Ever wonder how well you are protected from credit card fraud?

I was reading Cary Cartter's (I'm Thinking of the "O" Word...) and came upon a link he had on his blog on why we should all buy "shredders."

By the way "O" stands for obvious.

After clicking on the link, I found to my amusement a pictorial of Rob from Cockeyed.com ripping up one of those credit card offers in the mail we all receive, tearing it up, taping it back together and then sending it in to Chase.

AND Rob didn't stop here, he changed the address on the application and used his cell phone as his contact number. Note that these are both WARNING signals of fraud.

After researching the Chase site, Rob figured he had wasted his time. They clearly mention tearing up the application as a preventative measure.

Going even further, he researched the Federal Trade Commission's site, which also recommended tearing up the documents.

BUT he didn't waste his time, after a short wait his Dad called to let him know he had mail from Chase. Inside it was a shiny new credit card, which of course, he activated with his cell phone.

Link with lot's of pictures, here. One of the pictures shows a close up of the credit card indicating this is no hoax.

Although hilarious, this little experiment shows that despite the press from financial service companies about their top notch security procedures, fraud is too EASY to commit. It seems that they are more interested in marketing their products than protecting your personal information.

They expect fraud and figure it into their profitability margin, or add into the cost of using their service. That way they can sell even more services and you end up paying for it.

Of course, they are now "marketing" identity theft products and will try to sell that to you, also.

Here is an interesting commentary from the Motley Fool on why most identity theft products are another form of "dialing for your dollars" and why many of them offer little value.

Why Illegal Immigration Benefits No One

No one faults the hard working illegal immigrant, who is trying to pursue the dream of a better life, or escape poverty. The problem is the criminal activity that goes along with the trade. There is nothing noble about drug smuggling, kidnapping, bondage, identity theft and a host of financial crimes that tie into the trade in human flesh.

Organized criminals run this business and they engage in multiple streams of income, often using the illegal aliens in their other illegal activities. Unfortunately, it seems that legitimate corporations are knowingly complicit in the activity, also.

Here is a quote in a recent story from the New York Times:

Saying the hiring by companies nationwide of millions of undocumented workers is often a form of organized crime, Mr. Chertoff, a former federal prosecutor, said the government will now attempt to combat the practice with techniques similar to those used to try to shut down the mob.

"We target those organizations, we use intelligence to define the scope of the organization, and then we use all of the tools we have whether it's criminal enforcement or the immigration laws to make sure we come down as hard as possible and break the back of those organizations," Mr. Chertoff said during a news conference at the headquarters of Homeland Security's Immigration and Customs Enforcement Division.

IFCO Systems North America, the subject of the recent raid was also found to be supporting the identity theft crisis:

Company supervisors knowingly hired illegal immigrants, provided them with housing and transportation to and from work, and even reimbursed one undercover agent for the cost of obtaining fraudulent identity documents, Homeland Security Department officials said.

An examination of the company's payroll of 5,800 employees found that just over half of them had Social Security numbers that were either invalid, belong to a dead person or did not match up with names on file, investigators said.

Link to article, here.

There have been a lot of updates to this story. The LA Times is quoting a federal agent as saying the illegal immigrants were working in unsafe conditions.

"There was a lot of drilling, cutting, dismantling of old pallets, pneumatic nail guns, power saws. Most of these guys were working in jeans, tennis shoes, short-sleeve shirts; some had sawdust in their hair," he said. "No legal facility would let workers work in those conditions."

There is nothing honorable about this trade and it is shameful that certain seemingly legitimate corporations are in collusion with organized criminal activity. Substandard working conditions and the host of crimes that go along with this trade victimize everyone (including the illegal immigrant) so the few (primarily criminals) can reap enormous profits.

So far as the other criminal and potential terrorist activity that goes along with unsecured borders, here is a link to a previous post I wrote.

Package Deals to Commit eBay Fraud

Gone are the days where committing fraud took knowledge, or technical expertise. Personal, financial and "how to scam" kits are all easily purchased in IRC (Internet Relay Chat) chatrooms.

AuctionBytes (Ina Steiner) is reporting:

"According to an "eBay scam kit" obtained by AuctionBytes, women are easy marks on eBay. The kit, marketed as "eBay: Women Dough v1.8," contained everything a scammer needs to set up auctions on eBay to sell items they don't own and don't intend to fulfill to "customers."

"The eBay Women Dough scam kit contained three prepackaged high-end auctions targeting U.S. female buyers. The kit included descriptions and photos to include in the eBay auctions with detailed advice on how to list, handle customer service and accept payments."

These kits even contain detailed instructions on how to bypass eBay controls and dupe the potential victim into using unprotected wire transfer services, such as Western Union and MoneyGram.

Full story, here.

Please note that AuctionByte's article also quoted a Washington Post Article on IRC chatrooms written by Brian Krebbs. This article covers the full spectrum of information that is bought and sold in these chatrooms and paints a pretty realistic picture of the activity.

Here is something, I thought was interesting from the article:

"Marcus Sachs, a former cyber-security adviser to the White House who now directs the Bethesda, Md.-based SANS Internet Storm Center, said that if the information posted by the IRC channel operators is legitimate, then they are likely working with people on the inside at the major credit card issuers. But Sachs said he suspects that by "verifying" credit card information posted by other chat room members, those running the IRC channels are more interested in scamming the phishers."

Full story, here.

I guess we now know where all the stolen information from the record amount of data breaches is going. It's being sold on the Internet.

Here is a previous post, I wrote on that subject (data breaches):

Information Breaches, the Human Factor

Profiting at the Expense of the Poor, Electronically

Recently, I was in San Francisco and made a small purchase for about $5.00. While waiting in line, I watched the customer before me use one of the new EBT cards. EBT (Electronic Benefit Transfer) cards have replaced checks and food stamps for that segment of the population receiving government assistance.

The clerk behind the counter asked me whether I wanted to use credit, or debit and I said credit (I hate those pesky ATM fees). Much to my surprise, he put it through as a debit and handed me the PIN pad. I noticed that the amount (taking into consideration sales tax) had increased by $2.00.

When I confronted him, he claimed his command of English wasn't very good. Of course, I demanded a refund (out of principle) and left the store. Interestingly enough, he refunded my money in cash and declined to give me a receipt (which didn't exist).

The reason there was no receipt is that he used a calculator to figure the amount of the purchase. Please note, there was a cash register right in front of him. The only receipt available was from his handy debit card processor, which only accounts for the total dollar amount taken and doesn't break down the transaction.

Pretty handy and makes me suspect he was also skimming sales tax proceeds, which pay for needed government services.

The gentleman with the EBT card was standing near my car so I asked him about the fees. He told me that he gets charged wherever he goes. I mentioned that larger retailers don't charge to use the cards and he informed me that they were too far away and he didn't have a way to get there.

I started to think about it and what amazed me is that someone had just tried to charge me a 40 percent surcharge for using my debit card. Then I reflected on the plight of that poor individual using his EBT card. What was a minor inconvenience to me (I got in my car and drove to a reputable retailer) is something that he is forced to deal on a daily basis.

EBT cards were heralded as a means to reduce fraud and ensure that our tax dollars reached the poor. If they are being charged outrageous fees every time they use the card, it seems to me that this new system isn't helping the poor. Besides paying higher prices at inner city markets, they are getting dinged for a fee every time they use their card.

Alameda County (near San Francisco) has an interesting web page on how people on assistance can avoid surcharges. Please note that it is illegal to add a surcharge on the "food stamp" portion of the card.

A lot of this information is good stuff, but it is unlikely that poor people in inner cities are going to find the places that don't charge the extra fees easy to get to.

Small retailers aren't the only ones profiting from all of this. In fact, most states allow a legal surcharge to administer the cards. This means that certain financial institutions are profiting from processing the transactions. One example of this is Citibank, who contracts nationally to administer EBT. I wonder how profitable this is to their bottom line? At the .53 cents a transaction quoted on the Missouri Poverty at Issue site, it must make a lot of money for them.

Granted, most of this is based on a personal observation, but to me it doesn't seem fair. In fact, it reeks of "welfare reform" gone bad. I wonder how much of our tax money was spent thinking up this program and how many pockets it's lining?

The sad thing is that it probably takes money away from those, who need it the most.

Of course, this happened in California, where welfare reform has been criticized for other abuses. Here is a post, I wrote on that:

Back to Work Programs a Fraud Heaven for Scammers