POP Conference 2005, Charlotte NC

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  • Conference Session Description: Examining an Emerging Internet Fraud Problem: Who Has Responsibility and What Should Be Done? The Raleigh Police Department is seeing an increase in the number of victims falling prey to the ‘work-at-home’ scam seeking repackaging/reshipping of items. Credit cards are used fraudulently to purchase goods sent to these re-packagers/re-shippers.  Raleigh P.D. has made many attempts to catch the offenders but as of yet the Raleigh Police Department has not been successful at finding these perpetrators or reducing the opportunities for future crime.  We would like to share what we know about the problem and seek any assistance in identifying effective responses to the complex crime of repackaging fraudulently purchased goods and reshipping these goods to international locations.
  • “ Fraud” definition: “Fraud generally involves deliberately deceiving the victim with the promise of goods, services, or other benefits that are nonexistent, unnecessary, never intended to be provided, or grossly misrepresented.” (p1 COPS Guide: Financial Crimes Against the Elderly)
  • Job advertising sources varied, but were usually online. Victims had no relationship with the offender. Offenders used fictitious names as well.
  • Overseas countries were Russia and Ukraine. Repeat victimization of identity theft/scam victim.
  • However, it is more likely that they were told to pay the postage themselves. In turn, they will be reimbursed in their paycheck
  • Usual merchants are Neiman-Marcus, Saks Fifth Avenue, etc.
  • Credit cards; shipper’ billing, etc.
  • Scanning: how we are defining the POP problem for further analysis Nature of the POP problem (problem identification, verification problem exists, how long it has existed) Types of problems involved: Fraud (false pretense) – “phishing,” Illegally acquiring the information to eventually hijack customer accounts, or gain information for the act of identity theft. Credit Card fraud – purchase products off of Internet Identify theft – use of job applicant’s personal info to set up shipping account, or open new credit card accounts for use above. Internet fraud – (Ebay)   Actually hijacking the customer accounts and posting fictitious auctions.
  • Job Scam (1) Willing participant desperate for work opportunity from home or looking to make an easy buck (2) “job application” includes personal information & direct deposit info (3) Opportunity for and speed of fraud facilitated by the Internet
  • COPS Guide: Financial Crimes Against the Elderly Fraud is dramatically underreported (p8) Facilitating Victimization: Consumer fraud victims have a participatory role that is critical to a successful transaction. V compliance can fall along a continuum, from completely uninvolved V (ID theft or credit card fraud), toward the middle is the V who makes a purchase or financial arrangement that is not well-informed or well-researched, to the repeat V. The following are key moments that put the victim at risk in the typical fraud transaction – they have clear relevance to points of intervention : (p14) V makes the initial contact or takes steps that lead to the initial contact, including receptivity to the pitch. V provides information about him- or herself that helps the offender to carry out the fraud V allows conversation of a business relationship to shift to one of trust & waives customary safeguards V believes offender’s scenario or pitch V writes a check, gives a credit card number or otherwise provides access to funds
  • For the purposes of this presentation, we broke out the Response Phase into 2 parts: Solving cases Preventing future opportunities Often times, the responses overlap – they help solve the case and teach victims/guardians, place managers
  • Odds of solving these cases (and reducing future crime opportunities) are stacked against local law enforcement. This problem raises so many police management and ethical issues for our profession.
  • POP Conference 2005, Charlotte NC

    1. 1. Examining an Emerging Internet Fraud Problem: Who Has Responsibility & What Should Be Done? Facilitator: Dr. Graeme R. Newman Kristen Rosselli, RPD Strategic Initiatives Mgr. Patrick Niemann, RPD Training Sergeant
    2. 2. Work-at-Home/ Repackaging Fraud Raleigh NC Police Work-in-Progress
    3. 3. Raleigh, NC USA
    4. 4. M.O. of the Crime <ul><li>Two Variations of the “Work at Home” scam: </li></ul><ul><ul><li>Re-Packaging Variant </li></ul></ul><ul><ul><li>Money Order Variant </li></ul></ul><ul><ul><li>(variants can also be combined) </li></ul></ul>
    5. 5. Commonalities to Both Variants <ul><li>All victims responded to a job listing which advertised “work at home” opportunities. </li></ul>
    6. 6. Job Ad Example
    7. 7. Commonalities to Both Variants <ul><li>All suspects were overseas. </li></ul><ul><li>At the request of the suspect, all victims provided detailed resumes. </li></ul>
    8. 8. Commonalities to Both Variants <ul><li>The suspect will “use” each victim for approximately two weeks. </li></ul>
    9. 9. Re-Packaging Variant <ul><li>Victim is advised that they will receive parcels from several areas within the USA. </li></ul><ul><li>The victim is then instructed to re-package or combine the parcels, and ship them to the suspect (overseas). </li></ul><ul><li>The victim is sometimes referred to a specific carrier’s (i.e. UPS) business shipping account for postage. </li></ul>
    10. 10. Re-Packaging Variant <ul><li>What’s really going on… </li></ul><ul><li>The suspect is purchasing high-value items online with stolen credit card numbers. </li></ul><ul><li>The orders are shipped to the victim, who re-packages them, and forwards them to the suspect. </li></ul>
    11. 11. Re-Packaging Variant <ul><li>There’s More… </li></ul><ul><li>Sometimes, when using “corporate shipping” accounts, the victim was unknowingly billing himself for the shipping. </li></ul>
    12. 13. Money Order Variant <ul><li>Victim is advised that they will receive money orders, from various sources within the USA. </li></ul><ul><li>The victim is then instructed to cash the money orders. They are allowed to keep a small amount for themselves (usually 5%), but must wire the remainder to the suspect. </li></ul>
    13. 14. Money Order Variant <ul><li>What’s really going on… </li></ul><ul><li>The suspect is posting fictitious items on online auctions. He instructs the “winner” of the auction to send the price of the item, via money order, to the re-shipper. </li></ul>
    14. 16. Additional Impact to the Victim <ul><li>Upset merchants, auction bidders, and law enforcement are contacting the re-shipper, demanding answers or restitution. </li></ul><ul><li>Since the re-shipper has provided a resume to the suspect, continuing identity fraud is a possibility. </li></ul>
    15. 17. International Aspects
    16. 18. International Aspects
    17. 19. There can be several distinct crimes… <ul><li>Fraud </li></ul><ul><li>Identity Theft </li></ul><ul><li>Credit Card Fraud </li></ul><ul><li>Computer Crimes? </li></ul>
    18. 20. RPD Statistics <ul><li>Several case reports were filed with RPD, which ultimately identified: </li></ul><ul><li>3 re-shippers in Raleigh </li></ul><ul><li>15 victims throughout the US who sent money orders or merchandise </li></ul><ul><li>Two countries where proceeds were being sent (Russia, Ukraine) </li></ul>
    19. 21. National Statistics <ul><li>No authoritative data yet on re-shipping scams in particular , however… </li></ul><ul><li>From 1/1/04 through 12/31/04, there were 12,703 work-at-home and business opportunity fraud complaints reported to the FTC’s Consumer Sentinel. </li></ul><ul><li>Source: FTC’s “National and State Trends in Fraud and Identity Theft” published 2/1/05. </li></ul>
    20. 22. Typical Investigation <ul><li>Out-of-town victims are called, and interviewed at length. </li></ul><ul><li>Raleigh victims / re-shippers are visited and interviewed. </li></ul><ul><li>Court Orders are obtained for IP addresses (email trace). </li></ul>
    21. 23. Typical Results <ul><li>Re-shippers were unusually naïve, and desperately hopeful. </li></ul><ul><li>All IP address traces ultimately ended overseas. </li></ul>
    22. 24. Prosecution Results <ul><li>State Prosecution declined on local re-shippers, and no jurisdiction on foreign suspects. </li></ul><ul><li>Crime / damages do not meet threshold for prosecution at US Attorney’s Office (NC Eastern District). Therefore, no FBI, USSS, etc. involvement or adaptation. </li></ul>
    23. 25. Are victims warned? <ul><li>Caveat on “jobspider.com” </li></ul>
    24. 26. Are Victims Warned? <ul><li>Caveat from IFCC </li></ul>
    25. 27. Scanning <ul><li>Emerging complex crime in Raleigh </li></ul><ul><li>Multiple victims/case </li></ul><ul><li>$7,000 - $20,000/case </li></ul><ul><li>~2 week window </li></ul><ul><li>Multiple jurisdictions/case </li></ul><ul><li>Low solvability factors </li></ul>
    26. 28. Analysis <ul><li>Analyzed crimes separately </li></ul><ul><li>Underlying cause: “Opportunity” </li></ul><ul><ul><ul><li>Vulnerable victims </li></ul></ul></ul><ul><ul><ul><li>Vulnerable networks </li></ul></ul></ul><ul><ul><ul><li>Motivated offenders </li></ul></ul></ul>
    27. 29. Analysis: Resources <ul><li>COPS Guides </li></ul><ul><ul><ul><li>Identity Theft </li></ul></ul></ul><ul><ul><ul><li>Check and Card Fraud </li></ul></ul></ul><ul><ul><ul><li>Financial Crimes Against the Elderly </li></ul></ul></ul><ul><ul><ul><li>Shifting & Sharing Responsibility for Public Safety Problems </li></ul></ul></ul><ul><li>POP Center website: popcenter.org </li></ul><ul><li>Police Practitioners & Researchers </li></ul>
    28. 30. Analysis Job Scam Victims/Targets Re-packager/Re-shippers Online Merchants Shipping Companies Credit Card Companies
    29. 31. Analysis Job Scam Places/Systems Internet E-job websites Newspaper Ads Email Services Online Merchant Websites Shipping Networks US/ Int’l Shipping Locations Banking Networks
    30. 32. Analysis Job Scam Offenders Scammers Repackaged Parcel Recipients
    31. 33. Analysis Job Scam Places/Systems Internet E-job websites Newspaper Ads Email Services Online merchant’s websites Banking Networks Shipping Networks & Locations Int’l Reshipping locations Offenders Scammers Repackaged Parcel Recipients Victims/Targets Re-packager/Re-shippers Online Merchants Shipping Co. Credit Card Co.
    32. 34. Analysis Identity Theft Victims/Targets Credit Card Theft Victim Re-shipper Online Merchants & Shipping Co. Credit Card Co. Places/Systems Internet Online merchant websites Shipping networks & locations Place CC was compromised Offenders Identity Thieves Online product purchasers
    33. 35. Analysis Internet Fraud Victims/Targets Ebay Bidder Ebay Re-shipper Places/Systems Internet Ebay Auction Sites Email Services Money Order Locations US & Int’l Shipping Networks & Locations Offender Ebay Auction Site Scouts Website Designer
    34. 36. Analysis: Job Scam <ul><li>High offender commitment </li></ul><ul><li>Financial gain </li></ul><ul><li>Organized crime </li></ul><ul><li>Predatory & consensual/ participatory V-O relationships </li></ul>
    35. 37. Analysis: Job Scam <ul><li>Victim Facilitation </li></ul><ul><li>Making initial contact </li></ul><ul><li>Providing personal info </li></ul><ul><li>Allowing shift to trust & waives customary safeguards </li></ul><ul><li>Believing offender’s pitch </li></ul><ul><li>Providing access to funds </li></ul>
    36. 38. Analysis <ul><li>How capable are they? </li></ul><ul><li>Who else can help solve the problem? </li></ul><ul><li>Who has ownership? </li></ul>
    37. 39. Analysis Guardians Family Media Email Providers ISP Law Enforcement Financial Institutions Corp Fraud Depts Credit Reporting Agencies FCC & FTC Shipping Companies Job Scam
    38. 40. Analysis Place/Systems Managers Email Providers ISPs Website Managers Newspaper Ad Depts Corp Fraud/ Security Depts. Package Delivery Services Package Receivers Mailbox Companies Job Scam
    39. 41. Analysis Handlers Law Enforcement Organized Crime Members Others Job Scam
    40. 42. Response <ul><li>Solving cases </li></ul><ul><li>Preventing future opportunities </li></ul>
    41. 43. Response: Solve Cases <ul><li>Exhausted all leads </li></ul><ul><li>DA declined to prosecute </li></ul><ul><li>Little to no solvability </li></ul><ul><li>Cases inactivated </li></ul><ul><li>Seeking other response ideas… </li></ul>
    42. 44. Response: Prevention <ul><li>Attempted to influence </li></ul><ul><ul><ul><li>Victims & Guardians </li></ul></ul></ul><ul><ul><ul><li>Place/System & Managers </li></ul></ul></ul><ul><ul><ul><li>Offenders & Handlers </li></ul></ul></ul><ul><li>Addressed motivation of “owner” </li></ul><ul><ul><ul><li>Unable, unwilling, gain more from ignoring, profit from crime </li></ul></ul></ul><ul><li>Requested prevention efforts </li></ul><ul><ul><ul><li>Voluntary – Coercive </li></ul></ul></ul>
    43. 45. Assessment <ul><li>Not effective at removing causes </li></ul><ul><li>No prosecution </li></ul><ul><li>Some business practice changes </li></ul><ul><li>Problem continues </li></ul><ul><li>Seeking suggestions… </li></ul>
    44. 46. Request for Feedback <ul><li>What other information should be collected? </li></ul><ul><li>Who is in the best suited to address problem? </li></ul><ul><li>Other response ideas? </li></ul><ul><li>What are other ways to measure success? </li></ul>
    45. 47. Shifting/Sharing Responsibility <ul><li>What level of “due diligence” is required for emerging crimes? </li></ul><ul><li>What are the public’s expectations of local police response? </li></ul><ul><li>How much local police resources should be used? </li></ul>
    46. 48. Contact Information <ul><li>Kristen Rosselli </li></ul><ul><ul><li>Raleigh Police Department </li></ul></ul><ul><ul><li>919-890-3865 </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul><ul><ul><li>Patrick Niemann </li></ul></ul><ul><ul><li>Raleigh Police Department </li></ul></ul><ul><ul><li>919-872-4144 </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul>

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