June 2013 Issue

The 'Newsletter on Financial Fraud' from CustomerXPs is your monthly insight into the various new fraud types and methods used by fraudsters globally in the banking space.

This will help you stay abreast of all the latest happenings in the banking fraud space.

Prepaid debit cards: a weak link in bank security?


The recent loss of $45 million from bank ATMs in 27 countries by a gang of cyber criminals exposes an Achilles heel in the global financial industry: prepaid debit cards.

Cyber security experts and industry analysts say that it easier for hackers to withdraw large amounts of money before detection because pre-paid cards have fewer controls on them than on regular credit and debit cards issued by banks. Each prepaid card issued is like a blank slate: anonymous, new, and lacking any credit history or individual behavior pattern against which bankers and payment processors can measure activity to look for red flags.

They are also easier to hack. Raising a withdrawal limit on a prepaid card involves hacking into a system at a thirdparty payment processor, a company that is generally smaller than a bank and potentially subject to looser cyber security standards.

Modus Operandi

In a globally coordinated campaign, hackers broke into two unidentified payment processing companies that handled the prepaid debit cards for two Middle Eastern banks, U.S. prosecutors said on Thursday.

Once inside the computer networks, they increased the available balance and withdrawal limits on prepaid MasterCard debit cards . The criminal ring's operatives then fanned out around the world and used fraudulent prepaid cards to withdraw money from thousands of ATMs. The global scope and speed of the theft was unprecedented, cyber investigators said. Experts said the use of prepaid debit cards, instead of credit cards, was not accidental. Credit cards are attached to individuals whose spending habits over time give banks and credit card companies clear patterns they can use when trying to identify unusual or illicit activity.

According to Mercator Advisory Group, by 2013, the amount of money that was placed onto reloadable prepaid cards reached about $201.9 billion from $28.6 billion in 2009. That has raised concerns about the need for better security around prepaid cards, and the card processing companies that service them.

Source: Firstpost

Elder Fraud Epidemic: How Banks Are Failing Seniors


Elderly Americans form 12% of the population and 30% of the scam victims. The Consumer Financial Protection Bureau estimates the extent of elder fraud at $2.9 billion but the federal agency acknowledges that for every case that comes to the attention of law enforcement, 43 go unrecognized.

Elder fraud experts say - loudly and in many cases angrily - that financial institutions could be doing a lot more to prevent a substantial amount of elder fraud.

But, first, understand how abruptly it happens. A Washington State resident discovered her aged mom had, in the space of perhaps one month, been robbed of around $9,000, when a relative who monitored the elderly woman's account noticed that, suddenly, there were many ATM withdrawals where before there had been none. It was then they quickly realized that it was the caregiver.

Philadelphia lawyer Debra Speyer can top that. A client of hers had an account looted of several hundred thousand dollars. "My client had deposited an inheritance, and the bank employee had told her, 'only deal with me,'" said Speyer. That's what she did - until one day she discovered her funds were gone. Speyer analyzed the account activity and swiftly realized that the culprit had to be the bank employee.

Source: The Street

Ex-bank executive gets 2 years for fraud


Susan Emily Jones stole $800,000 from her employer over seven years. She gave about a quarter of that to local churches and charities, her lawyer said at her sentencing hearing Tuesday. Jones faced a maximum of 41 months in prison on a charge of wire fraud.

Jones, who pleaded guilty in January, also was ordered to pay restitution totaling $824,301, the amount she stole when she was a vice president at a local CitiBank office, U.S. District Judge Steven D. Merryday said.

Jones used her position as vice president and senior business director of Citi Travel Payment Services to take control of money transfers and expenses, court documents show.

Prosecutors said Jones donated about $200,000 to six churches and charities. The checks came from a CitiBank account and not that of Jones.

Brian McDougall, Idlewild's executive pastor, said he has never met Jones and that authorities have not contacted his church about returning the $12,500.

Jones also used CitiBank's accounts to buy tens of thousands of dollars worth of club seats for Tampa Bay Buccaneers home games, prosecutors said. Jones used the club seats for herself and gave the tickets primarily to her fellow CitiBank employees, court documents show.

Source: The Tampa Tribune

Southern Africa experiencing increased mobile, Internet banking fraud


Mobile and Internet bankingfraud is on the rise in Southern Africa (especially Zambia and South Africa) and is threatening to derail the progress that has so far been made to revolutionize banking services in the region.

Officials in both Zambia and South Africa are warning banks they should not compromise on security in light of the increased risks. A new report for banking services compiled by the Ombudsman for Banking Services in South Africa has revealed an increase of 8 percent in mobile fraud and 3 percent in Internet banking fraud cases in the country.

A number of local and international banks in Zambia have reported phishing attacks on their Internet banking systems, and in some cases they have been forced to temporarily close branches to protect customers' money.

The problem has further been compounded by the fact that very few banks in the region that provide Internet banking services are also able to offer security software to curb cybersecurity attacks.

Cybercrime in the region is said to have increased following the lowering of bandwidth and connectivity costs as mobile service providers and international cables compete for customers. Like many other countries in the Southern Africa region, in Zambia a 1GB Internet package now costs as low as US$23, down from as high as $130 just some three years ago.

Source: IDG News Service

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