In this interview, Ed Dickson from the fraud war blog reports on the nature of fraud and how what’s going on in the world can affect your computer, your bank account, and your life.
We discuss free e-gold accounts, Western Union and money transfer fraud, data breaches and information loss, and more.
Download the Fraudwar Blog Report (Part 2 Audio MP3) Here
The following is a Presentation of IdentityTheftSecrets.com
IdentityTheftSecrets: Welcome back to Identity Theft Secrets and I am here talking with Ed Dickson from the Fraud War Blog and just before we left we were talking about e-gold. We were going to have you talk with us a little bit about what e-gold is, why criminals use it, and how it works, basically.
Ed with the FraudWar Blog: Basically to set up an e-gold account, which is supposedly and I guess it is backed up by Gold, all you need is an email address and you can set up these accounts that are relatively anonymous. And e-gold will transfer the money. It is used in a lot of the bigger auctions scams where they will set up these accounts and move money, let’s say, into a phony escrow where you get ripped off because you think you are buying a high end item, like a car. But essentially it’s not much different from the Western Union and the money gram wire transfers. The bottom line is that once the money is moved from there, the victim has no recourse whatsoever, and of course, the transactions are pretty well anonymous and you are out of your money. I hope that explains it pretty…
IdentityTheftSecrets: How do they remain anonymous?
Ed with the FraudWar Blog: Well it’s real simple, if all you have to provide is an email address. Think about it; you can be anybody with an email address. Western Union – they have kind of clamped down with some of the wire transfers but as long as you keep it, say under a certain dollar amount – again, not much ID needs to be shown at certain places.
IdentityTheftSecrets: And how do I end up as a criminal then; I get money in my e-gold account, how do I get that money out of there? How do I actually spend that money?
Ed with the FraudWar Blog: That is where I haven’t actually been an e-gold customer. But that money can be used to buy goods or services. In the scams from what I have read and heard what they do is they move it into an escrow account, which is actually a phony escrow account. So, they set up a phony escrow company, the crooks get the money, and disappear. And of course, you never get your car or your other high dollar item. The wire transfer is pretty much the same thing, once you’ve wired the money and it has been picked up, and understand that Western Union will let you pick up, up to a certain dollar amount with just a code word. The money is gone, and again, the victim is out the money. And even if ID has to be shown, getting fake ID is not much of a problem in most major cities nowadays. And, that is another topic I have covered quite frequently on the blog.
IdentityTheftSecrets: So, how does that work?
Ed with the FraudWar Blog: With fake ID?
Ed with the FraudWar Blog: Pretty much they can counterfeit credit cards, IDs, or even counterfeiting Metro bus passes in some areas. They are using, you know, pretty straight forward technology and they are doing it out of garages. I had the opportunity of interviewing Suad Leija a few months ago, and she is actually the stepdaughter of one of the large Mexican crime families that counterfeits all of these documents all over the US and you really get an eye opening. She has done a series of videos on YouTube, and again, her name is spelled S U A D, last name L E I J A, and if you are interested in that; I mean, it is pretty interesting to watch those videos and I also did a piece on her. She has also been interviewed, by the way, by Hugh Downs and several other people from the mainstream press.
IdentityTheftSecrets: And in the interviews, I have read those interviews; by the way, very nice job with those; she talks a lot about how they use, and maybe if you could go into this a little bit, but how they use the fake identifications that they create in pursuit of all sorts of different kind of crimes, and not just actual identity theft but other kind of crimes so, they are actually using somebody else’s identity. So, would you kind of go into that a little bit?
Ed with the FraudWar Blog: Well with the illegal immigrants basically their main goal is to assimilate into society and what you are referring to is that they get themselves involved with; one of the things they counterfeit is utility bills. And the idea is to get enough feeder documents so you can go into a DMV and actually become that person. Now, what is interesting about illegal immigrants is once they get a good identity they are not going to want to wreck it so, they might establish all kinds of credit, you know, pay taxes and do everything else but they are not going to go south on you; south on the identity so to of speak and bring any attention to it. But, I mean, as we have all read and we’ve probably have ran into a few people; people are finding out that their identity is being used, by somebody else and that can mess; sometimes they are stuck with bad taxes, all kinds of fun stuff.
IdentityTheftSecrets: Right. Bad criminal record, I mean…
Ed with the FraudWar Blog: That is another one and that is not so much done by illegal immigrants but people are actually been arrested who are victims of identity theft and the criminals literally took over their identity and warrants; whatever the criminal did fooled the police. The criminal never shows up in court after getting out on bail and there is a warrant out for the real person’s arrest.
IdentityTheftSecrets: For not only the original crime but also for just missing court.
Ed with the FraudWar Blog: Right. Normally, you know if they don’t show up in court any judge is going to issue a bench warrant.
Ed with the FraudWar Blog: So it gets really sticky and just think about it, I mean, some of these people must go through pure hell.
IdentityTheftSecrets: At the hands of someone who has stolen and used their information.
Ed with the FraudWar Blog: Yeah, and gone out and committed all kinds of crimes.
IdentityTheftSecrets: Now, if someone reporting on fraud; oh sorry go ahead.
Ed with the FraudWar Blog: Oh that is alright; I was just saying that is really prevailing with bad checks because bad checks come back and companies file it with collection agencies and some of them are actually filed with DA’s offices and, you know, when they don’t show up for court again, warrants are issued.
IdentityTheftSecrets: So I write a bad check using your checking account information, I don’t pay the fees associated with that, the company turns me into the court system, and then the court system is after me even though I never had anything to do with that check in the first place?
Ed with the FraudWar Blog: Right and what I have seen is where they have DA restitution programs. Check fraud is an interesting thing, I mean, like we go back with the intent theory. You have to prove intent but a lot of DAs have programs where say I can bring in; understand that just writing a bad check is normally a civil matter. But if you use one of these DA programs and say, I turn over my bad paper to the DA program; they send out letters and you don’t respond to them, which with an identity theft victim that can happen pretty easily, then it escalates into a criminal matter because you refuse to respond to the collection request. That is unique to some of these DA restitution programs; that by the way are all over the country.
IdentityTheftSecrets: So then the DA, I mean, this happened to me one time actually with; and it is not quite the same thing but, I got into an accident where I felt, you know, I mean; I was hit from behind and I felt like, man I got hit from behind and I got the ticket? I never heard of that happening before and the officer even said I should take it to court after the other lady had left the scene and so it was a three point ticket, I was going to take it to court but the DA added on and I didn’t know DAs can do this, but the DA added on a four point ticket. So, instead of fighting a three point ticket I was now fight a seven point ticket in court. I decided it just wasn’t worth. I took the plea bargain for two points, but for somebody who has a criminal issue, I mean, a traffic accident is not the same thing as a criminal issue for check evasion or check fraud so, a district attorney can add those kinds of charges after the fact.
Ed with the FraudWar Blog: And a lot of the victims too; plea bargaining is the American way. I mean, the DA wants to plea bargain it and they go back and forth with the defense attorney and that is a whole other circus. But, going back to the identity theft victims too; in a lot of cases from what I have seen and read, these poor people are actually even arrested and put through the system using somebody else’s identity and then of course they never show up for court and then that is when the warrant starts getting issued.
IdentityTheftSecrets: Right. Well, what is, I mean, if somebody reporting on fraud; what is the most difficult thing you have read about that one person or group has done to another individual or group?
Ed with the FraudWar Blog: That would be hard to say Jonathan because every time I think I got it something new comes up. I would say what I am most concerned about is the amount of information with the data breaches out there and you translate that to the Carder forums and how cheaply that information is being sold; it just makes you wonder how much is out there and how organized it is. So, that to me is probably the greatest concern. But the reason I do the blog is because there are a lot of people that are getting scammed out there and to me people are what matters.
IdentityTheftSecrets: Right, right. So, not one individual but; I’m totally with you too on the level of information, I mean, I’ve got a theory of what is happening with all of this information that is being compromised that probably would go into a book at some point, but I mean it is amazing about how much if you; you know like we are talking, one billion records are out there and you know, I mean, let say that one tenth of those are real people. It’s just a lot of information about one person that means there is one hundred million people’s information that is just sitting out there available to crooks and scammers and thieves.
Ed with the FraudWar Blog: Even scarier, if you watch the Suad story, she flat out says that some of these groups are tied in with terrorists.
Ed with the FraudWar Blog: And, as a matter of fact, the Al Qaeda training fields train their, what I call minions, but train their disciples or whatever, to use credit card fraud as a way of funding their way through all their other various exploits.
IdentityTheftSecrets: Right. Have you read that translation online? There is a place where it is actually completely translated online; their training manual.
Ed with the FraudWar Blog: Right. I have read bits and pieces of it. I have never taken the time to read through the whole thing. Interestingly enough, I grew up in Pakistan so…
Ed with the FraudWar Blog: I know I have had some experience with that part of the world.
IdentityTheftSecrets: And, how would you say in general because people are people around the world and 99% of people are good people but; how would you say in general, just from your perspective, identity theft ties in with terrorism?
Ed with the FraudWar Blog: I don’t know I just see that; what I see is it’s becoming more and more viable. I would say that organized crime is behind it more and more all the time because it is so profitable. Again, enabled by some of the technology that has come out and the laws that don’t keep up with the technology and the internet. I mean, let face it; you can commit a crime across borders by clicking on a mouse nowadays.
Ed with the FraudWar Blog: To think that, you know, tights in to how it is growing. I think that identity theft isn’t just a problem here in the US; we already know it is a problem in Canada, Europe, but it is quickly becoming a world wide problem.
IdentityTheftSecrets: Right, well even; sorry go ahead.
Ed with the FraudWar Blog: No, you go ahead.
IdentityTheftSecrets: Oh no, I was just saying that I just saw recently, I mean, big, big loss in South Korea around a video game that like two hundred and thirty thousand people’s information was compromised straight out of a video game that they all signed up for and then South Africa has had big problems with identity theft too recently.
Ed with the FraudWar Blog: Right. And actually the one that I like to watch is India. Because India is an IT giant and I was just reading that one of their terrorist groups, the Tamils out of; which operate out of Sri Lanka and that has gone on for years, were actually using debit credit card fraud to fund it. They were, you know, all the information being skimmed was actually being done over in Great Britain.
IdentityTheftSecrets: Do you know how you spell the name of that group?
Ed with the FraudWar Blog: It is T A M I L.
Ed with the FraudWar Blog: And they are sometimes referred to as the Tamil Tigers and they have been involved with a Civil war in Sri Lanka, which used to be Ceylon for years. As a matter of fact, I have a contact and I can’t mentione which bank he is with who shuttles me information; he is with the security department for a major bank in India, major American bank that does business in India, and we’ve often corresponded back and watched how slowly but surely the scams are moving over there.
IdentityTheftSecrets: Because why? What is the reason behind it?
Ed with the FraudWar Blog: I was just; just because they are getting more and more involved in the technology. They have a tremendous amount with all the outsourcing of people’s information there that needs to be protected. One thing I will say for India though is; their government realizes that there is a tremendous uproar about the outsourcing and they seem to be actually very proactive in trying to do something about it.
IdentityTheftSecrets: What I was reading “In the World is Flat,” I don’t know if you have read that book or not but; it is a good one, definitely pick it up. But, one of the things that they talk about in there is you go to XYZ American company to have your taxes prepared, you give them all of your information, and all they do is scan it or, you know, they have a digital scan basically that they basically send these pages through, but once the pages go through or you fax your pages to them; they are actually being faxed to somebody in India. And that is who actually is preparing your taxes, it is somebody in India who turns around and sends the information back. Now, it is supposed to be all securely encoded and all of that before it is sent, but I would image that there are some of that that is not happening. Would you agree with that?
Ed with the FraudWar Blog: Oh, I agree with you 100% and you know that is the other thing that I write about sometimes is; the security industry is a multi billion dollar industry too and everybody is fixing everything but guess what? The crooks have generally figured out how to compromise it within six months and then the security people run out and come up with more expensive solutions on how to fix it, and even if you do have technologically secure protection; all it takes is one person on the inside who has access to compromise all of that information.
IdentityTheftSecrets: Right. So what is the solution in your mind to all this?
Ed with the FraudWar Blog: I think that we need to look more at protection, more of not laying out all that information that we lay out where it is so easy, you know, and a good example of that is Tom over at TrustOn who we talked about earlier, I mean he; we are seeing an identity theft product, you know, where people don’t have to go out there and compromise their information. Another example that I got involved with recently is a company called Cirrus, they are out of Redmond, Washington and anybody that has done a refund in a retail store knows that you now have to give out all your information which gets stored in a database; Cirrus is coming out with a new product that actually tracks the product rather than people’s information. Now, I have written a lot about that too because criminals do refunds at stores. I mean, that is how they get their cash, and I am just guessing that with identity theft a lot of that information that these retailers have been data mining is probably would not be accurate and might even be your information or my information.
IdentityTheftSecrets: So let take a step back; I am a criminal, I go in and, because this is a pretty common thing, I shoplift something out of a store and then I take it back in order to get the money for the thing that I returned. The store requires me to give information in order to get that refund so, instead of giving my information as the criminal; I give your information so that you are the one who returned the item that was originally stolen.
Ed with the FraudWar Blog: Yeah that is it absolutely. And the systems that they are using now, that data mine information, the whole idea behind it is once your identity is used too many times, they start denying you refunds. So, the crooks have to figure out a way to get around that. Is just like retailers, if you remember years ago they didn’t lock stuff up until it all started disappearing. Well, guess how they are stealing all that locked up information now, real simple; they are coming in with bad credit cards and bad checks and they are buying it. So it is really interesting if you figure out that the people using the bad credit cards and the back checks are already using other people’s information. It is just a step away from them using that information to refund the merchandise and turn it in, you know, what they really want is cash.
Ed with the FraudWar Blog: You know that is what; it is funny because it always boils back down to money.
Ed with the FraudWar Blog: No matter how sophisticated you get, as a matter of fact, I am sure you; did you follow the TJX scandal?
IdentityTheftSecrets: A little bit, not a lot.
Ed with the FraudWar Blog: Yeah, that one they are saying now; it keeps growing because they admit to more and more. Forty five million records compromised just in that, but one of the systems they hacked was their refund database.
IdentityTheftSecrets: Well, would you kind of start from the beginning with the TJX scandal, like what happened with it just so everybody because I think that a lot of people listening to this won’t know. What started the TJX issue, what caused it and all of that?
Ed with the FraudWar Blog: Well, allegedly nobody; that is the problem with the data breaches, the truth is that you get bits of information.
Ed with the FraudWar Blog: From what I can tell at this point is, they announced it in January and claimed that they discovered it in December; it has however now been traced that the hackers were hacking the information as far back as 2003 and what is being said is that hackers actually got into their system and were sifting the information out over that period of time.
IdentityTheftSecrets: What does TJX do?
Ed with the FraudWar Blog: TJX owns a bund of retail stores. Marshall’s, I don’t have a computer right in front of me but they own Marshall’s, there is a TJX store, they own a couple of chains in Canada. I mean, the breach literally effected people in the UK, Canada, and the United States. So, TJX is the parent company and I am sorry that I don’t know all…
IdentityTheftSecrets: No, that is okay. So, they hacked in; some criminals hacked into this and supposedly now over a period of four years or at least three years were sifting information out of the inside of that system. So, for three years this company was being hacked and as many as forty five million people’s information has been compromised.
Ed with the FraudWar Blog: Yeah and I believe that if you really dig into it, and I wish I had it in front of me right now; they are saying it only happened for chunks of time but you know Jonathan, who really knows.
Ed with the FraudWar Blog: They haven’t caught anybody, that is for sure, and if you look at all these data breaches it is rare that anybody is getting caught; which it even adds to how much of it is out there, how much doesn’t get caught.
IdentityTheftSecrets: What is also interesting is that it has been reported since, I mean, really the laws have only been in place that they have to report this stuff to us since 2005. There is a company called Axciom that collects and sells our information and I think that they since have changed; they kind of market themselves differently, but they really, I mean, they were hacked over a period of two years by an inside job. And you are probably familiar with this and nobody ever talks about Axciom, you know, and yet two years later when the laws were finally passed, ChoicePoint becomes a poster child for “if you loose information, we will punish you.”
Ed with the FraudWar Blog: You know the truth is companies have been buying and selling our information for marketing purposes for years.
Ed with the FraudWar Blog: And that is what has probably enabled the problem that we are seeing today, and of course, I’ll go back to be that nobody wants to stop making all the money that they are making off of it because we are talking millions of dollars. But at some point, I keep wondering when the bottom is going to fall out. I think that with TJX we are starting to see it because it is going to be a war, or I am predicting a war, between the retailers and the banks to see who is going to pay for all of this, and again, we are talking about the cost of providing identity theft insurance, issuing new cards, and all of the charge backs that they are going to come back when the phony cards are used.
IdentityTheftSecrets: Let’s talk for a minute, sorry go ahead. It is almost like?
Ed with the FraudWar Blog: It is like a vicious cycle of everybody tries to charge everybody else with the loss.
IdentityTheftSecrets: You know who is ultimately going to end up being charge with the loss?
Ed with the FraudWar Blog: Oh, I write about that all the time. It is you and me because one thing is for sure Jonathan, businesses don’t stay in business if they are not making money.
Ed with the FraudWar Blog: So any cost, whoever eats it, they are going to be forced to eventually pass it on to the consumer and that is why I kind of laugh when you see all these zero identity theft; zero exposure, you know, commercials from the banks for identity theft because we are paying for it.
IdentityTheftSecrets: Would you talk for a minute about identity theft insurance? We were touching on that real briefly before the call here and I think it is really interesting just to talk about because there are some; I should say this differently, there are few very good products out there and there is just a bunch of junk. And would you mind just touching on why, what makes an identity; because an individual needs to know what they need to do to protect themselves from fraud, and so, would you talk about maybe some of the challenges you see with some of the products out there and then also what an individual should look for in a product that they would be using.
Ed with the FraudWar Blog: Well, I mean, number one the only one…I’ve looked into a lot of them and after getting half way through I realized that they were junk. So, I am going to defer to you on some of the other ones we discussed before, but I ran into Tom Fragala over at TrustOn and Tom basically let you go and find out if there is a problem for free and then shows you very cheaply; understand most of the services I see what they want to suck you into is you pay $19.99 a month whether you ever become an identity theft victim or not, and then supposedly, if you do become a victim, they will take care of it all for you. Now, from what I have read; I question whether some are actually going to be able to do that for you effectively. But with Tom’s program what you do is you check out everything for free. When you become a victim, he has a computerized module that literally goes through every step of filing the police reports, notifying all the credit bureaus, putting a freeze on your credit if you need to, and you know, all the things that you need to do to follow up and it is real simple. I’m not a computer expert, by no means, and I tested the product when he was rolling it out and pretty much I can probably have my grandmother using it within a half an hour and I think you had some personal experience with him too, didn’t you?
IdentityTheftSecrets: Yeah, really sharp guy and I mean, the product is actually one of the few that I would recommend to people, you know. And, some of the things you just went through are the kinds of things that a program should do for people, you know, because there is a lot of junk out there.
Ed with the FraudWar Blog: So far as the other ones I’ll be interested in; maybe we’ll talk more in the future. You can educate me on some of the better ones because maybe I got jaded by seeing so many bad ones at first.
IdentityTheftSecrets: Sure. I guess kind of wrapping up here; how do you see getting this problem fixed – just as a whole?
Ed with the FraudWar Blog: I think that the more we can do to educate people that is certainly probably the most effective short term thing. Long term, we have to look at new ways of using information. And I think that some of the companies that we are talking about that have been data mining information, etcetera, etcetera, needs to look at ways of doing business and coming up with new ways of doing business where they are not letting people’s information out so much. And, you know, we are seeing a lot of good laws come out but we are also seeing the laws come up, we are seeing special interests water them down and to almost where they are not very effective once we get the watered down version. Are you familiar with the new Federal Legislation? That has been a big problem with that. So, you know, to sum it up, I mean; I don’t think that there is any one easy fix but that is what we should be working towards.
IdentityTheftSecrets: Yeah, I would agree with that. I mean; I just don’t know that legislation is going to fix it in definitely short term, you know? I think that in the long run we have to make our social security numbers less valuable and make that information less valuable. I just don’t see how that is going to become a solution before somebody forces the issue to have a solution.
Ed with the FraudWar Blog: No. Having been a person, you know, trying to catch everybody doing it; that is not going to be a solution either. There are just not enough people out there doing the catching to catch everybody who is doing it. So again, I think that we are all trying to do or educate people is probably the best way and it is going to have the greatest effect.
IdentityTheftSecrets: Yeah, definitely for the short term anyway. Well, I want to thank you for taking a few minutes with us today at Identity Theft Secrets, and again, your website if people want to get to it they go to http://fraudwar.blogspot.com. Is there anything you would like to say just in closing here?
Ed with the FraudWar Blog: No, I appreciate your time Jonathan and I look forward to maybe some further collaboration with you.
IdentityTheftSecrets: I would definitely welcome the opportunity of having you back. You are definitely very knowledgeable about this industry and doing good things to help people with it. So, I really appreciate it you taking the time today.
Ed with the FraudWar Blog: Thank you Jonathan.