Examining an Emerging Internet Fraud Problem: Responsibility & Solutions

1. Examining an Emerging Internet Fraud Problem: Who Has Responsibility & What Should Be Done?Facilitator: Dr. Graeme R. NewmanKristen Rosselli, RPD Strategic Initiatives Mgr.Patrick Niemann, RPD Training Sergeant POP Conference 2005, Charlotte NC

2. Work-at-Home/Repackaging FraudRaleigh NC PoliceWork-in-Progress POP Conference 2005, Charlotte NC

3. Raleigh, NC USA POP Conference 2005, Charlotte NC

4. M.O. of the Crime • Two Variations of the “Work at Home” scam: • Re-Packaging Variant • Money Order Variant (variants can also be combined) POP Conference 2005, Charlotte NC

5. Commonalities to Both Variants • All victims responded to a job listing which advertised “work at home” opportunities. POP Conference 2005, Charlotte NC

6. Job Ad Example POP Conference 2005, Charlotte NC

7. Commonalities to Both Variants • All suspects were overseas. • At the request of the suspect, all victims provided detailed resumes. POP Conference 2005, Charlotte NC

8. Commonalities to Both Variants • The suspect will “use” each victim for approximately two weeks. POP Conference 2005, Charlotte NC

9. Re-Packaging Variant • Victim is advised that they will receive parcels from several areas within the USA. • The victim is then instructed to re-package or combine the parcels, and ship them to the suspect (overseas). • The victim is sometimes referred to a specific carrier’s (i.e. UPS) business shipping account for postage. POP Conference 2005, Charlotte NC

10. Re-Packaging Variant What’s really going on… • The suspect is purchasing high-value items online with stolen credit card numbers. • The orders are shipped to the victim, who re-packages them, and forwards them to the suspect. POP Conference 2005, Charlotte NC

11. Re-Packaging Variant There’s More… • Sometimes, when using “corporate shipping” accounts, the victim was unknowingly billing himself for the shipping. POP Conference 2005, Charlotte NC

12. POP Conference 2005, Charlotte NC

13. Money Order Variant • Victim is advised that they will receive money orders, from various sources within the USA. • 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. POP Conference 2005, Charlotte NC

14. Money Order Variant What’s really going on… • 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. POP Conference 2005, Charlotte NC

15. POP Conference 2005, Charlotte NC

16. Additional Impact to the Victim • Upset merchants, auction bidders, and law enforcement are contacting the re-shipper, demanding answers or restitution. • Since the re-shipper has provided a resume to the suspect, continuing identity fraud is a possibility. POP Conference 2005, Charlotte NC

17. International Aspects POP Conference 2005, Charlotte NC

18. International Aspects POP Conference 2005, Charlotte NC

19. There can be several distinct crimes… • Fraud • Identity Theft • Credit Card Fraud • Computer Crimes? POP Conference 2005, Charlotte NC

20. RPD Statistics Several case reports were filed with RPD, which ultimately identified: • 3 re-shippers in Raleigh • 15 victims throughout the US who sent money orders or merchandise • Two countries where proceeds were being sent (Russia, Ukraine) POP Conference 2005, Charlotte NC

21. National Statistics No authoritative data yet on re-shipping scams in particular, however… • 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. Source: FTC’s “National and State Trends in Fraud and Identity Theft” published 2/1/05. POP Conference 2005, Charlotte NC

22. Typical Investigation • Out-of-town victims are called, and interviewed at length. • Raleigh victims / re-shippers are visited and interviewed. • Court Orders are obtained for IP addresses (email trace). POP Conference 2005, Charlotte NC

23. Typical Results • Re-shippers were unusually naïve, and desperately hopeful. • All IP address traces ultimately ended overseas. POP Conference 2005, Charlotte NC

24. Prosecution Results • State Prosecution declined on local re-shippers, and no jurisdiction on foreign suspects. • Crime / damages do not meet threshold for prosecution at US Attorney’s Office (NC Eastern District). Therefore, no FBI, USSS, etc. involvement or adaptation. POP Conference 2005, Charlotte NC

25. Are victims warned? • Caveat on “jobspider.com” POP Conference 2005, Charlotte NC

26. Are Victims Warned? • Caveat from IFCC POP Conference 2005, Charlotte NC

27. Scanning • Emerging complex crime in Raleigh • Multiple victims/case • $7,000 - $20,000/case • ~2 week window • Multiple jurisdictions/case • Low solvability factors POP Conference 2005, Charlotte NC

28. Analysis • Analyzed crimes separately • Underlying cause: “Opportunity” • Vulnerable victims • Vulnerable networks • Motivated offenders POP Conference 2005, Charlotte NC

29. Analysis:Resources • COPS Guides • Identity Theft • Check and Card Fraud • Financial Crimes Against the Elderly • Shifting & Sharing Responsibility for Public Safety Problems • POP Center website: popcenter.org • Police Practitioners & Researchers POP Conference 2005, Charlotte NC

30. Analysis Job Scam Victims/Targets Re-packager/Re-shippers Online Merchants Shipping Companies Credit Card Companies POP Conference 2005, Charlotte NC

31. Analysis Places/Systems Internet E-job websites Newspaper Ads Email Services Online Merchant Websites Shipping Networks US/ Int’l Shipping Locations Banking Networks Job Scam POP Conference 2005, Charlotte NC

32. Analysis Offenders Scammers Repackaged Parcel Recipients Job Scam POP Conference 2005, Charlotte NC

33. Analysis 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 Job Scam Victims/Targets Re-packager/Re-shippers Online Merchants Shipping Co. Credit Card Co. POP Conference 2005, Charlotte NC

34. Analysis Offenders Identity Thieves Online product purchasers Places/Systems Internet Online merchant websites Shipping networks & locations Place CC was compromised Identity Theft Victims/Targets Credit Card Theft Victim Re-shipper Online Merchants & Shipping Co. Credit Card Co. POP Conference 2005, Charlotte NC

35. Analysis Places/Systems Internet Ebay Auction Sites Email Services Money Order Locations US & Int’l Shipping Networks & Locations Offender Ebay Auction Site Scouts Website Designer Internet Fraud Victims/Targets Ebay Bidder Ebay Re-shipper POP Conference 2005, Charlotte NC

36. Analysis: Job Scam • High offender commitment • Financial gain • Organized crime • Predatory & consensual/ participatory V-O relationships POP Conference 2005, Charlotte NC

37. Analysis: Job Scam Victim Facilitation • Making initial contact • Providing personal info • Allowing shift to trust & waives customary safeguards • Believing offender’s pitch • Providing access to funds POP Conference 2005, Charlotte NC

38. Analysis • How capable are they? • Who else can help solve the problem? • Who has ownership? POP Conference 2005, Charlotte NC

39. Job Scam Analysis Guardians Family Media Email Providers ISP Law Enforcement Financial Institutions Corp Fraud Depts Credit Reporting Agencies FCC & FTC Shipping Companies POP Conference 2005, Charlotte NC

40. Job Scam Analysis Place/Systems Managers Email Providers ISPs Website Managers Newspaper Ad Depts Corp Fraud/ Security Depts. Package Delivery Services Package Receivers Mailbox Companies POP Conference 2005, Charlotte NC

41. Job Scam Analysis Handlers Law Enforcement Organized Crime Members Others POP Conference 2005, Charlotte NC

42. Response • Solving cases • Preventing future opportunities POP Conference 2005, Charlotte NC

43. Response: Solve Cases • Exhausted all leads • DA declined to prosecute • Little to no solvability • Cases inactivated • Seeking other response ideas… POP Conference 2005, Charlotte NC

44. Response: Prevention • Attempted to influence • Victims & Guardians • Place/System & Managers • Offenders & Handlers • Addressed motivation of “owner” • Unable, unwilling, gain more from ignoring, profit from crime • Requested prevention efforts • Voluntary – Coercive POP Conference 2005, Charlotte NC

45. Assessment • Not effective at removing causes • No prosecution • Some business practice changes • Problem continues • Seeking suggestions… POP Conference 2005, Charlotte NC

46. Request for Feedback • What other information should be collected? • Who is in the best suited to address problem? • Other response ideas? • What are other ways to measure success? POP Conference 2005, Charlotte NC

47. Shifting/Sharing Responsibility • What level of “due diligence” is required for emerging crimes? • What are the public’s expectations of local police response? • How much local police resources should be used? POP Conference 2005, Charlotte NC

48. Contact Information Kristen Rosselli Raleigh Police Department 919-890-3865 kristen.rosselli@ci.raleigh.nc.us Patrick Niemann Raleigh Police Department 919-872-4144 patrick.niemann@ci.raleigh.nc.us POP Conference 2005, Charlotte NC