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Cyber, check fraud hits home

By Chris Roberts Stop Cybercrime

Steve Head won't ship anything to Lagos, Nigeria.

The owner of the Joplin-based Internet business A Family Moment (www.family-moment.com), which sells and ships Christian material all over the world, said he has been burned too many times by credit-card fraud from orders through that country. After one or two bogus orders a week for several weeks, he finally gave up.

"It's one of the most terrible countries for Internet fraud," Head said. "Somehow they get your credit-card numbers and then use them to order $5,000 in Bibles or something because they can turn around and sell them for more. It's crazy."

While such problems are a nightmare for businesses, they are equally frustrating for area law enforcers. Credit-card fraud, check fraud and identity theft have become huge headaches for local and national agencies.

The practice has become so widespread that the FBI and the Department of Justice formed the Internet Fraud Complaint Center. In 2001, the latest year for which numbers are available, the center referred 48,000 alleged instances of fraud to local authorities.

In a single operation in 2001, the FBI, the Justice Department and the National White Collar Crime Center filed charges against 90 people and companies as part of a nationwide series of investigations into Internet fraud, code-named Operation Cyber Loss. The schemes represented 56,000 victims who reported losses of more than $117 million.

Internet issues

"Those crimes have always been around. You just didn't hear about them very much," said Rick Gellar, a detective with the Newton County Sheriff's Department who handles financial crimes.

"We've always had bank fraud and identity theft. Those crimes have just come to the forefront lately because of computers. There are so many ways of doing it that it's become a popular crime in just the last couple of years."

Both Newton and Jasper counties have their own fraud officers.

"It's a question of jurisdiction," Gellar said. "It makes it very hard to prosecute someone when they haven't committed a crime in your jurisdiction, and before that they are a pain to investigate."

The Internet is what causes most of the headaches, Gellar said. The credit-card number of a person living in Newton County, for instance, might be stolen from a site on the Internet, then used in Virginia to purchase something from Texas.

Identity theft is the same. Gellar said criminals will rifle through trash to get billing statements that contain credit-card numbers. Sometimes, he said, the numbers will be sold on the black market, either locally or through other countries such as Russia and China. Those numbers might be held onto for as long as a year before being used, which makes finding the thief extremely hard, he said.

And then, even if a suspect is caught, Gellar said most people are not willing to make the trip to another state for a court case that could end in a sentence of probation and a $1,000 fine.

"Not only that, but with financial crimes you have to have a prosecuting attorney who understands finances and the ways to track such things," Gellar said. "It's very hard to present a case like that in court. It's boring as hell, and you're bound to put a jury to sleep, but it's something that affects all of our immediate, out-of-pocket expense."

Check theft on rise

Another crime that is having a local impact is check theft, Gellar said. People steal checks out of mailboxes, then use their own names and addresses to create new checks with computer software. A common scheme is to take one of the newly created checks, which have authentic routing numbers, make it out for $1,000, deposit half into the account and cash the other half.

The thief walks away with $500, then goes to another bank in the chain, and withdraws the remaining $500 while cashing and depositing another check.

"VersaCheck (the software) is a curse," said Randy Scott, another computer fraud detective with the Newton County Sheriff's Department. "It's an evil, evil software. It's the worst thing ever invented. Criminals have been using it to run rampant because they can create their own checks.

"It causes a big mess and a lot of time to get straightened out. You could write 200 checks in a day if you knew how to do it, and no one would know until the check came back insufficient funds."

The time element makes solving these crimes hard, Scott said. It can take a check as long as 45 to 60 days to be processed or go through all of the channels it needs to go through before ending up on a detective's desk. Tracing the check back to the person who wrote it can often be as simple as looking at videotapes from the store where the check was written, but Scott said most stores keep tapes for only 30 days before reusing them.

Even worse, he said, is that most of those tapes are made to be used three or four times, but many stores in the area will reuse a tape 30 times or more.

"Some are going to digital for archive purposes, and some convenience stores are keeping their tapes longer, which helps because if you have video of the person who wrote the bad check, they are easier to track," Scott said. "The best way to protect against it is to make sure you have as much ID as possible. Otherwise it gets frustrating trying to find the person two or three months after they've committed the crime."

Many stores in the area are stepping up their protection procedures. Scott and Gellar said asking for photo identification will deter many criminals, and a thumbprint on a check also helps. They said some businesses reject the idea of pressing for positive identification, fearing such demands would lose customers.

Consumer vigilance

Shoppers also can help themselves, the detectives said.

"Try not to be so trusting of people," Gellar said. "Make sure you're using a secure, legitimate Web site, and do your homework when you purchase something online. And if you notice that your checks are missing or anything unusual with your account, report it as soon as possible.

"And never throw away any statements. Shred them. Credit cards are the hardest to protect against, but a lot of credit cards have zero percent liability now. Most of the time, though, identity theft ends up coming right out of the victim's pocket."

That's the main complaint Head has. He said he felt as if he couldn't get anyone to do anything about the credit-fraud problems he was dealing with. He said it wasn't until he had called congressmen, the state attorney general and every detective in between that he finally understood that these kinds of crimes are nearly impossible to solve.

"I called everybody, and basically the problem is that many other governments won't extradite, prosecute or even follow up with a fraud offender," Head said. "There is literally nothing you can do in that instance. The merchant ends up eating the order. When someone does burn you, the vendor is the one who loses the money and the merchandise."

He said the only thing he can do to protect himself is to be as cautious as possible.

"If anything looks fishy at all, we'll investigate," he said.

Source: www.joplinglobe.com

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