Fraud in the News

A strange case of credit card fraud

According to an Oct. 27 Consumer Affairs article by Jennifer Abel, chip-based credit cards might be more secure than magnetic-strip cards, but determined thieves could still find ways to commit fraud. (See 'Replay' lets fraudsters disguise fake credit card charges as legitimate chip-card transactions.)

"[Chip-based] cards also tend to require a personal identification number (PIN) at point of sale," says Abel. "These features do not make it impossible for hackers to steal money from accounts, but they are supposed to make thieves' lives more difficult by making it harder for them to actually use any account numbers they manage to steal."

Yet thieves are finding ways around this new system. According to the article, a strange case of credit card fraud out of Brazil has American banks and credit-card companies arguing over who's responsible for eating the cost.

As first reported by security blogger Brian Krebs (a keynote speaker at the 26th Annual ACFE Global Fraud Conference, June 14-19, 2015, in Baltimore, FraudConference.com), at least three unnamed U.S. financial institutions have "reported receiving tens of thousands of dollars in fraudulent credit and debit card transactions coming from Brazil and hitting card accounts stolen in recent retail heists." According to Krebs, as quoted in the article, the unauthorized charges were submitted through Visa and MasterCard's networks as chip-enabled transactions, even though the banks haven't even begun sending customers chip-enabled cards.

However, the question still remains: Who pays for these fraudulent transactions?

Stolen identities lead to stolen tax refunds

According to a Nov. 18 press release from the FBI and U.S. Attorney's Office, 17 individuals were arrested for their involvement in a stolen identity tax fraud scheme that utilized students' financial services accounts. (See Seventeen Charged Today in Connection with Stolen Identity Tax Refund Fraud Scheme Involving Student Financial Services Accounts.)

According to the release, the investigation uncovered a tax refund fraud scheme that accessed more than 1,000 student accounts at Miami Dade College, victimized 644 and resulted in an aggregate intended loss amount of $1.9 million. Twenty-one were charged, and four remain at large.

As alleged in the indictments, the defendants used the students' stolen identities so they or their co-conspirators could submit fraudulent tax returns to the IRS.

"Students attend college to give themselves a better chance for a successful future," says Kelly R. Jackson, special agent in charge, IRS Criminal Investigation, in the release. "These students, however, are accused of federal crimes that could land them in prison and tarnish their records forever."

Read more about identity theft tax refund fraud in the 2014 Fraud Magazine feature articles from March/April and May/June.