Is Office Max the Point of Compromise in the Debit Card Theft Case

CNet is reporting that the point of compromise in the debit card case affecting Bank of America, Washington Mutual and Wells Fargo is Walmart and possibly Office Max. I hate to admit this, but last week, I received a letter from one of these banking institutions suggesting I might be a fraud victim. When I went on-line to check my account, I discovered on a certain day there were numerous unexplained transactions.

To make it more interesting, it was from a old card number that I had since long replaced. The magnetic stripe on the card in question had stopped working properly and then was cracked by a sales clerk trying to get it to work.

When speaking to the fraud department at my bank, they confirmed that the transactions were magnetically "swiped." This would lead me to deduct that my card must have been cloned.

A day, or so later I read the article written by David Lazarus of the San Francisco Chronicle saying a major office supply retailer was the point of compromise. I then realized that I might very well be one of the victims of this AND Office Max is where I frequently buy office supplies.

Please note that Wells Fargo's possible involvement isn't being reported by CNet, but was reported by the San Francisco Chronicle:

"Wells Fargo reiterated only that the bank protects customers "if we discover they are at risk for unauthorized transactions." However, multiple Wells Fargo customers told me they've received new debit cards from the bank via FedEx."

The article from the San Francisco Chronicle stated that Visa and Mastercard (who issue cards via numerous banks) as saying they warned banks last month of a breach at a retailer.

Since most retailers accept Visa and Mastercard, which are issued by a multitude of banks, in theory numerous banks could be compromised. Retailers don't discriminate as to which bank the cards were issued at. Here is the story from CNet:

Web of intrigue widens in debit-card theft case

The article also quotes the FBI as saying this case is related to one at the Golden 1 Credit Union last November, where debit cards were compromised by a skimming device at a Sacramento merchant.

Golden 1 cancels 1,300 cards when area hit by fraud

Again, I find it odd that if the point of compromise was in fact a merchant in Sacramento, that only Golden 1 cards were compromised.

Either certain cards are more friendly for cloning (counterfeiting) purposes, or there is more to this than meets the eye.

In this case and possibly the one now, there is a lot of speculation that the breach was a result of an inside job. Organized fraud gangs are known to solicit and recruit people on the inside of organizations to steal information.

So far as the Sam's club angle, I'm not sure how this might tie in. As in most of these cases, it seems as little information is released as possible.

One thing in common is that all the breaking news seems to be coming out of Northern California, which is where my card was compromised.

No one is sure why the retailer's identity is being kept a secret, but some openly suspect it's to minimize liability from California's strict disclosure laws. Here is a previous post, I did on proactive legislation in California regarding matters like this:

Terminating Identity Theft in California

For anyone, who has been violated by this, here is a link from the Privacy Rights Clearinghouse, explaining the laws and what your rights are:

California Identity Theft Laws

If suspicions are true (that the secrecy is to skirt the intention of the law), then perhaps Bank of America, who started the flurry of reports is the most honorable one on the block. After all, they took the initial steps to protect their customers AND since then it seems a lot of evidence has been uncovered that they weren't the only one's compromised.

Keeping things quiet sometimes aids law enforcement's efforts to apprehend the "bad guys," but at this point there seems to be a lot of "law enforcement and banking industry sources" making comments on this case.

Let me specify that this is all mere speculation on my part and to say otherwise wouldn't be fair. I can't even be sure my case is part of this, but when I compare it to the breaking news, the similarities are amazing.

I guess it just goes to show, we are all at risk of becoming a victim of Fraud, Phishing and Financial Misdeeds AND I plan to follow this story closely, if out of nothing more than a personal interest.

For the article from the San Francisco Chronicle, click on the title of this post.

Will Cyber-Crime Lead to Economic Disaster

One of the greatest problems we face today is technology outpacing legislation (laws) to protect consumers. There can be no doubt that the Global Economy has spawned a Global Crime Wave, inspired in part by technologies used by businesses in the quest for profit.

For the first time in ten years, the Federal Trade Commission will host hearings this fall to take a look at this.

"Federal Trade Commission Chairman Deborah Platt Majoras today announced that the agency will host hearings this fall to examine the next generation of consumer issues to emerge in the high-tech global marketplace. Speaking to the Anti-Spyware Coalition meeting sponsored by the Center for Democracy and Technology in Washington, DC, Majoras said the hearings would bring together experts from business, government, the technology sector, consumer advocates, academics, and law enforcement officials to explore the ways in which technology development and convergence and the continued globalization of commerce impact consumer protection issues."

For the full press release by the FTC:

FTC to Host Global Marketplace Hearings

Federal Trade Commission Chairman Deborah Platt Majoras made this announcement to the Anti-Spyware Coalition. In their own words, here is their primary goal:

"The Anti-Spyware Coalition (ASC) is a group dedicated to building a consensus about definitions and best practices in the debate surrounding spyware and other potentially unwanted technologies."

A lot of groups, such as the Anti-Spyware Coalition are taking a stance on this problem. This is probably a response to the rapidly multiplying number of victims in the world today. In fact, the FTC itself says there are 9 million victims in the United States every year and if this is a world wide problem, I would hate to estimate the impact on a global basis.

Spyware is often confused with adware and to some, closely related to malware. I found another term recently (scumware), which is a good description of any software installed without the consumer's consent to market products, or steal their personal and financial information.

The problem is that there seems to be a fine line between legitimate business use and outright criminal applications of these technologies.

No wonder, we are facing a world wide identity theft crisis, where phishing no longer refers to a recreational activity.

I could go on and on about other potential problems, such as Terrorists getting in on the cyber-crime bandwagon, but the answer is clear. These issues need to be addressed and the longer we wait to address them could cause economic problems.

If the problem continues, it will continue to wear down on consumer confidence. The confidence of the consumer is a key economic indicator and shouldn't be taken lightly.

A lot of this links in this post are courtesy of Wikipedia. You can go to their page by clicking on the title of this post.

Adobe Latest Name Being Used in Phishing Attacks

Phishers love names we trust. Adobe is their latest target. Here is an alert from the people at Websense:

"Websense® Security Labs™ has received reports of a new phishing attack, using the brand name of Adobe Systems Incorporated. Users receive a spoofed email that provides a link to the phishing website, which is designed to mimic the Adobe online store. Users are given the option to buy and download Adobe products at substantially discounted rates. The site has links to awards hosted locally, which supposedly prove its veracity. When checking out, the user is prompted for credit card information."

"This phishing site is hosted in China and was up at the time of this alert."

For the alert from Websense, which contains a screenshot of the spoofed Adobe site, go to: Adobe.

Bank of America Debit Card Breach Grows to 200,000 and BofA Isn't Alone

The Bank of America debit card breach seems to be growing. Estimates are now that 200,000 customers have been affected AND it goes further than just Bank of America. There is evidence that Washington Mutual and Wells Fargo customers have been compromised, also.

Although, the banks aren't commenting, David Lazarus of the San Francisco Chronicle writes:

"But well-placed sources within the banking and credit card industries now tell me that the company in question is a leading retailer in the office-supply business."

Allegedly, the retailer in question knew of the breach last month.

There is also speculation that California's disclosure laws might have been violated by the retailer:

"It's unclear at this point whether the retailer violated state law by not directly notifying customers of the breach, instead allowing customers to be ambiguously alerted by their banks."

"State Sen. Jackie Speier, D-Hillsborough, a leading privacy advocate in Sacramento, said the spirit, if not the letter, of the law appears to have been violated."

For the full story by David Lazarus:

Security breach fallout reaches 200,000 debit card holders

For anyone, who has been violated by this, here is a link from the Privacy Rights Clearinghouse, explaining the laws and what your rights are:

California Identity Theft Laws

A fellow blogger (travis) left a comment on my post, Boston Globe Hands Out 202,000 Credit Card Numbers about a federal bill modeled after California's proactive legislation:

"Since the S.1789 bill is in the Judiciary Committee, it doesn't look like it will get much attention from those guys for a while. Here's the bill summary. There have been no hearings yet."

These laws are designed to protect all of us. Hopefully, the federal bill will move a little quicker and California's laws will be enforced to the letter of the law.

I highly recommend letting your opinion be known by contacting your elected representatives.

Phishing for a Lonely Heart

Romance Scams are not new on the internet. In the past, they have become a variation of Advance fee fraud (419) activity. The typical ploy was to establish e-mail/IM contact with a victim and get them to send money.

Now, it seems, the stakes are getting higher. Valentines Day could bring on a surge of phishing attacks designed to install malware (malicious software) on computer systems. The end-result of many of these attacks is personal and financial information being stolen and used to commit identity theft .

Here is a warning from Michael Carr of Purdue University, courtesy of TMCNet:

Electronic Valentine cards promising sweet nothings may instead infect loved ones' computers with a nasty surprise from a cyber scam artist, according to a Purdue University computer security expert.

"An e-mail or instant message from a 'secret admirer' on Valentine's Day may be specifically designed to pique your curiosity," says Michael Carr, Purdue's chief information security officer. "It's human nature and exactly what the bad guy is counting on."

According to the article, and Mr. Carr, here are items to be wary of:

- Not clicking on links or attachments unless they are part of an expected e-mail or instant message from a reliable, known source.

- Protecting your computer with current anti-virus software and manufacturer-recommended system patches.

- Checking the authenticity of a questionable message by contacting the sender via telephone or another messaging technique.

Sometimes dangerous e-mails can even arrive having been forwarded by or appearing to have been forwarded by people known by the recipient. Carr says even these messages also need to be evaluated and confirmed by a phone call to the sender.

"If you continue to have doubts about the e-mail or instant message, just delete the message," Carr says. "It is not worth the risk of being a victim."

"Information Technology at Purdue, also known as ITaP, provides free- of-charge computer security advice, including how to identify spam and phishing scams, on the Web at http://www.purdue.edu/SecurePurdue.

Here is the full story by TMCNet:

Expert: Electronic Valentine Cards Present Cyber Security Risk

Here is a previous post, I did on Romance Scams:

Criminal Activity on Dating Sites

A lot of these scammers lurk on dating sites and there is a Yahoo Group, Romance Scam 419 Yahoo Group (US) that is (in my opinion) the best resource out to learn how to avoid being a victim, or go to if you have become one. The members of this group support victims and actively go about scamming the scammers.

Here is what they do, in their own words:

"Welcome to the group Romancescams. Please feel free to tell us your story whether it is your own personal story or that of someone you know. This group provides a safe haven for all, free of criticism and judgment. Our goal is to educate by getting the word out to as many people as possible. Check out our photo, link, database, and file pages when you get the opportunity."

I highly recommend you find the opportunity to visit them and educate yourself. The group and it's members truly give a lot of themselves to help others, which is a noble cause. They also get quite a bit of revenge on the immoral people, who take advantage of other's feelings.

NCL Releases the Top Ten Internet Scams of 2005

The National Consumers League has released their 2005 Fraud Trends: Consumers Being Hounded by Internet and Telemarketing Scams.

The "Top Ten" internet scams were:

Auction items never delivered or misrepresented, the average loss was $1,155 and this category accounted for 42 percent of all the complaints.

General merchandise never delivered or misrepresented, the average loss was $2,258 and this category accounted for 30 percent of the complaints.

Nigerian money offers. False promises of riches if consumers pay to transfer money to their bank accounts, the average loss was $6,937 and this category accounted for 8 percent of the complaints.

Fake checks sent for goods or services and victim is told to wire back money, the average loss was $4,361 and this category accounted for 6 percent of the complaints.

Lotteries/lottery clubs. Requests for payment to claim lottery winnings or get help to win, often foreign lotteries the average loss was $2,919 and this accounted for 4 percent of the complaints.

Phishing, fraudulent e-mails asking for personal information, the average loss was $612 and this accounted for 2 percent of the complaints.

Advance-fee loans, loans promised with upfront fee, the average loss was $1,426 and this accounted for 1 percent of the complaints.

Internet Access Services, cost of internet access and other services misrepresented or never provided, the average loss was $1262 and this accounted for 1 percent of the complaints.

Information/adult services. Cost and terms of services not disclosed or misrepresented, the average loss was $504 and this accounted for 1 percent of the complaints.

Work-at-Home Plans. Kits sold on false promises of big profits from working at home, the average loss was $1,785 and this accounted for 1 percent of the complaints.

Although, these statistics are based on complaints made to the National Consumer League, they doubled over the past year (scary).

Wire transfers through non-banking institutions, such as Western Union and MoneyGram were the favorite venue for the fraudsters to have their money sent to them.

Here is an interesting statistic from the survey about eBay. I'm starting to think they deserve an award for ignoring the massive problems fraud has created for their customers:

* In the fall of 2003, online giant eBay removed the link from its Web site to fraud.org. As a result, the number of auction complaints reported to NCL’s fraud center dropped to 1/6 its previous level. Based on statistics prior to eBay’s action, NCL estimates that there would have been 30,720 auction complaints in 2005, representing 71 percent of complaints.

If you are interested in more information regarding eBay, put in keyword "eBay" in the search box at the top of the page.

The National Consumer's League and it's sister site National Fraud Information Center provide a lot of great information on how to avoid being a fraud victim. There are also other relevant (social awareness) resources on the National Consumer League's site. I highly recommend both of them.

You can go directly to the site for the National Consumer League by clicking on the title of this post.

Sales Tax Fraud

I was reading an article about an undercover investigation done by a consumer reporter on Sales Tax Fraud. Then it occurred to me, I see this all the time; especially at small independent retailers and restaurants.

If you don't receive a register receipt (not the one from the debit/credit card machine), the business you are patronizing is likely "skimming" the proceeds and under reporting the amount they receive.

These proceeds (which are in addition to the cost of what you are buying) go right into their pockets.

This occurs when nothing is rung (entered) into the register and the cash is put in the drawer. Another sure fire sign of "Sales Tax Fraud" is the employee using a calculator to figure out the total.

Here is the story:

"It can happen every time you buy something, and it's costing our state a staggering amount of money.

KIRO 7 Consumer Investigator Wayne Havrelly went undercover to expose a problem that's hurting all of us.

There's a secret underground economy operating in our state, and you're the one paying for it.

If you bought something today with cash, there's a good chance the tax you paid didn't go where it's supposed to. The tax bandits made sure of that.

Registers ring millions of times a day in Washington state, but our consumer investigation has revealed the money and tax we pay isn't always recorded."

To read about the entire investigation:

Sales Tax Fraud Could Cost State Millions

This is a local story in Washington State. If Washington is losing millions to this, I wonder how much we are losing nationwide?

I keep reading how local governments are running out of money all over the country. This mean that (we), who are honest end up paying more for essential government services.

If you spot this you should report it to your local State authorities. In the long run, you could reduce your taxes and help your community get the money it deserves.

Trust me, these businesses are using the services I mention and they are doing it for free, plus a profit.

I tried to find information on how to report this sort of fraud in all fifty states and there are a lot of sites, but none that where you can do it nationwide. I would recommend doing a search for keyword "Department of Revenue" if you see somethng you would like to report.

Of course, my favorite resource for reporting tax scams is Quatloos. Here is a form they have to report scams:

Quatloos! Fraud Report Form

Consumer Investigator Wayne Havrelly inspired me to reflect on this AND I see it happening all the time.

The Dirty Dozen Tax Scams

Tax Season is here and along with it many different types of fraud. In almost all instances, the people responsible are stealing from the government, but there are also those out there recruiting fresh victims daily to become unknowing accomplices to their crimes.

The slogan the IRS uses, which is one I subscribe to myself is "If it's too good to be true, it isn't."

Here is some advice from the experts at the IRS on the different types of scams they are seeing:

The Dirty Dozen

The IRS urges people to avoid these common schemes:

Trust Misuse.

Unscrupulous promoters for years have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits, and the IRS is actively examining these arrangements. More than two dozen injunctions have been obtained against promoters since 2001, and numerous promoters and their clients have been prosecuted. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.

Frivolous Arguments.

Promoters have been known to make the following outlandish claims: that the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; that wages are not income; that filing a return and paying taxes are merely voluntary; and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don’t believe these or other similar claims. Such arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Return Preparer Fraud.

Dishonest return preparers can cause many headaches for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Taxpayers should choose carefully when hiring a tax preparer. As the saying goes, if it sounds too good to be true, it probably is. No matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others, which are pending in court.

Credit Counseling Agencies.

Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment agreements or charge high fees, monthly service charges or mandatory “contributions” that may add to debt. The IRS Tax Exempt and Government Entities Division has made auditing credit counseling organizations a priority because some of these tax-exempt organizations, which are intended to provide education to low-income customers with debt problems, are charging debtors large fees, while providing little or no counseling.

"Claim of Right" Doctrine.

In this scheme, a taxpayer files a return and attempts to take a deduction equal to the entire amount of his or her wages. The promoter advises the taxpayer to label the deduction as “a necessary expense for the production of income” or “compensation for personal services actually rendered.” This so-called deduction is based on a misinterpretation of the Internal Revenue Code and has no basis in law.

“No Gain” Deduction.

Similar to “Claim of Right,” filers attempt to eliminate their entire adjusted gross income (AGI) by deducting it on Schedule A. The filer lists his or her AGI under the Schedule A section labeled “Other Miscellaneous Deductions” and attaches a statement to the return, referring to court documents and including the words “No Gain Realized.”

Corporation Sole.

Since September 2004, the Department of Justice has obtained six injunctions against promoters of this scheme and filed complaints against 11 others. Participants apply for incorporation under the pretext of being a “bishop” or “overseer” of a one-person, phony religious organization or society with the idea that this entitles the individual to exemption from federal income taxes as a nonprofit, religious organization. When used as intended, Corporation Sole statutes enable religious leaders to separate themselves legally from the control and ownership of church assets. But the rules have been twisted at seminars where taxpayers are charged fees of $1,000 or more and incorrectly told that Corporation Sole laws provide a “legal” way to escape paying federal income taxes, child support and other personal debts.

Identity Theft.

It pays to be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes. In one case, fraudsters sent bank customers fictitious correspondence and IRS forms in an attempt to trick them into disclosing their personal financial data. In another, abusive tax preparers used clients’ Social Security numbers and other information to file false tax returns without the clients’ knowledge. Sometimes scammers pose as the IRS itself. Last year the IRS shut down a scheme in which perpetrators used e-mail to announce to unsuspecting taxpayers that they were “under audit” and could set matters right by divulging sensitive financial information on an official-looking Web site. Taxpayers should note the IRS does not use e-mail to contact them about issues related to their accounts. If taxpayers have any doubt whether a contact from the IRS is authentic, they can call 1-800-829-1040 to confirm it.

Abuse of Charitable Organizations and Deductions.

The IRS has observed an increase in the use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur, for example, when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund but maintains control over the assets or income, thereby obtaining a tax deduction without transferring a commensurate benefit to charity. A “contribution” of a historic facade easement to a tax-exempt conservation organization is another example. In many cases, local historic preservation laws already prohibit alteration of the home’s facade, making the contributed easement superfluous. Even if the facade could be altered, the deduction claimed for the easement contribution may far exceed the easement’s impact on the value of the property.

Offshore Transactions.

Despite a crackdown on the practice by the IRS and state tax agencies, individuals continue to try to avoid U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance to do so. The IRS, along with the tax agencies of U.S. states and possessions, continues to aggressively pursue taxpayers and promoters involved in such abusive transactions.

Zero Return.

Promoters instruct taxpayers to enter all zeros on their federal income tax filings. In a twist on this scheme, filers enter zero income, report their withholding and then write “nunc pro tunc”–– Latin for “now for then”––on the return.

Employment Tax Evasion.

The IRS has seen a number of illegal schemes that instruct employers not to withhold federal income tax or other employment taxes from wages paid to their employees. Such advice is based on an incorrect interpretation of Section 861 and other parts of the tax law and has been refuted in court. Recent cases have resulted in criminal convictions, and the courts have issued injunctions against more than a dozen persons ordering them to stop promoting the scheme. Employer participants can also be held responsible for back payments of employment taxes, plus penalties and interest. It is worth noting that employees who have nothing withheld from their wages are still responsible for payment of their personal taxes.

Here is how you can report suspected activity:

Where Do You Report Suspected Tax Fraud Activity?
If you suspect or know of a company or person who is not complying with the tax laws, you can report their activity by phone, mail or your local IRS walk-in office.

Tax Shelter Hotline
The IRS Office of Tax Shelter Analysis serves as a clearinghouse for information about potentially improper tax shelter activity. You can submit information by mail, telephone, fax, or e-mail.

Referral Form for Reporting Abusive Tax Promotions and/or Promoters
(PDF 182K)The form helps document the information necessary to report an abusive tax avoidance scheme. The form can be mailed or faxed to the IRS.

Report Abusive CPAs, Attorneys or Enrolled Agents
Special e-mail address to report actions by unscrupulous tax professionals to the IRS Office of Professional Responsibility.

There aren't the only scams out there, if you are interested in learning more, go to:

Tax Fraud Alerts

No one likes paying taxes, but they are necessary to fund our way of life. When tax fraud is committed, the long term effect is that the honest taxpayer ends up paying more to cover for the government revenue lost to fraud.

That's not fair to the honest majority!

Perhaps educating ourselves and reporting suspected fraudulent activity would decrease the amount of taxes we pay in the future? After all, most politicians (especially at election time) don't like raising taxes.

Many of the social programs administered by the government are facing a lot of financial strain and I sometimes wonder how much of this is due to fraud?

Here is a site, Quatloos that covers of variety of scams, but has a lot of information on tax fraud.

What are the Security Implications of Pay Per Mail

Here is an interesting thought, Pay Per Mail. Yahoo and AOL will now offer a service (where for a fee) businesses can ensure their marketing e-mails bypass Spam filters.

Spam e-mail is often the delivery device of malware (malicious software), which is used for fraudulent activity on the internet. Experts agree that this activity is now being done by highly organized criminal enterprises. Many of these enterprises are probably capable of paying the fee, or using some sort of deception to have their Spam sent.

eBay accounts are now routinely taken over and used as vehicles for fraud. Will some of these Pay Per Mail accounts be taken over, also?

Here is one of the stories from the AP, courtesy of the San Francisco Chronicle:

Yahoo, AOL Plan Fee for Bypassing Filters

It's too early to speculate what the potential for abuse is. BUT I wonder how Yahoo and AOL will verify that the customers agreed to receive the mail (as they state) and that the businesses are legitimate?

Daily, we see major corporations and financial institutions being spoofed on the internet. Add in some Spam and people become victims of phishing, which leads to identities and financial information being stolen. If criminals are able to use this new service to their advantage, who will suffer from this?

The Spamhaus Project already has evidence the ISPs profit from Spam. Here is a recent article they did on this:

Should ISPs Be Profiting From Knowingly Hosting Spam Gangs?

This concept is probably too new to say anything for certain, but at first look, it bothers this writer.

The Spamhaus Project is a leader in the detection of Spam and other cyber-nasties, I like to refer to as scumware. If you would like a more technical perspective, I highly recommend their website, which can be viewed by clicking on the title of this post.

Back to Work Programs a Fraud Heaven for Scammers

We've all heard of Welfare Reform. Here are some examples of how it isn't saving the working public (who pay taxes) much money. In fact for those committing fraud, it appears to be pretty lucrative. According to reports, they may be taking in up to $5,000.00 a month without paying taxes.

Many of the people on this program, also qualify for AFDC (Aid to families with dependent children), the Food Stamp Program and possibly other free benefits.

In California alone, as reported by Troy Anderson of the Los Angeles Daily News, fraud and abuse are costing the taxpayers about 1.5 billion a year. Although this figure is being disputed by secondary sources, fraud isn't successful unless it goes undetected.

The end result from the law enforcement sources quoted is a belief that 40-50 percent of what is paid out is probably fraud.

Is it possible that some of these people have more spending power than say a "blue collar" family, who is paying for it in their taxes? Speaking of taxes, a lot of these people will qualify for
the Earned income tax credit, which can net them a few more thousand in spending power.

Here is a scary fact from the article that bespeaks a better than a "blue collar" lifestyle:

"In one case, prosecutors say a Lancaster resident conspired with relatives and friends to invent phony employment and child-care records and fraudulently obtain $345,719.

"The scam is increasingly popular in Los Angeles County, where investigators have opened more than 800 cases involving child-care fraud.

"Right now, this is the fraud du jour," said James Baker, assistant head deputy district attorney in the Welfare Fraud Division. "This is where the big money is now."

"The scam typically involves welfare-to-work recipients who fabricate employers or exaggerate work hours in order to qualify for taxpayer-financed child care. Then they split the money with friends and relatives who claim to be caring for the children, prosecutors said."

"Under reforms of the 1990s, welfare recipients qualify for government-paid child care -- usually $500 to $1,000 a month per child -- while they are looking for work or, after finding jobs, are making the transition into the work force."

For the full story by Troy Anderson, read:

Fraud eats away at funds earmarked for child care

The Welfare-to-work program is administered by the Federal Government. If there is 1.5 billion of fraud being committed in California, I would hate to estimate what the nationwide bill for all of this is. Furthermore, if in California, half of what is being paid out is a result of fraud, it's time to take a serious look at what is going on.

Don't get me wrong, we need to help those who are truly needy. BUT how much more could we help those who deserve help if half of the budget to help them wasn't being stolen by criminals? There are also the rights of those, who work hard and pay their taxes to support these social programs. It just isn't very equitable.

Speaking of social programs, it isn't hard to find reports in the news that they are over burdened and going bankrupt. The solution to this problem is greater oversight, to include aggressive prosecution of fraud and a complete review of entitlement policies and procedures.

It's not fair to make the working public pay for this sort of ABUSE!