advance mass marketing fraud schemes webinar
TRANSCRIPT
ACFCS WebinarJune 19, 2015
Ask a Financial Crime Expert:Advance-Fee Mass Marketing Fraud
Schemes: The fraudster, victim and your organization’s role
Expert speaker: Rachel R. Heintz
United States Postal Inspector
Assistant Editorial DirectorAssociation of Certified Financial Crime
SpecialistsMiami, FL
Daniela Guzman, CFCS
Certification, News, Guidance, Training, Networking
CFCS Certification
The Credential That Demonstrates Competency and Skill Across the Financial Crime Spectrum
Ask the expert
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• Moderator will field questions as they come in• Recording of the presentation and presentation
slides will be uploaded to www.acfcs.org
Rachel R. Heintz Inspector Rachel R. Heintz is currently assigned to the Mail Fraud Team of the United States Inspection Service’s (USPIS) Harrisburg Domicile, where her investigations center on fraud schemes involving the United States Postal Service. Inspector Heintz began her employment with the USPIS in February of 2014.
Prior to becoming an Inspector, Heintz was a Deputy County Attorney in Yavapai County, Arizona. In that position, she managed the Yavapai County Criminal Organizations, Fraud, and Financial Intelligence Network task force, instructed on a variety of legal topics throughout Arizona, and prosecuted felony level criminal violations, focusing primarily on white collar crime prosecution.
Heintz obtained a Juris Doctor from Hamline University School of Law in St. Paul, Minnesota, and a Bachelor of Science in Business Administration from Drake University in Des Moines, Iowa. Inspector Heintz is a member of the Arizona State Bar Association, Association of Certified Anti-Money Laundering Specialists, and the International Association of Financial Crimes Investigators.
Advance-Fee Mass-Marketing Fraud Schemes:
The fraudster, victim and your organization’s role
Rachel R. Heintz, U.S. Postal Inspector
Disclaimer
Some materials used in this multimedia presentation are the creative works of
others which are being used because they are in the public domain, because of fair
use, or through license or permission. This presentation was prepared in accord with the Copyright Act of 1976, 17 U.S.C. § 107,
and further use or distribution is not permitted.
Any views or opinions presented in this presentation are solely that of the
presenter and do not necessarily represent those of the United States Postal Inspection
Service.
THE UNITED STATES POSTAL INSPECTION SERVICE
And these types of fraud schemes are a big deal!
• During the 2014 calendar year, the Federal Trade Commission’s Consumer Sentinel Network (CSN) received over 2.5 million complaints– 60% of the complaints were reported as
involving various types of consumer fraud
– Customers reported paying over $1.7 billion to fraudsters
Federal Trade Commission. Consumer Sentinel Network Data Book for January – December 2014. February 2015
And these types of fraud schemes are a big deal!
• 2006 Survey by the Office of Fair Trading in the UK– 6.5% of UK adults (3.2 million people)
are victims of mass marketing fraud per year
– Reported losses due to fraud of $6.8 billion
– Less than 5% of people reported to law enforcement or regulatory agencies
Office of Fair Trading. Research on impact of mass-marketing scams: A summary of research into the impact of scams on UK consumers. December 2007.
And these types of fraud schemes are a big deal!
• 2008 study by the Australian Bureau of Statistics– 5% of Australian population had been
the victim of a fraud in the previous year
– Reported loss totaling $900 million
Australian Bureau of Statistics. Personal Fraud. 2007.
And these types of fraud schemes are a big deal!
• Lottery scams are an estimated $30 million annual industry in Jamaica
Testimony of Corporal Kevin Watson during USA v. Sanja Williams trial, May 2015.
• “Jamaican scammers make as many as 30,000 telephone calls each day to the United States telling people that they have won a non-existent lottery.”
Steve Weisman. Jamaican lottery scams often start as 876 calls. USA Today. February 21, 2015.
Mass-Marketing Fraud Schemes
“… any type of fraud scheme that uses one or more mass-communication
techniques and technologies – such as the Internet, telephone, the mail, and
even mass meetings in person -- to present fraudulent solicitations to numbers of prospective victims, to
conduct fraudulent transactions with victims, or to transmit the proceeds of the fraud to financial institutions or to others connected with the scheme.”
United States Department of Justice, Fraud Sectionhttp://www.justice.gov/criminal/fraud/internet/
Mass-Marketing Fraud Schemes
© Mille & Soeren
Bank and Financial Account Schemes(Fishing and Vishing)
Investment Opportunities(Altered Stock Price, Ponzi)
Advance-fee Fraud Schemes(Sweepstakes/Lottery, Romance, Grandparent, etc.)
© virtualhorizonstudio
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
© Casey Page, Billings Gazette
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
Blah, blah, blah.
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
Typical Advance-Fee Mass-Marketing Fraud Scheme
© ImageZoo
© ImageZoo
Examples of Advance-Fee Mass-Marketing Schemes
• Sweepstakes/lottery
• Grandparent scheme
• Romance scheme
• Hybrid scheme
• Fund recovery schemes
Moving the Money
• Products and services that offer fast money transfers include: – Bank wires– Money service
businesses• MoneyGram• Western Union
– Reloadable prepaid debit cards
• Green Dot MoneyPak
• Vanilla Reload Network
Written Statement of Green Dot Corporation For
Senate Committee on Aging Hearing
“Hanging Up on Phone Scams: Progress and Potential Solutions to this Scourge”
July 16, 2014
“… Based on dispute filings, we believe Victim Assisted Fraud represented approximately $30 million in cash
loads in 2013 out of total load volume of approximately $20 Billion, or approximately one-quarter of one percent
of loads.”
“…given the "Victim Assisted" nature of the fraud and our inability to completely eradicate this nefarious use of our
MoneyPak PIN product, Green Dot has decided to discontinue the MoneyPak PIN method of reloading a card altogether, and instead, move fully to the "card
swipe" reload process. This reload method requires the actual cardholder to be present in the store and swipe
the actual debit card in order to reload funds.”
Moving the Money
Moving the Money
Moving the Money
• Domestic Travel– Picking up funds
from a “sponsor”– Giving funds to a
someone believed to be working with you
• International Travel– Personally carrying
large amounts of funds to another country
– Dangerous
Moving the Money
• Innovative Funds Transfers– Precious Metals– Investing in low
value currency– Electronics
• Emerging Technologies– Cryptocurrency
Who are the fraudsters?
• Organized fraud syndicates located outside of the United States
Fraud Hot SpotsCanadaNigeriaJamaica
Costa RicaMexico
NetherlandsUnited Arab Emirates
… and more!
Who are the fraudsters?
Being a “scammer” is a way of life
“I spoke with two little boys, two students, who said they wanted to become scammers,” Watson says, “They said, 'Well, sir, we see scammers driving nice cars, and they have big houses and they wear nice clothes and party, and that's what we want.' I think young, impressionable minds like this now see this as a really easy way to make money.”
Public Radio International. Why some Jamaican kids want to grow up to be lottery scammers. May 6, 2015. http://www.pri.org/stories/2015-05-06/why-some-jamaican-kids-want-grow-be-lottery-scammers
Who are the fraudsters?
“Reparation” by VYBZ Kartel featuring Gaza Slim“Big up every scamma
Weh mek U.S. DollaBuild up di house fi yuh mama
Western union people fi gi wi more honorSlah, full-stop, comma
Every ghetto yute fi a live like Tony MantanaPresidental like barruk obama
Pool inna house and plane inna hangerWho say di scamma dem wrong
No, Hungry, poverty dat more wronger…”
Who are the fraudsters?
• Nigerian/West African
• Domestic participants– Middle men and
women– Victim network
• Other groups– Business
knowledge– Banking knowledge– Social engineering– Want/need for
funds
But they are not just fraudsters…
• What exactly is the fraud funding?– May 2015: London
police detain and then charge seven people in an elderly fraud investigation
– Proceeds of the fraud scheme were to fund and facilitate travel to Syria and Iraq to fight with the Islamic State
© Christopher Thomond for the Guardian
Find more information here: http://www.theguardian.com/uk-news/2015/may/07/five-charged-in-syria-investigation
Factors that Contribute to Victimization
• Individual Factors– Emotions– Loneliness/isolation– Greed– Confusion– Deterioration of
brain function– Threats
• Other Factors– Use of legitimate
names, logos, companies
– Technology
Challenges to Detection and Investigation
• Red Flags– If it sounds too
good to be true, it probably is!
– Working with a stranger
– No time to make a decision
– Secrecy– Change in behavior
Challenges to Detection and Investigation
• Challenges posed by the victim– May be tough to convince the victim of
the fraud– What is a scheme vs. what is
legitimate?– The victim may be your investigation’s
target– Fluidity of schemes– Threats of violence by fraudsters to
maintain compliance by the victim– Where and how to report?
Challenges to Detection and Investigation
• Challenges posed by the characteristics of the scheme– Could reach far outside your
jurisdiction or area of responsibility– Tracking is resource and time intensive– Tons of people between the victim and
fraudster– Use of legitimate business or entity
names• Including the use of U.S. Government
Agencies and law enforcement or judicial titles
Challenges to Detection and Investigation
• Challenges posed by the use of technology– Use of emerging technology– Use of fast money transfers – Shielding identities through a network– Anonymous communications– Allowing the fraudster to operate from
any location
How do we combat this epidemic?
• Partnerships– Law enforcement– Governments– Public and Private
Sectors– Communities
• Continue learning to (attempt to) stay one step ahead
• Awareness
Rachel R. HeintzU.S. Postal Inspector
Philadelphia Division | Harrisburg Domicile
[email protected] | Office: 717.257.2342
http://postalinspectors.uspis.gov/
Thank you.
• After the webinar ends, please make sure to fill out the short survey you will receive via email.
• And if you have any further questions, please contact us at [email protected].