Data Theft Breaches and Identity Theft Products

I saw an interesting article in the San Francisco Chronicle about Wells Fargo's latest product, Wells Fargo Select Identity Theft. For $12.99 a month, they provide monitoring of your credit file and will assist you if you become a victim. There are many of these products floating around these days. Wells is offering this in partnership with Trilegiant, a large marketing firm, which offers it's own identity theft service.

According to the article, Wells Fargo has had it's own woes with security breaches in the past two years. Wells Fargo has consistently refused to disclose how many people were put at risk, citing that it might jeopardize criminal investigations underway.

In April, they told former customers of Strong Financial, a recent Wells Fargo acquisition, that their personal information was sent to others due to an envelope stuffing error. Shortly, after the acquisition, they revealed that a binder full of Strong's customer information was stolen from a bank employee's car.

In March 2004, they lost 35,000 customer's information from computer theft at a bank office.

In February 2004, more computer theft occurred when 38,000 loan files were stolen from another rental vehicle driven by employees of Wells Fargo.

In November 2003, 201,500 customer's data was stolen from a bank consultant.

In October 2003, they hired a convicted felon as a temp worker, who they later fired, but was able to access the bank's website via a shared password and used customer's information for identity theft.

In an internal memo, Wells Fargo's CEO, Dick Kovacevich estimated that 70 percent of their remote data has some exposure to theft. Not sure, how they came up with that, if they give the wrong person access, I would imagine the percentage could be much higher.

This article made the interesting correlation that this amounts to exposing about 700,000 customers, which probably need this service. $12.99 x 12 x 700,000 equals $109,116,000 a year in additional revenue. They do claim they offer it free to their victims, but aren't clear as to if the free service is as good as the paid one they are now offering.

It's probably not fair to single Wells Fargo out. There are a lot of products appearing to protect people from identity theft. There have also been numerous data breaches in the recent past. With the increased sophisitication of the criminals out there, we need to invest more resources protecting the points of compromise and punishing those who are guilty of committing these crimes.

To link to the artice in the San Francisco Chronicle, click on the title.

Identity Theft Protection is starting to become a growing business. If you choose to purchase some, I would recommend that you shop around and compare services. It's a sad commentary that again, the cost of it is being put on the people, who are potentially victims.

There are free services, including laws mandating that the credit bureaus have to provide free reporting. Here is a link to a non profit organization (Identity Theft Resource Center) that has a lot of resources.

http://www.idtheftcenter.org/index.shtml

QChex Alert by the FDIC

Awhile back, I wrote a post on QChex, who is owned by Neovi Data Corporation, San Diego, California. QChex is a service that enables users to print checks, or send checks via an e-mail. On 7/12/05 the FDIC issued a warning on items issued by QChex.

Checks from QChex are being used in auction scams on sites, such as E-Bay and Craigslist. Criminals approach people selling items on these sites and offer a Qchex check as payment. Normally, the check is for over the amount of the purchase and the seller is asked to wire the excess amount back to the scam artist, who is in most instances, overseas. There are also instances of them being used to purchase high end items, such as electronics and jewelry. Again, the shipping destination for these items is normally overseas and the result is the same (worthless form of payment).

The QChex site has all sorts of legal disclaimers, including that they won't investigate anything.

The fraudulent items normally have valid account and routing numbers and could, in concept, verify through normal telephone (computerized) verification systems. If you insist on honoring, or attempt to negotiate one of these instruments, I would strongly recommend verifying the item with a live person at the bank and the owner (maker) of the account to ensure it is legititmate.

Comments from my original post indicate that people are also being arrested when presenting these items. I would recommend extreme caution when dealing with any item from Qchex. Quite frankly, they should be put out of business and an investigation should be conducted into this type of service to protect all of us.

For my earlier post and some interesting comments by readers go to:
http://fraudwar.blogspot.com/2005/04/qchex.html

Last, but not least, click on the title for the Alert from the FDIC.

The Road to Justice is Slow for Aunt Millie

Aunt Millie was a rallying cause in 2000-2001, when Enron was illegally manipulating energy costs by faking plant failures etc. California suffered the brunt of it with outrageous bills and blackouts. In taped conversations between the traders at Enron, poor old Aunt Millie (a grandmother from San Diego on a fixed income) was brought up and it was (jokingly) suggested that she use candles. At the time, for some in California, electrical bills were closing in on the $1000.00 a month range.

For many of us, Aunt Millie became a rallying point to seek justice against Enron for their misdeeds. This statement clearly showed their lack of caring in their quest for profit by defrauding the common citizen, as well as, government entities.

On Friday, the now bankrupt company said it would pay 1.5 billion. The exact amount might be a lot less due to bankruptcy proceedings and has yet to be approved by the courts. California is seeking 9 billion in damages and about 65 billion in claims are being made in the Enron bankruptcy case. According to experts, many will never see the full amount of their loss. Even with this promise to pay by Enron, the majority of it will be in unsecured debt, which is currently valued at between 22 and 25 cents on the dollar.

So far as how the money will be used, the Public Utilities Commission has said the money will be used to offset future rate increases.

I find it odd that since the price gouging directly affected the people of California that no refunds will be forthcoming to the people that paid the bills. Additionally, thousands of workers lost their jobs and investors lost billions when Enron filed for bankruptcy. I wonder if any of them will be made financially whole from this?

In the end, I see little justice in this for the victims of this debacle.

For a story from the AP on this, click on the title.

Fraud Allegations on Weapon Purchases in Iraq

There are a lot of stories about fraud coming out of Iraq these days. The latest is that the Iraqi military has been sold about 300 million dollars worth of substandard military equipment at inflated prices. It is being alleged that buyers for the Iraqi Defense Ministry were receiving kickbacks from vendors and have since been fired. There are also sources that say that the 300 million dollar amount is only what has been uncovered so far.

Allegations are that this flourished under American supervision prior to the elections in Iraq. Several former members of the Defense Ministry are under investigation. Iraqi Defense Minister, Saadoun al Duleimi, who isn't implicated in this scandal and is part of the new government stated that he sees this as an "incubator for terrorist activity." He also said that this defective equipment has jeopardized the lives of the Iraqi military, who face combat on a daily basis.

A lot of these deals were brokered by Ziad Tareq Cattan, a former Iraq exile, who after being hired as a district councilman was promoted rapidly to chief weapons buyer. In one allegation, he brokered a helicopter deal where 100 million was paid up front and when the helicopters were inspected, they were found to be old and deemed unusable. The 100 million was never returned. In another deal cited, Cattan bought a shipment of Heckler and Koch MP5 submachineguns for $3500.00 apeice that turned out to be Egyptian copies worth about $200.00 apeice. There are allegations that Cattan was routinely charging a 10 percent finder's fee for any deal he brokered. Whether these charges are true, or not remains to be proven.

Our young men and women in Iraq are being put in constant danger by a enemy that is often hard to identify. This war of terror is also claiming many innocent victims. Allegations, such as these, do nothing but inspire the terrorists, who are coming from all over to wage war against us. In the end, if we tolerate this behavior, we are only helping fuel the flames of terrorisim.

If you are interested in other stories regarding fraud in Iraq, go to the search box at the top and put in keyword: Iraq.

For the full story in the Miami Herald click on the title.