Computer Crime Research Center

Swindlers caught red-handed suspected in stealing 0,5 million dollars

Date: January 15, 2004
Source: Computer Crime Research Center
By: Maxim Serkov

Officers of Organized Crime Department, Odessa, Ukraine arrested four swindlers suspected in stealing about half million dollars from accounts of one of the most well-known bank in the world by using counterfeit plastic cards via ATMs. They were detained right in the moment when they were going to withdraw another 10 thousand USD, chief of Odessa Regional Organized Crime Department, Sergei Zgama informed “Segodnya” newspaper. He said that a criminal case was initiated according to the Article 190 of the Criminal Code of Ukraine “Swindle”. All four men are at present time under arrest. Officers have seized not only finished cards, but also blanks and equipment for counterfeit cards manufacture and plotting of stolen information from original plastic cards. This case may appear to be one of massive cases from the list of registered in sphere of swindle with plastic cards.

In general, thefts by using counterfeit payment means occur rather frequently, including Ukraine. We informed recently about money theft attempts from account of one of our newspaper employee: swindlers with help of fake card had intended to withdraw a definite sum of money from ATM placed in Poland. They failed only because there had been no requested sum of money on the account. “Segodnya” received a lot of responses from readers – it appeared that plenty of Ukrainians became real victims of other machination. We decided to continue this issue in details and to inform how thieves are really acting, how to protect savings, what to do when theft, for all that, had occurred.

Crime anatomy. Plastic cards counterfeit – main daily bread of wheeler-dealers

The market of plastic cards is developing in leaps and bounds. More and more people prefer this way of money saving and conducting financial operations. The boom has happened when so called salary projects of the banks, making the process of getting money allowances very handy, had been implemented by heads of a great number of absolutely different organizations – from tramway depots to state authorities. The level of “plastic” criminality grows along with increasing volumes of such operations.

Information from “Segodnya”

According to National Bank, Ukrainian plastic card holders committed operations to the sum of more than 6 billion UAH (1,1 billion USD) for the first quarter of the last year. And already in 3rd quarter – 9 billion UAH (1,67 billion USD). Average rates of growth are 20-22%. Users in overwhelming majority only withdraw money via ATMs. Only 5% fall on operations in trading network.

Such situation is conditioned by a number of factors. People do not particularly trust new technologies – especially when it concerns money. They prefer to withdraw cash at once and to keep money in less risky places. Though, some have learnt to appreciate advantages brought by plastic services. Significant sums are constantly turning over their accounts. In particular they become objects of such infringements of plastic thieves.

So, there are several ways of money theft. The most spread method is counterfeit. According to experts’ estimation about 40% of all illegal withdrawals fall on counterfeit payment orders. Cards manufacture is not so difficult. Turnover of so called “white plastic” is increasing year after year, as these or those technologies are being developed. Criminals use different material: electronic locks keys, passes, season tickets, club cards, etc. It is not a problem to get access to manufacture of such kind.

As to magnetization and embossing (marking plastic with embossed, prominent elements), one may, as it appears, absolutely easily purchase devices at radio marketplace in Kiev. It allows as well to emboss a card and to attach a magnetic streak and to plot corresponding information. The price of such equipment is about 100 USD. Materials expenditure for cards manufacture is not significant.

The second place is for thefts that became possible by reason of theft or loss of plastic cards – 35% of the “market”. Citizens often keep their cards together with pin codes – this situation significantly lightens the process of money withdrawal. This method is not so sophisticated and mostly gives way to counterfeit.

Another machination is more exotic. Unauthorized access to bank accounts is related, for example, to illegal breaking in bank information systems, though it is very complicated technically and it is related to certain risk, while thefts via the Internet are perspective but not so profitable. First of all it is conditioned by insignificant volumes of financial operations of such kind in Ukraine. Though this kind of criminal business may be efficient in future, like in Europe.

What are the losses?

According to chief of Computer Crime Department of the Security Service of Ukraine, Vitaly Khlevitski, it is rather difficult to estimate losses due to high latency of such crimes. Plastic cards holders do not always claim about money thefts, banks do not often inform law enforcement too, he said answering question of “Segodnya” reporter. That’s why it is complicated to speak unambiguously about the number of committed crimes and level of their disclosure.

The other barrier is absence of actual structure or mechanism that may provide such information collecting, data analysis, trends detection and statistical indexes estimation, Vitaly Khlevitski said.

Bank employees determine level of latency to be about 60% - amount of cases when clients take theft upon them and do not notify law enforcement. The reason is simple – clients do not believe in lost money return.

Bank Accounts Security Forum cites following data: annual volume of losses of Ukrainian clients from fraudulent operations with accounts, according to preliminary summary of the last year, is about 300 thousand USD, before last year – half less. There is such a trend: “plastic” criminality grows much faster than volumes of operations with legal plastic cards.

Law enforcement are at a loss

All victim card owners doubt that money will be given back. Many of them accuse banks: they say banks are powerless to prevent thefts. Bankers for their turn say that they do all their best in order to protect clients. But thefts, according to their firm conviction, are unavoidable – they occur not only in Ukraine, but also in other countries. And they point to law enforcement, that are to expose malefactors.

There are questions arising: do they search? are their searches efficient? One of victims, bypassing competent authorities, attempted to bring a suit against commercial bank employees of which, on his opinion, were partly guilty in 2,5 thousand losses from his account. However, the court refused further investigation. Another victim applied to regional police department – officers looked at him uncomprehending – there were the components of crime.

Vitaly Khlevitski says “plastic” direction of security services work appeared relatively recently. Department, where he is at the head, is gradually attempting to master methods of new kinds of crimes. One programmer was detained for he has been stealing for long time money from accounts of one bank in Kiev. The head of this bank had hired him for corresponding software development for ATMs and their services. Naturally he had a great opportunity to copy data from plastic cards of owners that use services of this financial institution. It is easy to manufacture fake plastic cards having the needed information. It is clear that malefactor hadn’t expected fiasco: bank sphere is quite a shady field for law enforcement. But it turned out differently: handcuffs were locked on his hands by officers of “Alpha” – a special department of the Secret Service of Ukraine.

The representatives of internal affairs authorities declare about their progress in this field far less. Though, as it became clear, units on fighting such crimes exist in all municipal or regional police departments. But the progress has not reached regions yet indeed. So in case of necessity you should apply directly for the Ministry of Internal Affairs or the Secret Service.

Will the money be returned?

Experience shows that in case of a criminal exposure, it is possible to return stolen funds. However it is possible only in cases of 50-150 UAH (9-25 USD) thefts. And only in cases when criminals are arrested and they have necessary for refunding damage means or property. The process of giving back may last for long time. There is nothing to boast about judging by how nicely law enforcement and bankers pass this topic by.

There is no 100% security

While thieves are finding ways to hack “plastic”, experts attempt to find new methods of theft non-admission. This situation was commented by the head of “E-business Center” of one of the banks Alexander Vityaz:”

- We cannot secure absolutely. 100% security – is to entirely stop the business. There will be no problems at all. That’s why banks are aimed at minimization of losses. According to the rules of payment systems, banks are to carry out the monitoring of operations with cards: client's operations and operations in bank trading network, in order to reveal suspicious. If such are detected, all...

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