing the numbers to 2005, a 24,000 increase in complaints was noted.

The report points out that many experts speculate that not all cybercrime is reported or even discovered. Additionally, the standard for classifying it varies from State to State, which makes it hard to evaluate current statistical data. Given these factors, many believe the problem is understated.

In looking at the enforcement level by the States, the Center for American Progress and the Center for Democracy and Technology gathered information from annual and biennial reports, websites, news articles, and the bimonthly Cybercrime Newsletter released by the National Association of Attorneys General.

Data from the Cybercrime Newsletter revealed that 60 percent of the cases prosecuted were for the sexual enticement of minors or pornography. Crimes involving the theft of information or identity theft represented 8.9 percent of the total and 15.5 percent involved online sales and services. The majority of the cases involving online sales and services were for false advertising or the quality of a product or service.

The conclusion given by the researchers is that not very many crimes involving phishing, spyware, spam, adware and hacking were being effectively investigated or prosecuted. "Internet crime requires almost no expense to execute, carries potentially high financial rewards, and involves relatively little risk of being caught and punished," according to the report.

The monetary cost of all this activity isn't cheap, either. In 2007, an estimated $7.1 billion was lost due to phishing, viruses and malware in the United States, alone. Given that the estimated losses in 2006 was a mere $2 billion, this would lead a reasonable person to speculate that the problem is a growing one. Worldwide estimates put the losses at about $100 billion.

The report gives a possible reason for the increase in activity. With few overhead or start-up costs a phishing group can net about $250,000 a month and operate anonymously from just about anywhere in the world.

Do it yourself (DIY) phishing kits for sale on the Internet have been cited as a primary cause of more and more activity, also. Some of these DIY kits even come with technical support. The bottom line is that it no longer takes much technical knowledge to become a phisherman.

The report speculates that we shouldn't be surprised that online fraud and abuse are at high levels and calls for stronger deterrents. They believe that stronger action by the state attorneys general is key to this effort.

While more support at the State level is needed, I'm not sure if the States can control Internet crime all by themselves. Internet crime moves across borders with a click of a mouse and it's going to be difficult for Alabama to prosecute a spammer or phisherman living in Moscow, Shanghai, Montreal or London.

Two so-called spam kings were recently prosecuted by the federal government. One later escaped and killed himself and family members in the process. These arrests didn't seem to make much of a dent in the amount of spam being sent. Both of the government press releases on these stories mentioned they were catering to commercial clients. Any solution to crime on the Internet will have to take a long and hard look at what enables the activity to be too easy to facilitate in the first place.

Some blame the Internet Service Providers (which seem to be a dime a dozen) for looking the other way because spam brings in revenue for them. Of course, auction sites like eBay have long been criticized for looking the other way at the the criminal activity on their sites. Since Internet Service Providers and Auction sites operate worldwide with a click of the mouse, it's difficult to prosecute or investigate anything on the Internet.

This list of Internet crime enablers is long and the one's referenced regarding service providers and auction sites are merely two examples of them. But if you were to take a look at all them, they have one thing in common: which is maintaining an environment conducive to making money easily. The question is how long will it take for the financial and social costs of Internet fraud and abuse to inspire a more responsible and practical approach to the problem?

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eBay/Craigslist praised by Congressman for efforts to curb sales of stolen military equipment on their sites (?)

I've written a few things about scams and fencing stolen merchandise on auction sites. Recently, the GAO discovered that items stolen from the military are for sale on eBay and Craigslist.

Even more interesting were the results of narrowly focused hearings (my opinion) on this matter in Washington, which can be seen at the bottom of this post. The reason I believe they were "narrowly focused" is because there is no shortage of fraud, phishing and financial misdeeds on auction sites.

Of course, there is also no shortage of ordinary citizens and businesses that have been taken to the cleaners on an auction site. Stolen government items are only a small part of the overall problem.

From the GAO report:

GAO found numerous defense-related items for sale to the highest bidder on eBay and Craigslist. A review of policies and procedures for these Web sites determined that there are few safeguards to prevent the sale of sensitive and stolen defense-related items using the sites. During the period of investigation, GAO undercover investigators purchased a dozen sensitive items on eBay and Craigslist to demonstrate how easy it was to obtain them. Many of these items were stolen from the U.S. military. According to the Department of Defense (DOD), it considers the sensitive items GAO purchased to be on the U.S. Munitions List, meaning that there are restrictions on their overseas sales. However, if investigators had been members of the general public, there is a risk that they could have illegally resold these items to an international broker or transferred them overseas.

Apparently, body armor, MRE (meals ready to eat), uniforms, night vision goggles, NBC (Nuclear Biological Chemical) equipment and even F-14 components were some of the items purchased on eBay and Craiglist by undercover investigators.

The obvious concern would be terrorists, or other not very friendly people getting their hands on some of this stuff.

Given the organized effort on a lot of auction sites to fence stolen merchandise via some pretty sophisticated methods, it's not surprising that the GAO found military equipment for sale on the sites. Many have speculated that these sites are used as a means of fencing the proceeds of what is known as organized retail crime. Of course, less organized criminals obviously sell their goods on auction sites, also.

Organized retail crime obtains their goods by a variety of methods from common theft to using stolen financial instruments. A lot of stolen financial instruments are used to purchase items on auction sites and e-commerce sites. Of course, they are used in more traditional store settings for the same purpose, also.

On eBay, account credentials and payment accounts (PayPal) are phished all the time, enabling an additional layer of anonymity to the schemes. In fact, over the years, many experts have stated that eBay and PayPal are the two most phished brands out there.

One thing not mentioned in the report is that people don't always get what was advertised on these sites. It isn't inconceivable that a complete fighter jet might be put up for sale, paid for and in the end a toy, or "nothing at all" is received by the buyer.

Trust me, this wouldn't be the first time something like this has happened on an auction site.

A lot of counterfeit (knock-off) merchandise is sold on the sites, advertised as the "real thing," also.

Our leaders in Congress reacted by calling Jim Buckmaster (Craigslist) and Tod Cohen (eBay) in to speak with them on the matter.

Anne Broache (CNet) writes:

By calling Craigslist CEO Jim Buckmaster and eBay government relations chief Tod Cohen to Washington for the hearing, the subcommittee seemed to be preparing to place those executives in the hot seat. But the tone of that questioning was actually quite cordial. At the end of the panel, Tierney even praised the companies for "trying very hard" to keep sensitive military goods off their sites and acknowledged the rules of the road aren't the most clear.

Based on her article, which reports that Buckmaster and Cohen were treated with "kid gloves" during the session, my prediction is that little is going to be done to regulate the sale of stolen goods on auction sites as a result of this.

Meanwhile, everyone running for office is saying they will be the one doing something about the problem of special interests in Washington.

On a closing note, I want to commend the GAO for their efforts to expose a problem. I'm just saying it's a shame that no one listened to what they were saying, very carefully.

HTML version of the GAO report, here.

PDF version, here.

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Phishing increases ten-fold over the Thanksgiving weekend

I just got finished writing about Symantec's prediction that spam would break new records this holiday season.

It appears that in one category of spam a.k.a. phishing, they were right on the money.

Another computer security company (Barracuda Networks) is reporting:

Barracuda Networks, Inc., the worldwide leader in email and Web security appliances, reported a more than 10x surge in the number of phishing Web sites created and three times the number of phishing emails sent out in the last 24 hours. This increase in activity indicates that scammers and their criminal networks are working feverishly to cash in on ‘Black Friday,’ traditionally the biggest shopping day of the year, and the long Thanksgiving Day weekend.

Here is more detail on what they observed:

Barracuda Central, a 24/7 security operations center at Barracuda Networks that continuously monitors the latest spam, virus and other Internet threats, including phishing Web sites, observed a tremendous increase in the number of fake Web sites targeting popular shopping sites, including eBay, Amazon, PayPal, and other e-commerce sites, pop up on Thanksgiving Day. Typically phishing Web sites are set up via compromised PCs of innocent businesses and are quickly shut down once the business has been notified. However, by exploiting the four-day Thanksgiving weekend in which most U.S. business activity shuts down on Thursday and Friday, scammers are banking on the idea that the sites will go uninterrupted because no one is available to take them offline.

One of the better resources to learn about phishing, which is a method used to steal personal and financial information is the Anti Phishing Working Group. The site has a lot of information on the subject, including what to do if you've been phished and where you can report it.

Barracuda press release via Business Wire, here.

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DIY (do it yourself) crimeware kits designed to steal personal information are for sale on eBay

Do it yourself (DIY) crimeware kits being sold on the Internet make it easy for non-technical criminals to commit fairly sophisticated (technical) crimes.

DIY crimeware kits have been credited with fueling the information (identity) theft crisis.

Ran into this interesting post on Cappnonymous (The Modern Day Beatnik Refuses to Die), which quotes a press release from PC Tools about crimeware for sale on eBay. The original press release from PC Tools points to eBay links, which have been deactivated.

Fortunately for those of us, who might be interested in taking a look at this, Cappnonymous was able to recreate a visual demonstration (screenshots) showing this illicit software being sold on eBay.

From the original press release from PC Tools:

Online auction site, eBay, is unwittingly selling software that is used to hack eBay user accounts and steal personal information, according to research from online security experts PC Tools.

A number of software items for sale on the world’s leading online auction site contain a variety of programs including keyloggers, trojans and other malware making devices that are aimed at helping users hack computers, websites and even individual user accounts.

The release quotes Mike Greene, VP Product Strategy at PC Tools as saying:

It is ironic that something intended ultimately to steal a consumer’s identification and financial information is being sold via what is one of the world’s number one targets for the ID theft.

Cappnonymous added his own sage comment:

Note a couple of the hilarities such as payment via Paypal and the Square Trade seal.

The seller’s feedback is 100%, so he/she must have some very happy buyers.

Cappnonymous post, which contains an excellent visual demonstration of this problem, here.

Although, eBay is frequently the subject of fraud articles, I'd like to point out that tools to commit cybercrime might be for sale on a variety of auction sites.

They are also being sold in a lot of other places on the Internet. Because the sellers are motivated to sell as many of them as they can, they will migrate to the best places to market their seedy products.

Some of them even provide technical support.

The Anti Phishing Working Group issued a detailed report last October regarding this problem, which can be seen, here.

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If your car gets stolen, eBay might be a good place to look for it!

If your car was recently stolen, it might be a good idea to check out the listings on eBay, according to Dariusz Grabowski, a.k.a (also known as) as the "eBay king of stolen cars."

Rick Hepp at the Star-Ledger reports:

Grabowski and his crew would buy junked or damaged vehicles at auctions and look for similar newer cars to steal. Once they found a car they wanted, they would get its vehicle identification number, usually found in sales ads or right on the car's windshield.

Today's newer car keys can only be duplicated if their computer chips are programmed according to the vehicle identification numbers. Car owners who lose their keys and want duplicates generally go to locksmiths who program the new keys by getting "key codes" from database companies hired by auto manufacturers.

Posing as a locksmith, Grabowski got these codes from the database companies and then made brand new keys. His crew took the keys and simply drove off with the cars.

Before selling the cars, they made them look legitimate by switching the vehicle identification numbers with the ID numbers of the junked cars they had bought.

Grabowski learned how to do all of this by surfing websites that provide technical assistance to locksmiths, and interestingly enough, buying any hardware he needed, on eBay:

You go online, you find anything you need," Grabowski told the investigators in the videotaped interview. "You can go on eBay at this point and purchase any of the equipment you need. Of course, I might pick this up easier than other people.

From there, Grabowski got a business license, which he made on a computer "real quick" and lavished special attention on a female owner of a company licensed to provide locksmiths with the necessary code to clone keys.

Grabowski and crew have all been convicted, but their victims are still paying the price for their misdeeds. New Jersey State Investigator, Jeffrey Lorman was quoted in the article as saying:

The buyers were happy with the cars, they got a great deal. Then we found out about Dariusz and the stolen cars were recovered. Some of these people are still paying for cars they no longer have.

The article mentioned that Grabowski was affiliated with a lot of other Polish nationals, involved in the business of stealing cars, also.

Our friend Dariusz, might or might not be the eBay king of stolen cars. If he is, he isn't alone, at least according to Google. A simple Google search reveals a large amount of information related to scams involving automobiles on eBay, here.

Fraud, Phishing and Financial Misdeeds a.k.a. (sometimes) FraudWar has a lot of information on auction fraud (if anyone is interested), here.

My advice is to be extremely cautious when buying a car on an auction site! If you choose to be cautious a good place to perform due diligence is CarBuyingTips.com, which can be seen, here.

The word is caveat emptor, latin for "buyer beware."

Star-Ledger article, here.

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Bills Introduced to Combat Organized Crime on Auction Sites

While stories of individual people getting scammed on auction sites are legendary, individuals aren't only ones victimized on these sites. Large retailers and brand owners are victimized when their stolen or counterfeit merchandise is sold on these sites, also.

In response to this, two bills are being introduced to combat this problem in the halls of Congress.

The reason this has become a growing issue is that criminals can net 70 percent of the value of stolen merchandise on an auction site versus the going 30 percent received on street corners, flea markets and pawn shops. So far as all the knock-off (counterfeit) goods being sold on auction sites, it's hard to put a dollar loss to it, but many believe it's substantial.

According to the International Anticounterfeting Coalition, counterfeiting costs U.S. businesses $200 to $250 billion a year. Counterfeiting and e-fencing pose safety risks to the public-at-large, also. Outdated or merchandise that isn't what it is advertised to be could potentially poison people, or cause bodily harm when it doesn't work like it's supposed to.

Simply stated auction sites, provide an anonymous marketing environment to sell both stolen and counterfeit goods.

“By hiding behind the anonymity of the Internet, they can make more money with less risk of getting caught than selling to a stranger on a street corner who might turn out to be a police officer. This bill would lift that cloak and help law enforcement put on-line criminals where they belong – behind bars,” according to Joe LaRocca, the National Retail Federations Vice President of Loss Prevention.

To address this problem, a federal bill (H.R. 6713, the E-Fencing Enforcement Act of 2008) is being introduced by Representative Bobby Scott, chairman of the House Judiciary Committee’s Subcommittee on Crime, Terrorism and Homeland Security.

The bill will require on-line auction operators to maintain information about high-volume sellers and provide the information to a person with "standing" once a police report is filed. The definition of a person of standing would be a law enforcement officer or a representative from a company, who has an interest in the merchandise being illegally sold on an auction site.

This is the second bill introduced recently to combat organized retail crime, which costs retailers anywhere from $15 to 30 billion a year. On July 15th, H.R. 6491, the Organized Retail Crime Act of 2008, was introduced by Representative Brad Ellsworth, a former county sheriff, along Representative Jim Jordan, as the lead co-sponsor. The bill establishes that unless auction site owners can show specific steps to prove goods being sold were not being obtained by theft or fraud, they could be viewed as "facilitating" the activity. This bill will also require site operators to cooperate with the police and organizations with a stake in stopping the activity. In certain instances, it will also allow merchants to initiate civil actions over stolen merchandise being sold on an auction site.

In the past, auction operators have been criticized for not effectively cooperating with companies and law enforcement when they made an inquiry into suspected criminal activity on their sites. It has also been established that smaller (individual) victims and merchants often receive little to no assistance after being victimized in an Internet auction deal.

E-fencing, phishing, counterfeit goods and the use of fraudulent financial instruments to buy merchandise from unsuspecting customers have all victimized countless people and organizations on auction sites.

Criminals often lure people to do their dirty work, also. Recruits are normally harvested off the Internet, sometimes from job sites, and offered work to reship stolen merchandise and or launder money from fraudulent transactions. Much of this activity involves sending money, or hot merchandise across an International border --making it extremely difficult to track.

A lot of criminal activity is facilitated on auction sites by what is known as phishing. Phishing is where an account owner is tricked into giving up their account details, either via social engineering, or more and more often, after downloading some malicious sofware. The stolen account details are then used to take-over the account and use it for illicit purposes.

In fact, eBay and PayPal accounts are frequently the most phished brands out there.

Phishing, normally facilitated by spam e-mails, is another ever-growing criminal activity on the Internet. Recent studies by the Anti Phishing Working Group show that it is becoming more automated and malicious software (crimeware) used to automatically steal information is becoming more prevalent.

There is little doubt that a lot of the criminal activity on auction sites is sophisticated and reeks of organized crime.

For anyone investigating fraud on an auction site, the only way to effectively do so, is to have access to information quickly and with as little red tape as possible. A lot of these crimes cross over borders quickly and by the time and investigator gets what they need, the trail is often pretty cold.

When auction site owners -- who suffer no financial liability and collect a lot of revenue in fees from this activity -- don't cooperate or move too slowly, it only ensures that criminals will be laughing all the way to the bank.

Even the government has had their stolen inventory sold on eBay and Craigslist. In April, the GAO issued a report that military items, including F-14 components, were being sold on auction sites. In August of last year, a U.S. Attorney was quoted as saying that stamps being stolen from self service vending machines with cloned payment cards were being sold on auction sites. At the time, I ran a simple search query and found some pretty good deals on stamps. As of today, these great deals still exist. Many of them are being sold below cost and the last I checked the Postal Service still offers credit. Why would someone sell stamps below cost?

In my opinion, both of the bills don't only serve the large merchants out there, but have the potential to protect everybody from fraud on auction sites. While both of these bills are being driven by the National Retail Federation, I see a lot of benefits to passing them for everyone concerned with fraud on auction sites.

I highly recommend that these other people, join in with the NRF and the Congressmen involved, and support getting these bills passed.

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buySAFE takes on the issue of counterfeit (knock off) merchandise

buySAFE bonds sellers after verifying they are reputable and honest. They also contribute their time to protecting the average person in the sometimes murky waters of e-commerce. Recently, buySAFE has been taking on the (huge) issue of counterfeit merchandise.

Consumers are protected when they buy from a merchant bearing the buySAFE seal. Not a very bad deal for the consumer! Bonding isn't free, but many merchants experience higher sales volumes after being accepted by buySAFE. Trust can drive a lot of sales! buySAFE is also a viable means for a merchant to protect their assets.

The Association of Certified Fraud Examiners noted in their last report to the nation that small businesses suffer "disproportionate fraud losses," when they are victimized by fraud. Large merchants can afford experts to deal with their fraud problems, however the cost is hiring experts can be restrictive for smaller merchants.

Of the numerous fraud issues found on auction sites, complaints about counterfeit goods rank pretty high. People buy items believing they are the "real deal," only to discover the item is a (knock-off) counterfeit.

Companies, who sell respected and trusted brands, are impacted by a loss of sales and consumer trust in their products, also. Some of them have already filed civil litigation against eBay because of the amount of knock-off (counterfeit) merchandise being sold on the site.

Even though auction sites offer seller rating systems, these ratings are often compromised when seller accounts are hijacked (taken over). eBay and PayPal (by most accounts) are recognized as the two most phished brands out there.

The intent of most of these Phishing schemes is to obtain personal/financial information to steal money (and or) take over legitimate accounts.

This can also happen when malware (crimeware) is inserted into an unprotected system and personal/financial details are stolen, normally using key logging software. Sadly enough, the criminal element has found it pretty easy to remain anonymous on auction sites, and few of them seem to get caught.

Whenever the Anti Phishing Working Group (APWG) releases a new report, both of these activities seem to set a new record that surpasses the previous one.

Recently, eBay seems to be taking the fraud problem a lot more seriously, but someone using the name of "Vladuz" is intent on proving their systems are easily compromised. A good place to keep up on the Vladuz saga is firemeg.com.

Although a good information source, I'm not certain that bashing Meg is the solution to fraud on auction sites.

Being the largest auction site, eBay is targeted by fraud all the time because of their popularity.

Fraud has already migrated to other auction sites, but they will always target the most popular.

The reason for this is simple (and it's only business for them) - there are more victims to harvest in popular places.

The term "Vlad" was based on a Romanian historical figure, Vlad Tepes, who inspired the novel, Dracula. In recent times, the term has come to signify fraudsters from Romania, who are well established and organized in the world of auction fraud.

Besides, protecting merchants and consumers, buySAFE makes a lot of contributions to addressing fraud issues on auction sites. Most recently, Jeff Grass (buySAFE CEO) has posted a lot of educational information on his blog about the counterfeit problem, here.

Jeff also appeared on the Today show, when they did a piece on counterfeit goods.You can view a clip of the show, here.

And the Today show isn't the only place that considers buy Safe’s views on the counterfeit problem important. The French government recently included buySAFE as part of a U.S. delegation (including government experts) to discuss the problem of counterfeit goods.

The INTERNATION ANTICOUNTERFEITING COALITION (a non-profit) sums up the problem when they state:

Counterfeiting is big business.It is estimated that counterfeiting is a $600 billion a year problem. In fact, it's a problem that has grown over 10,000 percent in the past two decades, in part fueled by CONSUMER DEMAND.

The real truth is people who purchase counterfeit merchandise risk funding nefarious activities, contributing to unemployment, creating budget deficits and compromising the future of this country in the global economy.

IACC site, here.

Part of the reason the activity has grown 10,000 percent is probably due to the explosion in e-commerce, especially on auction sites.

buySAFE seems to be doing a little more than just selling a product. In fact, they seem to be exercising some corporate responsibility by educating the public on fraud trends in the rapidly growing world of e-commerce.

Consumers can become a member of their Smart Buyer's Club, which leads you to a lot of good deals (safe to buy), here. Club members accumulate points, which can be redeemed for goods, or services (listed on the site).

Anyone claiming to be a buySAFE merchant can be verified, which can be done on the site, also.

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SIRAS PI - tracking theft to the source

Graphic demonstration of anti-theft technology courtesy of SIRAS.com.

Criminals, who steal goods, whether with bogus financial instruments, or by more physical means might be in for a little surprise if the merchandise is protected by SIRAS PI.

Last week, SIRAS made this announcement in a press release:

SIRAS.com, the pioneer in Point-Of-Sale Electronic Product Registration used by leading manufacturers and retailers, has announced the nationwide launch of SIRAS P.I., a groundbreaking initiative to aid law enforcement officials in determining whether products they recover are, in fact, stolen, and if so, from where. Piloted by the Mesa, Arizona Police Department, SIRAS’s P.I. (Product Information) Database has already proven to be effective in helping law enforcement officials identify stolen items, report suspicious items, and apprehend and convict thieves. The database will be available, free of charge, to police and law enforcement agencies nationwide.

The way SIRAS works is simple, but effective. It tracks a product by recording the UPC (Universal Product Code) and the product serial number. SIRAS has the capability to determine where merchandise was stolen, whether from a merchant, manufacturer, or individual.

Earlier this year, SIRAS did some testing that revealed a substantial reduction in TV and MP3 player losses on products, where their technology was being used.

If deployed properly at the merchant level -- it could also determine how an item was purchased, and whether or not -- the method of payment used was legitimate. In theory, a merchant could also use the technology to impact credit card chargeback and fraud check losses.

I say "deployed properly" and "in theory" because the information to accomplish this (sales data) belongs to the company using SIRAS technology. Because of this, the capability to track sales information would have to be implemented inside the company. At most larger companies, this information is already tracked and analyzed to prevent and detect dishonest activity.

For years, most high-theft (shrink) merchandise has been secured so a thief can't merely pick it up from a shelf. When high-theft merchandise that was secured is stolen, it's normally because of one of two reasons. It was purchased with a bogus financial instrument, or an insider was involved in the theft.

Other reasons for secured merchandise being stolen might be a theft, directly from the manufacturer, or a theft during the shipping (transport) process. In these instances, if the merchandise was registered at the manufacturer, SIRAS can identify the point of compromise, also.

Technology has made it a lot easier for criminals to obtain and use fraudulent forms of payment. Information being compromised (data breaches) and anonymous places to communicate like Internet chat rooms, have given a lot of common criminals access to bogus financial instruments.

Along with the increased availability of fraudulent forms of payment, obtaining counterfeit identification documents has become fairly easy, and the identity used on them normally belongs to someone else. This has made it easy for a lot of retail criminals to operate as someone else.

Because of these new trends, current systems that record personal information to prevent fraud are becoming less effective than they use to be. I often wonder (no one probably really knows) how much of the information contained in them is incorrect.

In the recent data breach at TJX, one of the systems compromised was their refund database. Stories have circulated recently about the wrong people being pegged as frequent refunders, or bad check writers after their identities were stolen.

Neither one of these situations fosters good will, or trust with customers. Besides that, data breaches are becoming costly. The last I heard TJX has spent approximately $256 million dealing with the breach. With pending litigation, the cost is liable to keep going up.

With SIRAS, using personal information isn't necessary to determine, whether or not, a return is legitimate. SIRAS already has proven to be highly effective in reducing refund fraud without asking for one item of personal information.

An example of how some of the TJX data was used in a retail theft scenario can be seen, here.

Given that criminals that steal merchandise want to turn it into money, two methods are normally used. They either refund it somewhere, or fence it. Auction sites provide an easy and when combined with account-takeover activity (anonymous) venue for criminals to fence merchandise.

In the auction world, seller accounts are taken over all the time. This normally occurs when seller accounts are compromised by a phenomenon known as phishing. Phishing occurs when a person is tricked into giving up their access information after receiving a spam e-mail.

Compromised seller accounts are sold on the Internet the same way financial information is, and there is a trend in DIY (do-it-yourself) phishing kits being sold that enable non-technical criminals to get into the game.

eBay and PayPal are two of the most heavily phished brands. Once these accounts are compromised (taken over), they are used by criminals to fence merchandise and launder the monetary proceeds of their illicit sales.

Another growing trend related to phishing is when malware, also sometimes known as crimeware is used to steal information. The difference here is information is stolen from systems automatically (normally by keylogging software) and social engineering (trickery) is no longer necessary to get people to give up information.

Malware is often picked up by a computer system by clicking on a spam e-mail link, or by visiting a website designed to inject the software on a system. PC World recently did one of the many stories floating around about malware being sold on the Internet in the form of DIY kits.

In the story they wrote:

The global market for criminal malware now operates like a supermarket, complete with special offers and volume discounts, a security company has discovered.

Here again, this capability enables not very technically inclined criminals to get into the game. This has become a growing problem and I expect it to get worse before it gets better.

With the availability of all this personal and financial information, being sold on an economy of scale, current fraud protection systems are routinely being compromised by a lot of criminals.

There is an old saying in the investigations world, which is if you want to solve a crime, the easiest way is to follow the money.

SIRAS takes this one step further by tracking both the merchandise and can track the money ( if programmed to do so by the user). When you do this, the odds are far greater that the true culprit will be identified. They are normally associated with either the money, and or the merchandise.

Since the technology records both physical and UPC information, the database can determine exactly where the merchandise was compromised (stolen). Given that many merchants use digital video systems -- which are capable of storing video footage for a long time, it's also possible to obtain video evidence of the original transaction -- when sales information has been programmed to tie into the technology.

SIRAS has been used by select manufacturers and merchants for several years now -- however a new initiative, SIRAS PI, which was tested with Mesa PD -- makes the database available to law enforcement agencies free of charge.

Law enforcement can access the database either via the Internet, or by telephone. They can also add items to the database when they are reported stolen. If someone later tries to refund the merchandise at a participating retailer, the transaction can be automatically flagged.

Although a lot of fencing now occurs on the Internet, the technology is equally as effective in investigating more traditional property crimes, also. The bottom line is once merchandise is discovered, it can be tracked by SIRAS, if the item has been registered.

Recently, Chris Hansen (MSNBC), did a story about iPod theft. When Apple was approached about tracking the merchandise using Apple's registration database, they decided not to cooperate with MSNBC.

Undaunted by this, MSNBC purchased a bunch of iPods and engineered the registration disc to send them the information when the iPod was registered. They then left the iPods (new in the box) unattended, let them get stolen and tracked them to the crooks once the iPod was registered.

Chris Hansen made an excellent point on how databases can track stolen merchandise -- but in this instance, brand new iPods had to be left in public places to be stolen -- then registered to make the point.

If Apple used SIRAS technology to protect their merchandise -- it would have already been traceable, even if it was stolen from an individual -- who didn't provide the thief with the registration disc. It also would eliminate privacy concerns, which might be why Apple didn't want to cooperate with the MSNBC investigation?

When registering any product, a lot of personal information is normally asked for.

In any event, most criminals of the smarter variety aren't going to provide their personal information in the registration process. Most of them shy away from doing things, which might get them caught.

It would be interesting to have MSNBC, or another investigative news source do the same story with merchandise protected by SIRAS. The story might expose more than people, who stole because of an almost "too good to be true" opportunity was provided to them.

MSNBC iJacking story, here.

This brings up another potential benefit to this technology. Expensive portable electronics and other expensive toys like mountain bikes are stolen from the people who buy them (customers) all the time. Using SIRAS technology might even be a selling point that instills customer trust in the product they are purchasing.

This technology has prevention/investigation applications for corporations, law enforcement agencies and individuals, alike. It also doesn't require using people's personal information, which isn't as effective as it used to be, and is becoming more unpopular all the time.

In my opinion, this technology has the ability to make it a lot harder to get away with stealing merchandise and converting it into money.

Of course, the more it is used, the more effective it will become. Databases have a tendency to do this, or become more useful as they contain more information.

There are a lot of anti-theft/fraud technologies that claim to prevent theft/fraud. Very few of them also claim to be able to go after and hold the criminals committing the fraud/theft personally accountable.

The last I heard, most criminals still fear getting caught!

If you would like more information on the organized trade in counterfeit identification documents, the story of Suad Leija can be seen, here.

Suad's story has been covered extensively in the media, including by Lou Dobbs. Currently, she is writing a book and I keep in touch with her occasionally.

More information about bogus financial instruments can be seen, here and here.

A chronology of data breaches is compiled by the Privacy Rights Clearinghouse, here.

The best source on phishing is the Anti-Phishing Working Group and if you are interested in learning even more about phishing and want to see some totally fake banking sites, Artists Against 419 is another good place to visit.

Last, but not least, if you are interested in learning more about SIRAS PI, you can do so by visiting their site, here.

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Were Internet Scammers Preparing to Exploit Hurricane Gustav?

Gustav has passed and it seems like it wasn't as bad as it could have been. One positive aspect to it all was the emergency responders, who were on top of it this time. They really did a first-class job of ensuring the public's safety and deserve to be commended for their efforts.

Unfortunately, this might not be the case with everyone who was preparing for the worst Gustav might have dished out. Cyber criminals appear to have been positioning themselves on the Internet to divert as much of the relief money as they could get away with. And although it wasn't as bad as it could have been, we might still see these crooks try to take advantage of the situation.

Gary Warner, who is a blogger and computer forensics research type, recently posted a list of names that appear as if they might used to impersonate Gustav relief efforts on his blog. Some of the potential fraud domain names listed include contributiongustav.org, donategustav.org, donationgustav.org, gustav-relief.org, gustavassistance.org, gustavattorney.com, gustavclaims.net, gustavcontribution.org, gustavhelpers.org and gustavlawsuit.com. Many more of these domains can be seen on his blog post.

Gary also pointed to interesting package deal of domain names being offered on eBay. The seller has a 94.1 percent approval rating on eBay and offers to give 10 percent of the purchase price to a charity of the buyer's choice. Additionally, he assures anyone bidding on these names that their User ID will be kept private.

eBay isn't the only e-commerce place selling these domain names, I found some on DNForum.com, also. In fact, DomainPulse.com is reporting that 100 names related to Gustav were registered in less than 48 hours.

The good folks at the SANS Internet Storm Center are also keeping an eye on this activity and have an interesting diary going on about it. They are asking that anyone with any further information about this send them a quick note so they can stay on top of the subject and hopefully report it to the federal authorities.

Whether or not these domain names will be used for fraud is purely speculative at this point. However with the Louisiana Attorney General reporting that phishing attacks using Gustav as a lure have already started, it's probably only a matter of time before some of these sites are used in an attempt to dupe the general public. It should be noted that phishing is a time-tested method used to direct unsuspecting users to fraud websites, where they are tricked out of money via social engineering schemes or can even have malicious software dropped on their operating system. Becoming a Phish normally carries the risk of identity or information theft, also.

Identity theft isn't the only reason malware is dropped on a system. Often the intent is to take over a system and turn it into a member of a botnet so it can be used as a spam spewing zombie. It's always considered wise not to click on links received in e-mails from unknown sources.

The average person can check out if a charity is legitimate by visiting the Better Business Bureau Wise Giving Alliance, Charity Navigator or the American Institute for Philanthropy.

If you happen to detect a site that appears to be fraudulent, the socially responsible thing to do is to report it to Internet Crime Complaint Center.

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Spoofed (counterfeit) BBB e-mails contains virus

If you get an e-mail from the Better Business Bureau stating you have received complaints don't click on the link to view them.

Annys Shinn (Washington Post) is reporting:

The Better Business Bureau network was the target of a "spoofing" scam yesterday in which thousands of businesses in the United States and Canada received e-mails encouraging them to download what is thought to be a computer virus.

The e-mails, using the name of the 95-year-old network of nonprofit groups that looks into consumer complaints, told businesses that they were the subject of a complaint and included a link to view related documents. Clicking on the link, however, accessed the address book of an infected computer and distributed the counterfeit e-mail to more recipients, said Steve Cox, spokesman for the Council of Better Business Bureaus.

Washington Post article, here.

Wandering to the BBB site to see what they had to say, I found a little more information. Apparently, if you click on the link, it downloads an executable file, believed to contain a virus.

The BBB and others are calling this a phishing attempt, but in phishing the intent is normally to get the user to provide personal, and or financial information to the sender. Since this doesn't seem to be the case, and no one is saying exactly what the executable file (virus) is, this doesn't appear to be phishing.

It will be interesting to see exactly what this executable file does, but some computer viruses (crimeware and malware) download keyloggers, which log a person's keystrokes and are used to steal personal and financial information.

Other computer viruses might turn a computer into a zombie, which allows someone else to use it for their own purposes (sending spam or denial of service attacks). Zombie computers are formed into what is known as botnets (groups of zombie computers), which are used for illicit purposes by their "controller."

You can download a lot of nasty things by clicking on something from someone you don't know. And the people behind it like to spoof well known entities, such as the BBB. Organizations from eBay to the FBI have been spoofed in the past.

Example of spoofed e-mail from the BBB site:

From: operations@bbb.org [mailto:operations@bbb.org]
Sent: Tuesday, February 13, 2007 6:06 AM To: XXXX
Subject: BBB Case #263621205 - Complaint for XXXX

Dear Mr./Mrs. XXXX

You have received a complaint in regards to your business services. The complaint was filled by Mr. XXXX on 02/05/2007/

Use the link below to view the complaint details:

DOCUMENTS FOR CASE #263621205

Complaint Case Number: 263621205
Complaint Made by Consumer Mr. XXXX Complaint
Registered Against: Company XXXX
Date: 02/05/2007

Instructions on how to resolve this complaint as well as a copy of the original complaint can be obtained using the link below:

DOCUMENTS FOR CASE #263621205

Disputes involving consumer products and/or services may be arbitrated. Unless they directly relate to the contract that is the basis of this dispute, the following claims will be considered for arbitration only if all parties agree in writing that the arbitrator may consider them:
- Claims based on product liability;
- Claims for personal injuries;
- Claims that have been resolved by a previous court action, arbitration, or written agreement between the parties.

The decision as to whether your dispute or any part of it can be arbitrated rests solely with the BBB.

The BBB offers its members a binding arbitration service for disputes involving marketplace transactions. Arbitration is a convenient, civilized way to settle disputes quickly and fairly, without the costs associated with other legal options.

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The Phishermen keep using the IRS name to hook Phish (Identity Theft Victims)

Phishing has become a huge problem. Criminals (phishermen) spoof (impersonate) a brand or organization that people trust to trick people into giving up their personal, or financial information. The information is then used to steal money.

In the more sophisticated attempts, malware (crimeware) is dropped on a system that logs keystrokes, gathering even more personal information, without the computer owner's knowledge, or consent.


The phishermen have been spoofing the IRS so frequently, the IRS set up a dedicated e-mail address to report activity. The address is phishing@irs.gov (follow the instructions).


The most recent version is a spam e-mail intended to scare a person into thinking they are being investigated. Here is what the IRS site is reporting:

The e-mail purporting to be from IRS Criminal Investigation falsely states that the person is under a criminal probe for submitting a false tax return to the California Franchise Tax Board. The e-mail seeks to entice people to click on a link or open an attachment to learn more information about the complaint against them. The IRS warned people that the e-mail link and attachment is a Trojan Horse that can take over the person’s computer hard drive and allow someone to have remote access to the computer.

Trojan horses are often a gateway to install malware -- sometimes referred to as crimeware -- which often includes keylogging software. The bottom line is that once installed on a computer, they have the ability to steal personal and financial details, from afar, without any additional assistance from you.


All the terms out there get confusing to non-technical people, there are some now saying, we should group some of the terms together and call it "grayware?" Another term to group some of this terminology together is "badware."


Similar technology is used for advertising and marketing purposes by legitimate businesses, also. This is often referred to as spyware and adware. The one thing they all have in common is that they are often a nuisance.


The key is to NOT even open the spam e-mails enticing you to click on their links. The best practice is to delete them. These e-mails are generated by the millions, perhaps billions by now, using automated software and botnets (other people's computers that have been taken over).


Spam filters designed to stop them from getting in your inbox, seem like they are getting less effective, recently.


Botnet owners are known to rent out their networks to other criminals for this purpose.


Sadly enough, the IRS name has been being spoofed a lot lately. Here is the extent of it:

Since the establishment of the mail box last year, the IRS has received more than 17,700 e-mails from taxpayers reporting more than 240 separate phishing incidents. To date, investigations by TIGTA have identified host sites in at least 27 different countries, as well as in the United States.

The phishermen often impersonate financial institutions, eBay, PayPal, or government agencies; such as the FBI and Interpol.


The latest alert from the IRS can be seen, here.

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Crimes Against Businesses Contribute to Job Losses

Organized retail crime costs retailers billions of dollars. In an era, where retailers are closing stores or going completely out of business, it's logical to assume that organized retail crime is a contributing factor to retailers shutting their doors and people losing their jobs. With the sour economy inspiring more and more theft and fraud, it is becoming more critical than ever before for companies to control their losses in their struggle to remain viable.

When retailers lose money to theft, the end result can be (assuming they don't go bankrupt) that jobs are cut. Payroll is normally the largest and most controllable expense in any business. When businesses start to show negative earnings — like a lot of them are right now — payroll is normally the first place they look to cut when trying to avoid shutting their doors.

In an effort to fight what experts say is a $30 billion a year organized retail crime issue, the National Retail Federation is welcoming legislation being introduced to give them more tools to fight this problem. Yesterday, three bills were introduced in Congress to assist retailers and law enforcement in this effort.

The three bills introduced are "the Combating Organized Retail Crime Act of 2009, sponsored by Senate Majority Whip Richard J. Durbin, D-Ill.; the Organized Retail Crime Act of 2009, sponsored by Representative Brad Ellsworth, D-Ind.; and the E-Fencing Enforcement Act of 2009, sponsored by House Judiciary Committee Crime, Terrorism and Homeland Security Subcommittee Chairman Bobby Scott, D-Va. The measures are similar to legislation first introduced last summer" according to the press release and podcast on this matter by the National Retail Federation.

In case you are unfamiliar with "Organized Retail Crime," it involves organized retail theft activity for profit. Once the merchandise is stolen, it is fenced (sold) to get a cash value out of it. Traditionally, this merchandise was sold at flea markets/dishonest retailers, but more and more often nowadays, retail crime rings are turning to auction sites to unload their stolen goods.

The reason for this is if they sell it on an auction site, they make a lot more money than in the more traditional fencing venues. Experts believe they net 70 percent of the retail value by selling their stolen wares on an auction site versus the 30 percent of retail value they receive in more traditional fencing venues.

Another possible factor contributing the problem is that consumers — who are operating with ever-decreasing personal budgets — are flocking to these sites to stretch their buying dollars. Without knowing it, they might be adding fuel to the fire and unknowingly buying this stolen merchandise.

Even if the retailer can prove that merchandise on an auction site is stolen, it can be extremely difficult for them to get the site to cooperate in going after the criminals selling it. Due to a lot of red-tape imposed by these sites to release information, it requires a lot of time/effort to get the site to cooperate in an investigation. Because of this, the crooks are normally long gone before any effective investigative action is taken.

Another phenomenon called phishing makes the activity even more anonymous/hard to track on auction sites. Phishing is where a person (user) is tricked into giving up their credentials to an account. For years, eBay and PayPal have ranked as some of the most phished brands out there. Criminals use this information to take over an account and commit fraud using someone else's selling account. When investigating auction fraud, time is of the essence, otherwise the trail is often too cold to track. The crooks use one of these accounts for a short period of time and then move on to another phished account to avoid detection.

Organized retail crime is also taking advantage of the identity theft/financial crimes phenomenon and working with the hacking element that has been attacking the financial industry. Counterfeit payment cards (credit/debit), checks and identification are all being used to electronically boost merchandise and walk right out the store with it. In the TJX data breach — which was the largest hack of financial data to date — a group was caught using cloned payment cards to buy $8 million worth gift cards from Walmart. In the more recent data breach at Heartland Payment Systems — which looks like it might surpass TJX in the amount of data stolen — the only arrests made thus far were a group using the stolen data to clone gift cards. Since gift cards are redeemed at retailers, this is yet another example of how the financial hackers and organized retail crime types are working together. To me, this is evidence that organized retail crime is becoming more sophisticated in their theft techniques, which will likely make this problem get even worse than it already is.

The three bills being introduced will force auction sites to cooperate with retailers and law enforcement, define organized criminal activity as a federal offense and establish stricter sentencing guidelines for criminals convicted of organized retail crime. Too frequently, under current laws, criminals involved in this activity are treated like petty thieves and get a slap on this wrist when they are caught. Last, but not least, it will hold auction sites more accountable for the sale of stolen merchandise if it could have been prevented.

Besides fencing, there is a lot of other fraud on auction sites that isn't necessarily tied in to fencing and victimizes auction customers/sellers, more personally. Legitimate e-commerce sellers are frequently ripped off with bogus financial instruments. Buyers are also defrauded in a wide variety of scams on these sites. Like the major retail types, who are behind this legislation, the more ordinary victims are often hung out to dry when they try to get any assistance from the auction sites. There is little doubt (my opinion) that auction sites need to clean up all the fraud that occurs on them. While they do provide value and a fun way to buy things, there have been too many innocent people victimized on them.

While this legislation primarily focuses on fencing, it's a start in the right direction. Perhaps other groups should join in and support this legislation, which if passed, will likely set some needed legal precedents. It will also make it a little harder for the criminally inclined to operate on auction sites.

Supporting this legislation makes a lot of sense for a lot of different reasons. These are not victimless crimes and the consequences are being felt by innocent consumers and businesses.

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