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    Frauds, Scams and Financial Euphoria: Jack Lang

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    tejaskamble45
    Frauds, scams, and financial euphoria come in many forms. Some common types include dishonesty through false accounting or insider abuse, credit card fraud through stolen numbers, and system weaknesses exploited by hack attacks or TV decoder piracy. Unrealistic schemes like Ponzi schemes or lotteries prey on greed through unrealistic promises of profits. Inside trading and market manipulation can inflate stock prices through misleading information. Countermeasures include risk assessment, separation of financial duties, audits, and following the money trail.

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    Frauds, Scams and Financial Euphoria: Jack Lang

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    tejaskamble45
    181 views27 pages
    Frauds, scams, and financial euphoria come in many forms. Some common types include dishonesty through false accounting or insider abuse, credit card fraud through stolen numbers, and system weaknesses exploited by hack attacks or TV decoder piracy. Unrealistic schemes like Ponzi schemes or lotteries prey on greed through unrealistic promises of profits. Inside trading and market manipulation can inflate stock prices through misleading information. Countermeasures include risk assessment, separation of financial duties, audits, and following the money trail.

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    Frauds, scams, and financial euphoria come in many forms. Some common types include dishonesty through false accounting or insider abuse, credit card fraud through stolen numbers, and system weaknesses exploited by hack attacks or TV decoder piracy. Unrealistic schemes like Ponzi schemes or lotteries prey on greed through unrealistic promises of profits. Inside trading and market manipulation can inflate stock prices through misleading information. Countermeasures include risk assessment, separation of financial duties, audits, and following the money trail.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    181 views27 pages

    Frauds, Scams and Financial Euphoria: Jack Lang

    Uploaded by

    tejaskamble45
    Frauds, scams, and financial euphoria come in many forms. Some common types include dishonesty through false accounting or insider abuse, credit card fraud through stolen numbers, and system weaknesses exploited by hack attacks or TV decoder piracy. Unrealistic schemes like Ponzi schemes or lotteries prey on greed through unrealistic promises of profits. Inside trading and market manipulation can inflate stock prices through misleading information. Countermeasures include risk assessment, separation of financial duties, audits, and following the money trail.

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 27

    Frauds, Scams and Financial Euphoria

    Jack Lang ***Health Warning*** DO NOT TRY THIS AT HOME You will meet strange new people and change your life.not for the better Its easy to steal. Its much harder to enjoy the proceeds

    Frauds and Scams

    Straightforward dishonesty
    False accounting Insider abuse False goods False customer claims Credit cards etc: Attacks and counter measures Identity theft Long firm Con tricks Telco fraud TV decoders Hack attack: blackmail DoS attacks Ponzi schemes Lotteries Financial Euphoria Insider trading: Guinness, and others Boiler room schemes Money laundering: layering Enron, false customer numbers, churn Follow the money

    System weaknesses

    Unreal Maths

    Inside trading and market manipulation


    Institutional fraud

    Countermeasures

    This list is not exhaustive!


    Searching For Evil http://www.lightbluetouchpaper.org

    Dishonesty

    Most likely attack


    Insider with authorised access False accounting
    Spoof invoices Spoof purchases Spoof bank orders etc Poor control: Leeson etc

    Countermeasures: Cleanliness:
    Double entry book-keeping; asset register; purchasing system Separation of front and back-office functions 2 signatures for critical functions (e.g. cheques)

    Good control systems and audit


    Locks & keys: password control Vet staff & have good staff relations Risk assessment for critical jobs Corporate culture

    Unusual behaviour patterns


    Unsocial hours, expensive tastes

    Credit Cards

    Overall cost of fraud


    Spain 0.01% UK 0.2% USA 1.0% BUT for certain sites, customer not present 40%

    Motivation who gets the reward?


    Huge hype Evil Hackers Employment for security types No case of fraud resulting from online or mail interception! Getting sense from mail is hard Real problem: crooked end systems

    Many ways to collect or generate valid card numbers


    Shoulder surfing video camera Garage security cameras External hacking end systems more for show than practicality

    Dishonest merchants

    Fake goods
    Medicines Fashion goods Tickets Jewelry

    Non-existent goods Lock-ins


    Service agreements, supplies, mortgages

    Dishonest customers

    False customer claims and repudiation


    I did not order these goods You did not ship me the goods I ordered Countermeasures: Audit
    Secure audit trails

    Stolen credit cards


    Countermeasures: Check card before shipping
    e.g. $1 transaction end to end

    Check ship address is card address

    Credit Cards

    Originally fraud risk borne by banks Introduction of mail order and telephone (and web) order (MOTO) risk for transactions with the cardholder not present passed to merchant. MOTO have lower floor limits, and in delivery only to cardholder address
    Not possible to check addresses for e-delivery, or overseas or services like Worldpay) 40% fraud for some sites Paypal fraud

    Traditional frauds:
    Stolen cards Pre-issue Identity theft

    Credit Cards

    Evolution of forgery
    Attack Simple copy Alter embossing Emboss mag strip # Make up strip Skimming Countermeasure Hologram Check mag strip TDC CVV, CVC Intrusion detection

    Free Lunch

    False Identity

    Legend:
    e.g. Giles Stanley Murchison Date of Birth -> Birth certificate ->Passport Passport + Utility Bill -> Bank Account Bank Account -> Credit Card
    -> NHS record, Employment benefit Email address (e.g Hotmail, NetIdentity) Telephone entry

    Long Firm Fraud

    Stolen identity
    Credit card + pin Bank account + Utility Bill (fake) Online trail

    Phishing
    Please enter your bank/card details.... Fake banks

    Mule Recruitment

    Mule recruitment Receive money into bank account; remit by non-repudiable route, e.g Western Union Proportion of spam devoted to recruitment shows that this is a significant bottleneck Aegis, Lux Capital, Sydney Car Centre, etc, etc mixture of real firms and invented ones Only the vigilantes are taking these down impersonated are clueless and/or unmotivated Long-lived sites usually indexed by Google

    419 Frauds Nigerian letters

    http://www.419eater.com/

    Con tricks

    Setup
    Select the mark Establish credibility

    Hook and Bait


    Small steps Greed and desire

    Sting
    Special limited time offer Things are not what they seem

    Shut-out
    Exit route

    Overpaid cheques

    You sell some goods on Ebay etc Or are told you have won a prize/lottery You are sent a cheque for too much You send a refund The original cheque bounces...bank claims back the money

    System weaknesses
    TV decoders Blocking Fake cards Hack attacks: blackmail DoS attacks Industrial Espionage
    Over rated!

    System weaknesses
    TV decoders Blocking Fake cards Hack attacks: blackmail DoS attacks Industrial Espionage
    Over rated!

    Telco Frauds

    Internal (examples):
    Illicit provisioning Illicit routing Suppression of billing data False credits to customer accounts Changing class of service to make a prepaid phone look like a post paid and avoid decrementation.

    External:
    Subscription fraud including id theft or lie Commmission fraud T'ing in or clip on (connecting a handset toi someone else's line) Direct Inward System Access (eg hacking through a PBX to get an onward line Cloning (now possible in GSM and very dangerous in a roaming situation Redirection Using the phone for a false identity Export scam

    Billing issues: BT have over 30,000 products!


    You are probably paying the wrong amount for your phone call

    Unreal Maths

    Ponzi schemes
    Named after Carl Ponzi, who collected $9.8 million from 10,550 people ( including of the Boston Police Force ) and then paid out $7.8 million in just 8 months in 1920 Boston by offering profits of 50% every 45 days.

    Much older Pay early investors from later capital Pyramid selling (Multi-Level Marketing) MM Albania

    More Maths

    Lotteries
    Tax on the poor and the ignorant How Casanova made his money Not all promoters are honest!

    Financial Euphoria
    Tulipmania (1637) South Sea Bubble (1720) Railways (1849) Radio and Aeroplanes (1920) Dot.Com J.K. Galbraith

    Inside trading and market manipulation

    Insider trading: Guinness, and others


    Market illiquid for small stocks or large orders Upstairs market What is a fair market? Anonymity and disclosure:
    Pre-trade Post-trade

    Chinese walls (and whispers) Money laundering: Layering Getting it into and out of the banking system Bureau de Change & offshore banks Disguise as legitimate business

    Boiler room schemes

    Fraud?
    Cambs firm slated over share hike
    BAD PRESS has hit Cambridgeshire varicose veins firm DioMed. The company, which is listed on the U.S. Nasdaq exchange, has become a target for the New York Post. The paper claims the company, originally a spin-out from Generics Group at Harston, is enjoying an unwarranted hike in its share price following the efforts of a stock promoter who has a large holding stashed away in the Cayman Islands. "DioMed is exactly the sort of stock that should send any normal person fleeing the room at the mere mention of its name: suspect auditor (Andersen in the U.S.), offshore accounts, weird product, teeny-weeny revenues, board members with back stories -- this stock's got it all, the complete package," the New York Post says. DioMed's share price has risen more than 200 per cent to $7 this year, the greatest gain of any listed stock on Wall Street in this period. CEN 27th Mar 2002

    Institutional & Governmental fraud

    False assurances
    Enron BP Golden Share Murdoch

    Bad statistics
    Unemployment, hospital waiting lists Telco/cable customer numbers, churn Web-site clicks, adverts

    Euphoria
    3G Telco licences Privatisations

    Countermeasures

    Caution
    If something is too good to be true, it probably is! RISK ASSESSMENT

    Cleanliness
    2-person working/separation of function Conventional double-entry bookkeeping Audit Culture

    Follow the money


    Hard to make it disappear

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