[ISN] Electronic Identity Fraud Issue 1

From: mea culpa (jerichot_private)
Date: Thu Oct 29 1998 - 15:27:52 PST

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    [Moderator: New 'zine dealing with electronic identity fraud. Subscription
     info is in the 'Introduction'. I will probably not forward future copies
     to ISN.]
    
    From: Edentificat_private
    
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     E L E C T R O N I C  
     I D E N T I T Y
     F R A U D  
     
     		Issue 1
     		Oct 25, 1998
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     from        e-DENTIFICATION LLC
     voice       717 859 2430
     fax           717 627 5454
     email     EDENTIFICAt_private
     
     
     INTRODUCTION
     ==============
     Welcome to the introductory issue of this newsletter.
     
     If you are involved in .....electronic commerce.....electronic data
     interchange.....credit management.....security.....banking.....internet
     business.....you and your associates are invited to subscribe.
     
     Just send an email to:  ZRZZ31At_private
      
     WHY THIS NEWSLETTER
     ======================
     
     The motivation for this newsletter is to share information about the growing
     problem of identity fraud. I hope that by providing a forum for sharing
     news, analysis and the early identification of emerging problems and trends
     in identity fraud, we can all become better equipped to fight this sneaky and
     costly crime. 
     
     Unfortunately, in many areas identity fraud is not acknowledged, is not
     treated as a crime and is rarely prosecuted. 
     
     WHO AM I ?
     ==========
     
     My background as an attorney led me into the problems of identity fraud
     which in turn led me to start a company called NBIB Inc. This company
     developed a system that has been used by 17,000 banks to screen new
     accounts to detect identity fraud.
     
     The growth of electronic commerce creates a new situation in which 
     business is being conducted between remote parties.  These parties have
     never met and therefore, substantial losses could be incurred by parties
     dealing with fraudsters using fake identities.
     
     This problem generated a solution that is addressed by my new company 
     e-DENTIFICATION LLC, which developed a system for companies
     engaged in electronic commerce to confirm the identity of their remote
     and unseen customers.
     
     DEFINE OUR FIELD OF INTEREST
     =============================
     
     Letís whittle the crime scene down to our field of interest. We are not
     interested in crime in general, not in crime against persons, nor in crime
     against property where there was a face to face confrontation....such as
     robbery, burglary and embezzlement.
     
     We are concerned with the new field of electronic fraud where the message
     is conveyed electronically and where the opposing sides are remote and
     communicate only through electronic means.
     
     ELECTRONIC FRAUD
     ===================
     
     Recognizing that a digital identity is the key to the net worth of the
     individual, it has become an attractive target for criminal activity. I would
     offer the following quotation from Senator John Kerry to suggest the
     capabilities of the criminals involved in identity fraud:
     
     "Today's transnational criminal cartels use high-speed modems and
     encrypted faxes. They buy jet airplanes three and four at a time and even
     have stealth-like submersibles in their armadas. They hire the finest minds
    to devise encryption systems and provide the complex accounting procedures any
    multi-billion-dollar empire requires. They engage the ablest lawyers to defend
    them, the craftiest spin doctors to spiff their images in the media, the most
    persistent--and generous--lobbyists to influence legislative decisions. They
    retain retired intelligence officers from the world's best secret services to
    consult with them on security. Highly educated and well-trained scientists
    ensure quality control in the production of narcotics...."
     
     quoted from Senator John Kerry in The New War, 1997, Simon & Schuster 
     
     PROSECUTING WHITE COLLAR CRIME
     ==================================
     
     When I was a practicing attorney, I had a senior prosecutor in one of
     America's largest cities tell me that, as a matter of policy, they did not
     prosecute white collar crime. To look to government for the solutions to
     this problem is to neglect the possibility of the best solutions. Self-help
     within the industry and among the individuals most affected is likely to
    yield
     better results.
     
     However, in order to help ourselves we must become better informed about
     the problem. This is the mission I have established for myself and this
     newsletter is one means of accomplishing that mission.
     
     IDENTITY FRAUD
     ===============
     
     In each issue, I will try to identify at least one aspect of identity fraud
    for all
     of us to think about. The first aspect I would like all of us to consider is
    how
     we treat digital identities verses real or biologic identities (the one our
     mother's used in recognizing us).
     
     There is a recent television commercial that clearly illustrates the current
     status of digital identities verses biologic identities. In this commercial
     famous people are recognized with their celebrity status until they try to
    cash a check. Then their biologic identity is denied and only the digital
    identity of a credit cared will suffice.
     
     While somewhat humorous, this commercial accurately portrays the
     situation in the world today. There is an almost irrebuttable presumption in
     favor of digital identities over biologic ones. The reason for this is the
     convenience of processing billions of transactions using digital identities
    over biologic ones, transcends the risks of fraud.
     
     DIFFICULT TO DETECT
     ====================
     
     However, the risks of fraud are increasing. It is impossible to alter a
     biologic identity and simple to alter a digital one. Further, it is very
    difficult
     to detect an altered digital identity. In fact, if the legitimate and altered
     digital identities are placed side by side it is impossible to tell which is
    which
     without additional information. One set of ones and zeros (which comprise
     the digital identity) look just like another.
     
     The criminals who practice identity fraud recognize this problem and alter
     digital identities by the hundreds of thousands. In one sense this problem
     was created when our digital identities assumed an existence separate from
     our biologic identities. The solution to the problem of favoring the digital
     identity over the biologic one can be effectively addressed by marrying our
     digital identities with our biologic identities. This will be a continuing
    thread
     in this newsletter.
     
     RECAP
     ======
     
     I will work to keep this newsletter brief and breezy and publish it more
    often
     rather than creating a tome that comes out less often and intimidates my
     readers by its length. Other features I will include in the future will be
     synopsis of news items and I will try to offer reviews of current and
     pertinent literature that sheds light on the problem of Electronic Identity
     Fraud.
     
     I welcome your suggestions.  
     
     John F. Ellingson, Madison, WI - Principal
     e-DENTIFICATION, LLC
     voice 717 859 2430
     fax     717 627 5454
     personal email address: JohnE37179 @ aol.com
      
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     IDENTITY THEFT TO BE FEDERAL CRIME
     
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     New legislation would make it a federal crime to assume someone's
     identity to commit financial fraud.  Legislation has passed Congress and
     was sent to President Clinton.
     
     The crime of Identity theft is defined as the unauthorized use of a
     person's name, address, birth date, Social Security number and mother's
     maiden name to fraudulently obtain credit cards, loans, and open bank
     accounts. It does not cover electronic commerce fraud, but it is a start.
     
     Clinton will sign according to Sen. Patrick Leahy, D-Vt. who sponsored
     the bill. Victims of identity theft would be able to obtain restitution. The
    bill
     requires the FTC to establish a centralized complaints service.
     
     And equipment used in the crime would be forfeited. 40,000 people annually
     are estimated to have their identities stolen.
     
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     FINANCIAL FRAUD REPORT CENTER
     
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     A neighborhood watch program on cyberfraud was started by a state
     securities regulators' group. Program was announced by the North
     American Securities Administrators Assn. The address for reporting
     suspected Internet financial fraud is www.cyberfraud(at)nasaa.org.
     
     Complaints will be referred to the appropriate regulators and FTC.
      
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