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Subject: [ISN] Electronic Identity Fraud Issue 1
From: mea culpa <jericho () dimensional ! com>
Date: 1998-10-29 23:27:52
[Download RAW message or body]
[Moderator: New 'zine dealing with electronic identity fraud. Subscription
info is in the 'Introduction'. I will probably not forward future copies
to ISN.]
From: Edentifica@aol.com
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E L E C T R O N I C
I D E N T I T Y
F R A U D
Issue 1
Oct 25, 1998
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from e-DENTIFICATION LLC
voice 717 859 2430
fax 717 627 5454
email EDENTIFICA@AOL.COM
INTRODUCTION
==============
Welcome to the introductory issue of this newsletter.
If you are involved in .....electronic commerce.....electronic data
interchange.....credit management.....security.....banking.....internet
business.....you and your associates are invited to subscribe.
Just send an email to: ZRZZ31A@PRODIGY.COM.
WHY THIS NEWSLETTER
======================
The motivation for this newsletter is to share information about the growing
problem of identity fraud. I hope that by providing a forum for sharing
news, analysis and the early identification of emerging problems and trends
in identity fraud, we can all become better equipped to fight this sneaky and
costly crime.
Unfortunately, in many areas identity fraud is not acknowledged, is not
treated as a crime and is rarely prosecuted.
WHO AM I ?
==========
My background as an attorney led me into the problems of identity fraud
which in turn led me to start a company called NBIB Inc. This company
developed a system that has been used by 17,000 banks to screen new
accounts to detect identity fraud.
The growth of electronic commerce creates a new situation in which
business is being conducted between remote parties. These parties have
never met and therefore, substantial losses could be incurred by parties
dealing with fraudsters using fake identities.
This problem generated a solution that is addressed by my new company
e-DENTIFICATION LLC, which developed a system for companies
engaged in electronic commerce to confirm the identity of their remote
and unseen customers.
DEFINE OUR FIELD OF INTEREST
=============================
Let’s whittle the crime scene down to our field of interest. We are not
interested in crime in general, not in crime against persons, nor in crime
against property where there was a face to face confrontation....such as
robbery, burglary and embezzlement.
We are concerned with the new field of electronic fraud where the message
is conveyed electronically and where the opposing sides are remote and
communicate only through electronic means.
ELECTRONIC FRAUD
===================
Recognizing that a digital identity is the key to the net worth of the
individual, it has become an attractive target for criminal activity. I would
offer the following quotation from Senator John Kerry to suggest the
capabilities of the criminals involved in identity fraud:
"Today's transnational criminal cartels use high-speed modems and
encrypted faxes. They buy jet airplanes three and four at a time and even
have stealth-like submersibles in their armadas. They hire the finest minds
to devise encryption systems and provide the complex accounting procedures any
multi-billion-dollar empire requires. They engage the ablest lawyers to defend
them, the craftiest spin doctors to spiff their images in the media, the most
persistent--and generous--lobbyists to influence legislative decisions. They
retain retired intelligence officers from the world's best secret services to
consult with them on security. Highly educated and well-trained scientists
ensure quality control in the production of narcotics...."
quoted from Senator John Kerry in The New War, 1997, Simon & Schuster
PROSECUTING WHITE COLLAR CRIME
==================================
When I was a practicing attorney, I had a senior prosecutor in one of
America's largest cities tell me that, as a matter of policy, they did not
prosecute white collar crime. To look to government for the solutions to
this problem is to neglect the possibility of the best solutions. Self-help
within the industry and among the individuals most affected is likely to
yield
better results.
However, in order to help ourselves we must become better informed about
the problem. This is the mission I have established for myself and this
newsletter is one means of accomplishing that mission.
IDENTITY FRAUD
===============
In each issue, I will try to identify at least one aspect of identity fraud
for all
of us to think about. The first aspect I would like all of us to consider is
how
we treat digital identities verses real or biologic identities (the one our
mother's used in recognizing us).
There is a recent television commercial that clearly illustrates the current
status of digital identities verses biologic identities. In this commercial
famous people are recognized with their celebrity status until they try to
cash a check. Then their biologic identity is denied and only the digital
identity of a credit cared will suffice.
While somewhat humorous, this commercial accurately portrays the
situation in the world today. There is an almost irrebuttable presumption in
favor of digital identities over biologic ones. The reason for this is the
convenience of processing billions of transactions using digital identities
over biologic ones, transcends the risks of fraud.
DIFFICULT TO DETECT
====================
However, the risks of fraud are increasing. It is impossible to alter a
biologic identity and simple to alter a digital one. Further, it is very
difficult
to detect an altered digital identity. In fact, if the legitimate and altered
digital identities are placed side by side it is impossible to tell which is
which
without additional information. One set of ones and zeros (which comprise
the digital identity) look just like another.
The criminals who practice identity fraud recognize this problem and alter
digital identities by the hundreds of thousands. In one sense this problem
was created when our digital identities assumed an existence separate from
our biologic identities. The solution to the problem of favoring the digital
identity over the biologic one can be effectively addressed by marrying our
digital identities with our biologic identities. This will be a continuing
thread
in this newsletter.
RECAP
======
I will work to keep this newsletter brief and breezy and publish it more
often
rather than creating a tome that comes out less often and intimidates my
readers by its length. Other features I will include in the future will be
synopsis of news items and I will try to offer reviews of current and
pertinent literature that sheds light on the problem of Electronic Identity
Fraud.
I welcome your suggestions.
John F. Ellingson, Madison, WI - Principal
e-DENTIFICATION, LLC
voice 717 859 2430
fax 717 627 5454
personal email address: JohnE37179 @ aol.com
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IDENTITY THEFT TO BE FEDERAL CRIME
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New legislation would make it a federal crime to assume someone's
identity to commit financial fraud. Legislation has passed Congress and
was sent to President Clinton.
The crime of Identity theft is defined as the unauthorized use of a
person's name, address, birth date, Social Security number and mother's
maiden name to fraudulently obtain credit cards, loans, and open bank
accounts. It does not cover electronic commerce fraud, but it is a start.
Clinton will sign according to Sen. Patrick Leahy, D-Vt. who sponsored
the bill. Victims of identity theft would be able to obtain restitution. The
bill
requires the FTC to establish a centralized complaints service.
And equipment used in the crime would be forfeited. 40,000 people annually
are estimated to have their identities stolen.
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FINANCIAL FRAUD REPORT CENTER
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A neighborhood watch program on cyberfraud was started by a state
securities regulators' group. Program was announced by the North
American Securities Administrators Assn. The address for reporting
suspected Internet financial fraud is www.cyberfraud(at)nasaa.org.
Complaints will be referred to the appropriate regulators and FTC.
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-o-
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