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Faulty Fraud Scores And Alerts Lead To Lawsuits š©
Frank McKenna
January 09, 2024
Greetings from FrankonFraud,
Fraud scores. We all rely on them to help us flag fraud, but what happens when consumers get wind of those fraud scores when their benefits are delayed? Two cases this week highlight the dilemmas states face when they use fraud scores.
The top stories this week are:
AI is now being used to bypass KYC controls
I created a digital doppelganger of myself
Expert warns, āBanks not ready for this fraudā
Thomson Reuters āFraud Detectā complaint issued
A faulty fraud system had a 93% error rate
A big Uber Identity Theft case revealed
A police officer steals an arresteeās credit card
23andme blames users for data breach
A Scam Town Coup in Myanmar
Letās get to the top stories!
AI and Deep Fakes Are Being Touted Online For Defeating KYC
Telegram channels are heating up with chatter of deepfakes now having the capability to defeat KYC checks.
On Redditās StableDiffusion channel, one user created quite a stir by creating a complete AI image and used it to pass KYC checks. It included AI generated handwriting as well. This was the image šļø
On Telegram, there is lots of chatter in channels about using deepfake video to defeat KYC checks too. Check out the latest where fraudsters talk about Doordash KYC and deepfakes. šļø
This Took 3 Minutes To Make - My Digital Doppelganger Is 100% Deepfake.
Check out this video. This is a 100% deepfake of both my voice and my video. This may not be perfect but it is only going to get better every month. Deepfakes are coming.. Trust me.
Expert - FedNow Fraud Is Going To Surprise People
Uri Rivner posted a warning in American Banker last week that the industry may not be ready for Fednow fraud when it gains critical mass.
Currently, only 402 out of the over 4,300 banks in the US have signed up for Fednow, and that might be the reason there has been little fraud to date. With little critical mass of users, there is low opportunity for fraudsters.
But, Rivner warns that the biggest hit will come at the beginning. He advised that in 2017, right after Zelle launched, the fraud rate in some cases hit 700 basis points for banks that were not prepared.
Thomson Reuters āFraud Detectā Complaint Filed To FTC
People love to complain about fraud scores, but this group took their complaint all the way to the FTC. š
Forty-two states use Thompson Reuters Fraud Detect system to prevent benefits fraud. This week, the group EPIC filed a complaint with the Federal Trade Commission alleging the score is faulty with a high error rate.
The complaint alleges that the fraud system uses sensitive personal information about consumers and provides a fraud score that denies millions of people access to public benefits. They also claim that the fraud score also uses the credit score of the applicant, which violates FCRA guidelines.
The group is asking the FTC to investigate the fraud score for unfair and deceptive practices.
Faulty Fraud System Had 93% Error Rate - 40,000 People Impacted
A faulty fraud program in Michigan called MIDAS (Michigan Integrated Data Automated System) caused over 40,000 people to be accused of unemployment fraud. The agency then attempted to collect on the fraud fining people 400% of the benefits amount paid.
The agency later determined that 93% of the time, the fraud program was wrong, and those people were all innocent. Many had assets seized and
Nearly a decade later, the state has been ordered to pay about 3,000 of those victims a meager $1,600 in a class action settlement. The attorneys, on the other hand, will get $6.6 million.
DataBreach - āItās You. Itās Not 23andMeā
23andme is shamelessly blaming its customers for the massive data breach that exposed close to 7 million of their DNA records to hackers last fall.
They claim there was no website breach and that irresponsible customers are to blame.
Last year, hackers accessed 14,000 accounts on 23andMe by using passwords that had been previously breached during security incidents on other websites. The hackers used credential stuffing, pummeling the website with thousands of login attempts and finding those accounts where the passwords still matched.
This is a slick legal maneuver, but it remains to be seen if it works.
50 Fraudulent Drivers On The Road
In an audacious fraud, Thiago De Souza Prado purchased driverās licenses and social security numbers on the dark web and set up a RideShare identity fraud mill.
Using stolen identities, he would create rideshare accounts on Uber and Lyft and then rent those accounts to drivers who would pay him a cut of the proceeds. He boosted the profits by using a tool called āThe Droneā that created imaginary rides and fabricated ride lengths, falsely boosting their accounts with earnings for phantom or lengthier rides than were actually done
The Vision Pro is Here. Will This Be The New Fraud Analyst?
The Vision Pro is being released in February. The future is now here. What do you think?
āLunch Is On Me Guysā - Cop Steals Credit Card
Officer Andy Urrutia, a one-year rookie cop from New York, was arrested after he stole the credit card of an arrestee in the 52nd Precinct.
Police reports state that the officer sent photos of the credit card and shared them with a group of his friends on a text thread on March 23 that said, āLunch on me guys!!!ā later adding, āYou are all welcome,ā according to the New York Daily News.
One of his friends took him up the offer and tried to use the card 4 times at Starbucks but was declined.
This Guy Got A $1 Million Check From The IRS by Mistake. What Should He Do?
Reddit User LiefDaniel90 received a check from the IRS and was in a bit of a pickle.
I messed up the decimal points and accidentally submitted a payment for $999,027 to the IRS. Even though it didnāt go through, couple weeks later I received a check from the IRS for $960,000.
Is there a way I could benefit from this without getting in trouble? (Obviously I have to return the money at some point.)
Got any advice for this guy? No one wants to get on the wrong side of the IRS, particularly when it comes to fraud!
A Major Coup In Scam Mecca Will Impact Pig Butchering Scams
An ethnic alliance in Myanmar captured and now controls the city of Laukkaing. The city is known as a āscam townā and the center of pig butchering compounds, which generate hundreds of millions in proceeds each year.
The alliance has raided 300 cyber scam centers and repatriated over 40,000 Chinese citizens who were trafficked and forced to scam.
This should take a big bite of the pig butchering scams in the region or at least slow it down.
Thanks for staying informed with me on new trends in fraud.
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Thank you fraud fighters!