Alerts

FDA NEWS RELEASE

For Immediate Release: June 27, 2013
Media Inquiries: Christoper Kelly, 301-796-4676, christopher.kelly@fda.hhs.gov
Consumer Inquiries: 888-INFO-FDA

En Español
FDA takes action to protect consumers from dangerous medicines sold by illegal online pharmacies
International Operation Pangea VI combats online sale and distribution of unapproved prescription medicines

The U.S. Food and Drug Administration, in partnership with international regulatory and law enforcement agencies, took action this week against more than 9,600 websites that illegally sell potentially dangerous, unapproved prescription medicines to consumers. These actions include the issuance of regulatory warnings, and seizure of offending websites and $41,104,386 worth of illegal medicines worldwide.

The action occurred as part of the 6th annual International Internet Week of Action (IIWA), a global cooperative effort to combat the online sale and distribution of potentially counterfeit and illegal medical products. As part of this year’s international effort – Operation Pangea VI – the FDA’s Office of Criminal Investigations, in coordination with the United States Attorney’s Office for the District of Colorado, seized and shut down 1,677 illegal pharmacy websites. The effort ran from June 18 to June 25, 2013.

Many of these websites appeared to be operating as a part of an organized criminal network that falsely purported its websites to be “Canadian Pharmacies.” These websites displayed fake licenses and certifications to convince U.S. consumers to purchase drugs they advertised as “brand name” and “FDA approved.” The drugs received as part of Operation Pangea were not from Canada, and were neither brand name nor FDA approved. These websites also used certain major U.S. pharmacy retailer names to trick U.S. consumers into believing an affiliation existed with these retailers.

The FDA’s Office of Criminal Investigations Cybercrime Investigations Unit banner is now displayed on seized websites to help consumers identify them as illegal. Here are some examples:

  1. http://www.canadianhealthandcaremall.com/
  2. http://www.walgreens-store.com
  3. http://www.c-v-s-pharmacy.com

“Illegal online pharmacies put American consumers’ health at risk by selling potentially dangerous products. This is an ongoing battle in the United States and abroad, and the FDA will continue its criminal law enforcement and regulatory efforts,” said John Roth, director of the FDA’s Office of Criminal Investigations. “The agency is pleased to participate in Operation Pangea to protect consumers and strengthen relationships with international partners who join in this fight.”

During Operation Pangea VI, the largest Internet-based action of its kind, the FDA targeted websites selling unapproved and potentially dangerous prescription medicines that could pose significant public health risks. Products purchased from the websites targeted during Operation Pangea also bypassed existing safety controls required by the FDA, and the protections provided when used under a doctor’s care. In general, prescription medicines, including those purchased online, should only be used with a valid prescription and under the supervision of a licensed health care provider.

The goal of Pangea VI, which involves law enforcement, customs, and regulatory authorities from 99 countries, was to identify the makers and distributors of illegal drug products and medical devices and remove these products from the supply chain.

Some of the medicines that were sold illegally by the websites targeted during Operation Pangea VI included:

Avandaryl: FDA-approved Avandaryl (glimepiride and rosiglitazone) is used to treat type 2 diabetes and to minimize potential associated risks, including edema caused by fluid retention, worsening the condition of the heart, or heart failure. Avandaryl must be prescribed by a certified healthcare provider and dispensed by a certified pharmacy with a medication guide explaining the potential risks.
“Generic Celebrex”: “Generic Celebrex” sold online is not an FDA-approved product. FDA-approved Celebrex (celecoxib) is a non-steroidal anti-inflammatory product used to treat the signs and symptoms of osteoarthritis and rheumatoid arthritis and to manage acute pain in adults. To minimize the potential associated risks, including gastrointestinal bleeding, heart attack, or stroke, in some people with long term use, Celebrex must be dispensed with a medication guide explaining the potential risks.
“Levitra Super Force” and “Viagra Super Force”: While Levitra (vardenafil) and Viagra (sildenafil) are FDA-approved medicines used to treat erectile dysfunction (ED), Levitra Super Force and Viagra Super Force are not FDA-approved products and claim to contain dapoxetine. The FDA has not determined the safety or efficacy of dapoxetine. People with certain heart conditions should not take ED medicines containing vardenafil or sildenafil. There are also potentially dangerous drug interactions or serious adverse effects with these drugs, such as loss of hearing or vision.
Clozapine: FDA-approved Clozaril (clozapine) is used to treat severe schizophrenia and is associated with potentially fatal agranulocytosis, a severely low (and dangerous) white blood cell count that can predispose patients to serious, life-threatening infections. To minimize potential risks, consumers who are prescribed FDA-approved Clozaril must be enrolled in a registry that ensures regular monitoring of their blood counts.

The FDA in collaboration with other federal agencies screened drug products received through selected International Mail Facilities during the IIWA. Preliminary findings show that certain drug products from abroad, such as antidepressants, hormone replacement therapies, sleep aids, and other drugs to treat erectile dysfunction, high cholesterol, and seizures were on the way to U.S. consumers.

In addition to health risks, these pharmacies pose non-health–related risks to consumers, including credit card fraud, identity theft, or computer viruses. The FDA encourages consumers to report suspected criminal activity at http://www.fda.gov/oci.

The FDA provides consumers with information to identify an illegal pharmacy website and advice on how to find a safe online pharmacy through BeSafeRx: Know Your Online Pharmacy.

The IIWA is a collaborative effort between the FDA, INTERPOL, the World Customs Organization, the Permanent Forum of International Pharmaceutical Crime, Heads of Medicines Agencies Working Group of Enforcement Officers, the pharmaceutical industry, and national health and law enforcement agencies from 99 participating countries.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

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15 thoughts on “Alerts

  1. SFA Reporter October 12, 2012 at 6:20 am Reply

    October 11, Softpedia – (National)

    Regions Bank website attacked by hackers. Hackers have once again kept their promise and launched a distributed denial-of-service (DDOS) attack against the Web site of Regions Financial Corp. October 10, they took aim at the site owned by SunTrust and October 11, they seemed to focus on the Regions Bank Web site.

    Regions representatives told Fox News that the organization was aware of the threats, and claimed they were “taking every measure” to protect the company and customers.

    The site appeared to be experiencing some performance issues, but it seemed to be accessible from the United States. On the other hand, it was not accessible from a Romania IP, which might mean that certain IP address ranges were restricted in order to mitigate the attack. The hackers claimed that during the weekend of October 13 they will plan the next attacks.

    Source: http://news.softpedia.com/news/Regions-Bank-Website-Attacked-by-Izz-ad- Din-al-Qassam-Hackers-298767.shtml

  2. SFA Reporter October 12, 2012 at 6:24 am Reply

    October 10, Fox News – (National)

    SunTrust the latest victim in cyber attack saga. SunTrust seemed to be the latest bank targeted with a denial of service attack October 10 in a chain of cyber attacks that hit Capital One October 9 and other major Wall Street institutions in September.

    The hacking group in a blogpost October 8 said it would target Capital One October 9, regional bank SunTrust October 10, and Regions Financial October 11. A handful of users reported on Twitter and SiteDown.com they were having issues accessing SunTrust’s e-banking Web site.

    That is different from some of the earlier attacks where customers could not access the main customer Web site altogether.

    When attempting to log on, some customers complained of receiving one of two error messages: “Server Unavailable” or “Server is too busy”. “We have seen increased traffic today and have experienced some intermittent service availability,” a SunTrust spokesperson said. October 9, SunTrust said that it was “aware of the threat” and was working to mitigate any disruption to clients should an attack occur.

    The group threatened to pursue more cyber attacks the week of October 15 and has long said it will not stop until a video mocking the Islam religion first posted to YouTube is removed from the Internet.

    Source: http://www.foxbusiness.com/technology/2012/10/10/suntrust-may-be-latestvictim- in-cyber-attack-saga/

  3. SFA Reporter October 25, 2012 at 9:36 am Reply

    The United States has filed a civil mortgage fraud lawsuit against Bank of America and its predecessor Countrywide, announced the Office of the Special Inspector General for the Troubled Asset Relief Program. The complaint seeks damages and civil penalties for Bank of America (Countrywide) allegedly engaging in a scheme to defraud the government-sponsored enterprises Fannie Mae and Freddie Mac.

    Read the news release here.

  4. SFA Reporter October 26, 2012 at 8:33 am Reply

    U.S. Sues BofA Over Alleged Mortgage Fraud

    October 24, Reuters – (National)

    The United States filed a civil mortgage fraud lawsuit against Bank of America, accusing it of selling thousands of toxic home loans to Fannie Mae and Freddie Mac that went into default and caused more than $1 billion of losses, Reuters reported October 24. The case, originally brought by a whistleblower, is the U.S. Department of Justice’s first civil fraud lawsuit over mortgage loans sold to Fannie Mae or Freddie Mac.

    According to a complaint filed in Manhattan federal court, Countrywide in 2007 invented a scheme known as the “Hustle” designed to speed up processing of residential home loans. Operating under the motto “Loans Move Forward, Never Backward,” mortgage executives tried to eliminate “toll gates” designed to ensure that loans were sound and not tainted by fraud, the government said.

    This resulted in “defect rates” that were roughly nine times the industry norm, but Countrywide concealed this from Fannie Mae and Freddie Mac, and even awarded bonuses to staff to “rebut” the problems being discovered, it added. The scheme ran through 2009 and caused “countless” foreclosures, the lawsuit alleged.

    Source: http://bottomline.nbcnews.com/_news/2012/10/24/14671246-us-sues-bofaover-alleged-mortgage-fraud?lite

  5. brea howard October 29, 2012 at 7:46 am Reply

    my mother was a recent victim of this Pinnacle. finance scam. they told her to she was eligible for a 10,000 loan…my mom who is on. fixed income thought if she got this loan she wud b able to pay her bills n get Christmas gifts for her grandkids to make a long story short ….I helped her send the 375.00(1/2 of 750.00) n called Lauren Hall (ex4068) she actually picked up n gave us instructions on what to do. I called her bk n she said I’ll send u a email w the conformation # n you’ll get ur loan..nothing I tried calln her bk…zero!! I called greendot moneypk customer service n filled a compliant on our behalf w the FTC..they were very understanding. so I feel sad they took advantage of a elder who just wanted to help herself n get gifts for her grandchildren

  6. SFA Reporter October 31, 2012 at 10:08 am Reply

    June 25, 2012, 12:19 p.m. ET
    By MARY KISSEL- WALL STREET JOURNAL

    The Consumer Financial Protection Bureau announced a “major step forward” last week in its “work to protect customers.” What is this cutting-edge initiative? The country’s most powerful and unaccountable regulatory agency has decided to release consumer credit-card complaints on the Internet, creating reputational and litigation risk for companies it regulates—with no verifiable evidence of wrongdoing. What a winning idea . . . for lawyers.

    Consumer bureau chief Richard Cordray described the beta release of the database thus on a conference call with reporters: “We believe the disclosure of this data not only serves the public interest, but promotes the advancement of the free market system.” And: “Anyone with access to the Web will be able to review and analyze the information and draw their own conclusions.”

    Well, that’s one interpretation. In June, the consumer bureau itself admitted that the “complaint process does not provide for across the board verification of claims made in complaints,” and “does not validate the factual allegations of complaints.” But rest easy: the bureau maintains “significant controls to authenticate complaints.” Check out the website at http://www.consumerfinance.gov/complaintdatabase/ , and the accompanying press release, which talks about the “consumer response intake specialists” who review each complaint “for completeness, jurisdiction, and non-duplication.” As if the credit-card companies don’t have those teams?

    Read More….

  7. SFA Reporter November 9, 2012 at 4:20 pm Reply

    Nov. 9, 2012, 9:27 a.m. EST

    MoneyGram to pay $100 mln in Consumer Fraud Case

    –Three years ago MoneyGram agreed to pay $18 million to settle charges involving telemarketing scammers

    –DOJ says MoneyGram knew of the fraud, but “rarely accepted” recommendations to terminate complicit agents

    Prepayment services firm MoneyGram International Inc. MGI +1.09% agreed to pay $100 million to settle charges that certain of its U.S. and Canadian agents defrauded tens of thousands of customers and also that it failed to maintain an effective anti-money laundering program.

    The justice department alleges MoneyGram knew some of its agents were “involved in a scheme to defraud,” and the victims were “fraudulently induced to send money” through MoneyGram. The schemes included promising victims they would receive large cash prizes and lottery winnings, falsely offering expensive items for sale online at deep discounts and falsely posing as a relative asking for money.

    The victims were directed to send advance payments to fictitious payees using MoneyGram’s money transfer system. These payees then brought the victims’ MoneyGram reference numbers to MoneyGram agents to withdraw money. The DOJ alleges that the “MoneyGram agents knowingly entered false addresses, telephone numbers and personal identification document information for these transactions into the MoneyGram database” and that the agents “gave the perpetrators the victims’ money after subtracting their own fees for completing the fraudulent transaction.”

    The DOJ said MoneyGram knew its agents were involved in the scheme to defraud customers, pointing out that between 2004 to 2009, MoneyGram customers filed about 63,8144 consumer fraud reports involving transfers paid out totaling about $128.4 million in losses because of the scheme.

    While the company’s fraud department recommended that certain agents and outlets be terminated for fraud, the DOJ says “the fraud department’s termination recommendations were rarely accepted.” As a result, agents complicit in the scheme stayed on and fraud “skyrocketed.”

    The settlement comes about three years after MoneyGram agreed to pay $18 million to settle similar charges with the U.S. Federal Trade Commission.

    Chief Executive Pamela H. Patsley said Friday that since 2009, MoneyGram has “created a new culture at the company and have taken numerous steps to enhance our global compliance and anti-fraud programs.” The company said in its statement that it has terminated its relationship with agents involved in the fraud.

    Ms. Patsley called the scheme “unacceptable to MoneyGram and counter to everything we strive to stand for. She added it takes “compliance very seriously at MoneyGram, and nothing angers us more than when our services are used to perpetrate illegal activity.”

    Under the latest deal–a deferred prosecution agreement with the U.S. Attorney’s Office for the Middle District of Pennsylvania and the Department of Justice–MoneyGram has agreed to the appointment of an independent compliance monitor and a forfeiture of $100 million that will be available to victims of the consumer fraud scams perpetrated through MoneyGram agents. No further action will be taken against MoneyGram if it meets the agreement’s conditions.

    The company had disclosed it was in discussion with authorities about the investigation in previous filings. During the second quarter, it made an accrual for $30 million. On Friday, it said it had made an additional accrual of $70 million in the third quarter related to the matter.

    MoneyGram also reported Friday that it had swung to a third-quarter loss, as a rise in total operating expenses outweighed higher revenue.

    Shares rose 1.1% to $13.94 in recent trading. The stock has dropped 32% in the past year.

    SOURCE WSJ: MoneyWatch

  8. SFA Reporter November 24, 2012 at 6:39 pm Reply

    FTC Cracks Down
    On Phony Mortgage Relief Schemes

    Victimizing Thousands of Consumers, Marketers Allegedly Falsely Claimed They Could Help, But Instead Drove Distressed Homeowners Deeper into Debt

    The Federal Trade Commission has filed three separate suits in federal court to halt the allegedly deceptive tactics of three operations that preyed on distressed homeowners by falsely claiming they could save tExpense Management America homepageheir homes from foreclosure, and then charging them thousands of dollars up-front, while delivering little or no help and often driving them deeper into debt.

    “With many homeowners still struggling to hold onto their homes, the FTC takes a hard line against con artists who are seeking their next victim,” said Jon Leibowitz, Chairman of the Federal Trade Commission.


    A portion of the Expense Management America
    website homepage. Click to view the entire page.

    Leibowitz appeared with U.S. Attorney General Eric Holder, FBI Associate Deputy Director Kevin Perkins, and HUD Secretary Shaun Donovan, and announced the FTC cases as part of the Distressed Homeowner Initiative, a federal effort to stop predatory foreclosure rescue, mortgage modification, short sales, and bankruptcy schemes that target distressed homeowners.

    Since 2008, the FTC has brought more than 40 cases against companies peddling fraudulent mortgage relief schemes, that caused hundreds of millions of dollars in consumer injury. These law enforcement actions have helped tens of thousands of consumers who were victims of these scams, and have prevented tens of thousands more from becoming victims.

    In November 2010, the FTC issued the Mortgage Assistance Relief Services (MARS) Rule, which provided new protections and banned mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.

    In all three cases announced today, the FTC took action against defendants who allegedly peddled bogus mortgage relief services, in violation of the FTC Act and the MARS Rule. The agency also charged that two of the operations violated the Telemarketing Sales Rule.

    Prime Legal Plans/Reaching U Network. The FTC alleged that from at least mid-2010, the defendants behind this scheme marketed mortgage relief services in English and Spanish, including under the names “Reaching U Network,” and “American Legal Plans.” They allegedly told consumers who were in debt that attorneys would review their mortgage loan documents to see if their lenders complied with state and federal mortgage laws, and would use the resulting “forensic audit” information to help save their homes and negotiate more favorable mortgage terms. The defendants told consumers that “80 percent of mortgages contain some fraud,” and “Our network attorneys have helped hundreds of Americans stay in their homes,” according to the FTC complaint.

    But instead of helping consumers, the defendants charged them up to $750 a month, while little or nothing was done to save their homes from foreclosure, and running an operation that a court found was “permeated with illegal practices” , according to the FTC.

    The FTC alleged that on company websites, the defendants would falsely claim to be a “private charity working for struggling consumers that can’t afford legal representation.” When responding to consumers who called the toll-free number on the websites, and when cold-calling consumers, including those listed on the Do Not Call registry, the defendants routinely failed to provide the disclosures required by the MARS Rule, collected up-front fees, and misrepresented the results that consumers could expect, according to the complaint. The FTC charged that the defendants violated the Telemarketing Sales Rule, the FTC Act, and the MARS Rule by: calling consumers whose numbers were listed on the Do Not Call Registry; not paying the required annual fee to access the Registry; misrepresenting that they would get mortgage modifications to make consumers’ payments significantly more affordable and help prevent foreclosure, and that they would use so-called forensic audits to do this; misrepresenting the amount of time it would take to get results; failing to provide required disclosures about mortgage modification relief; and collecting advance fees.

    A federal judge granted the FTC’s request for a temporary restraining order and ordered a freeze of the defendants’ assets and the appointment of a receiver. The preliminary injunction hearing is scheduled for October 11, 2012.

    American Mortgage Consulting Group. TheFTC alleged that since early 2011, the defendants claimed a phony affiliation with the U.S. government, pretended to be attorneys, and promised to substantially lower monthly mortgage payments in exchange for an up-front fee ranging from $1,495 to $4,495. Along with two companies he controls – American Mortgage Consulting Group, LLC and Home Guardian Management Solutions, LLC – defendant Mark Nagy Atalla allegedly violated “nearly every provision of the Mortgage Assistance Relief Services Rule.”

    The defendants telemarketed mortgage relief services to consumers nationwide, often stating that they were paid by the federal government to assist homeowners and obtain so-called “Home Saver” grants from the government to reduce consumers’ up-front fees, according to the FTC’s complaint. They also allegedly proclaimed themselves to be “a California Professional Legal Team,” sent documents to consumers from their so-called “Legal Department,” and referred to their operation in e-mails as a “law office.”

    The defendants claimed they were virtually certain they could obtain loan modifications for their clients, and that the clients would receive a full refund if that did not happen, even though they did little or nothing to help consumers and they failed to provide refunds, according to the FTC.

    Also, in violation of the MARS Rule, the defendants allegedly told consumers to stop communicating with their lenders, and failed to disclose that:

    • consumers would only have to pay the defendants if they accepted the terms of the mortgage assistance the defendants obtained from their lenders;
    • the defendants are not associated with the government and their services are not approved by the government or the consumer’s lender; and
    • even if a consumer used the defendants’ services, the lender may not agree to change the terms of the consumer’s loan.

    By their actions, the defendants diverted consumers in danger of losing their homes from pursuing authentic, government-affiliated programs, and duped them into paying thousands of dollars based on false promises and misrepresentations, according to the complaint.

    A federal judge granted the FTC’s request for a temporary restraining order and preliminary injunction, froze the defendants’ assets, and appointed a receiver.

    Expense Management America. Presenting themselves as the solution to all the consumer’s financial problems, the defendants have cold-called thousands of U.S. consumers from their call center in Montreal since at least mid-2010, including those whose numbers were registered on the Do Not Call Registry, according to the FTC complaint.

    Whether the consumer was struggling with a mortgage, credit card debt, student loans, car payments, or a poor credit score, the defendants charged an up-front fee of $2,200 to $10,000 that they claimed was being used to pay off debts,according to the complaint. The defendants allegedly claimed that their relationships with lenders and their ability to negotiate on behalf of large groups of consumers made it possible to substantially reduce their payments. But according to the FTC, the defendants failed to produce any of the promised results.

    The defendants – Expense Management America, six affiliated companies, and five individuals, who operated in Canada and the United States – also used a series of websites that lured consumers to call them, according to the complaint. After pitching consumers by phone, the defendants allegedly would send brochures and financial documents to consumers via e-mail, and obtain their authorization to withdraw funds from their checking accounts. One brochure, the Expense Management Guide, explicitly told consumers they must follow the “Golden Rule,” which was to cease communicating with their creditors and let the defendants do the talking:

    “Sometimes [creditors will] go to extremes in an attempt to force you into an agreement by saying things such as ‘We’ve never heard of E.M.A.’ Or ‘We don’t deal with them.’ … Sometimes [creditors] even break the law. Don’t be fooled by them. Let E.M.A. do the talking!” The FTC charged that the defendants violated the Telemarketing Sales Rule, the FTC Act, and the MARS Rule by: falsely claiming they could secure more affordable payments and reduce the principal on consumers’ loans; making deceptive claims about the price and material aspects of debt relief and other goods and services; charging advance fees for debt relief; calling consumers whose phone numbers are listed on the Do Not Call Registry; telling consumers not to communicate with their lenders; and failing to make the disclosures required by the MARS Rule.

    For consumer information about avoiding mortgage and foreclosure rescue scams, see Your Home at the FTC website Money Matters.

    The Prime Legal Plans/Reaching U Network complaint names as defendants: Prime Legal Plans, LLC; Consumer Legal Plans LLC (Nevada); Consumer Legal Plans, LLC (Wyoming); Frontier Legal Plans LLC, 123 Save A Home, Inc.; American Hardship LLC; Back Office Support Systems LLC; Consumer Acquisition Network, LLC; Legal Servicing and Billing Partners LLC; Lazaro Dinh; Kim Landolfi; Derek Radzikowski; Andrew Primavera; Christopher Edwards; and Jason Desmond. The complaint also names The 2007 San Lazaro Irrevocable Life Insurance Trust and its trustee, Maria Soltura, as relief defendants.

    The Expense Management America complaint names as defendants: E.M.A. Nationwide, Inc., also doing business as EMA and Expense Management America; New Life Financial Solutions, Inc., also d/b/a New Life Financial, and New Life Financial Services; 1UC Inc., also d/b/a 1st United Consultants, and First United Consultants; 7242701 Canada Inc.; 7242697 Canada Inc.; 7246293 Canada Inc., 7246421 Canada Inc.; James Benhaim, a/k/a Jimmy Benhaim; Daniel Michaels, a/k/a Dan Michaels, a/k/a Dan Michles; Phillip Hee Min Kwon, a/k/a Phillip H. Kwon; Joseph Shamolian; and Nissim N. Ohayon.

    The FTC would like to thank the California Bar Association for its valuable assistance in bringing the action announced today against American Mortgage Consulting Group.

    The FTC would like to acknowledge the Royal Canadian Mounted Police and the Centre of Operations Linked to Telemarketing Fraud (Project COLT) for their valuable assistance in bringing the action announced today against Expense Management America. Launched in 1998, Project COLT combats telemarketing-related crime, and includes members of the Royal Canadian Mounted Police, Sureté du Québec, Service de Police de la Ville de Montréal, Canada Border Services Agency, Competition Bureau of Canada, Canada Post, U.S. Homeland Security (U.S. Immigration and Customs Enforcement and the U.S. Secret Service), the U.S. Postal Inspection Service, the Federal Trade Commission, and the Federal Bureau of Investigation. Since its inception, Project COLT has recovered $22 million for victims of telemarketing fraud.

    The Commission votes authorizing the staff to file the complaints and seek temporary restraining orders against defendants in the Prime Legal Plans/Reaching U Network, Expense Management America, and Home Guardian Solutions cases were all 5-0. The FTC filed the Prime Legal Plans/Reaching U Network complaint and request for a temporary restraining order in the U.S. District Court for the Southern District of Florida, and the court entered the documents on September 24, 2012. The preliminary injunction hearing is scheduled for October 11, 2012. The agency filed the American Mortgage Consulting complaint and request for a temporary restraining order in the U.S. District Court for the Central District of California, Southern Division, and they were entered by the court on September 18, 2012. The agency filed the American Mortgage Consulting complaint and request for a temporary restraining order and preliminary injunction in the U.S. District Court for the Central District of California, Southern Division, on September 18, 2012. The TRO was entered by the court the same day, and the preliminary injunction was entered on October 1. The FTC filed Expense Management America complaint in the U.S. District Court for the Northern District of Ohio on September 25, 2012.

    NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The cases will be decided by the court.

    The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

    STAFF CONTACT:
    Betsy Lordan
    Office of Public Affairs

    202-326-3707
    MEDIA CONTACT:
    Prime Legal Plans/Reaching U Network; FTC File No. 1123205
    Leah Frazier
    Bureau of Consumer Protection
    202-326-3224Home Guardian Solutions; FTC File No. 1223054
    David Horn
    FTC Northwest Region, Seattle
    206-220-4483Expense Management America; FTC File No. 1223069
    Christopher Panek
    FTC East Central Region, Cleveland

    216-263-3406

  9. Larry E Gillikin Jr January 12, 2013 at 9:12 pm Reply

    What is the latest on MyCashGuardian they withdrew $29.95 out of my checking act without my permission or knowledge. How can they do that legally and how did they get my account information?I don’t even know who they are. They won’t answer their phone or respond by email.Is there another way to contact them? What can I do legally?

  10. SFA Reporter February 12, 2013 at 7:19 am Reply

    For Release: 11/15/2012

    FTC Expands Fight Against Deceptive Business Opportunity Schemes
    More Than 70 Actions Brought By FTC and Its Law Enforcement Partners

    The Federal Trade Commission today announced seven new law enforcement actions and logo of Financial Fraud Enforcement Task Forcedevelopments in five other FTC cases involving scams that falsely promise jobs and opportunities to “be your own boss” to people who are unemployed or underemployed.  Six of the new FTC actions are the first cases brought under the FTC’s recently updated Business Opportunity Rule, which requires business opportunity sellers to provide specific information to help consumers evaluate a business opportunity, and provides a simple, one-page disclosure form.

    As part of a continuing federal-state crackdown, “Operation Lost Opportunity” targets scams that took millions of dollars from more than two million consumers.  The defendants in the FTC’s cases allegedly lured consumers with deceptive offers to help them start businesses as mystery shoppers, credit card processors, website operators, and government insurance refund processors.

    This joint effort by the Consumer Protection Working Group of the Financial Fraud Enforcement Task Force also includes 22 actions brought by the Department of Justice, 15 administrative actions by the U.S. Postal Inspection Service, and 20 actions by state attorneys general in Indiana, California, Arizona, Colorado, and Ohio.  Earlier federal-state enforcement efforts against consumer financial fraud include Operation Empty Promises, Operation Bottom Dollar, and Operation Short Change.

    “The scam artists the FTC shut down lied to people trying to make an honest buck, and robbed them of their money as well as their hopes,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection.  “We brought these cases on behalf of millions of people who wanted to jumpstart their incomes and rebalance their budgets – people who placed their hopes in a business opportunity so they could better provide for their families.”

    The defendants in the FTC cases announced today allegedly committed multiple violations of the FTC Act, including misrepresenting how much money people could make through the business opportunity.  The defendants in six of the cases* also allegedly violated the amended Business Opportunity Rule.**

    Participants in the FTC “Operation Lost Opportunity” press conference
    David Vladeck, Director, FTC Bureau of Consumer Protection, announces more than 70 civil and criminal law enforcement actions against promoters of fraudulent business opportunities at a Federal Trade Commission press conference in Washington on Nov. 15, 2012. Pictured, left to right: David Vladeck; Greg Zoeller, Indiana Attorney General; Stuart Delery, Principal Deputy Assistant Attorney General, Department of Justice; Shawn Tiller, Deputy Chief Inspector of the U.S. Postal Inspection Service; Janice Kopec, FTC Staff Attorney; and Tracey Thomas, FTC Staff Attorney.

    FTC Law Enforcement Actions

    *Shopper Systems, LLC; Revenue Works, LLC, also doing business as Surplus Supplier; EMZ Ventures, LLC; The Veracity Group, LP; Brett Brosseau; Michael Moysich; and Keith R. Powell allegedly sold the business of providing mystery shopping services to retailers, offering lists of merchants seeking mystery shoppers in the buyer’s area.  According to the FTC’s complaint, consumers who agreed to buy were lured into buying another business opportunity – operating a webstore – that did nothing but draw them into negative-option programs (the seller interprets consumers’ silence or inaction as permission to charge them) with unforeseen, recurring monthly charges to their credit cards.  Using text messages, phone calls, websites, ads in periodicals, and ads on online employment websites, the defendants allegedly falsely claimed people could earn an average of $50 per mystery shopping assignment with no limit to the number of assignments.  They offered training for $2.95 and a seven-day trial period for the mystery shopping program, and subsequently charged $49.95 per month for a list of interested merchants, with an option to cancel at any time without further obligation.  The defendants charged $3.95 for the webstore opportunity, with a 14-day trial period and $49.95 per month, and often enrolled consumers without their awareness.  Consumers who canceled the mystery shopper membership were still billed monthly $49.95 charges and were later told they had to cancel both programs, which is how many consumers first learned they had been enrolled in the second program.

    The Commission vote authorizing the staff to file the complaint was 3-0-2, with Commissioner Rosch abstaining and Commissioner Ohlhausen not participating.  The complaint was filed in the U.S. District Court for the Southern District of Florida.  On October 31, 2012, the court issued a temporary restraining order that halted the defendants’ deceptive practices, froze assets, and put the companies into receivership temporarily.  At a recent hearing, the Court indicated that it would continue these provisions as to defendants Shopper Systems, LLC, Surplus Supplier, and Michael Moysich.  Defendants EMZ Ventures, LLC and Brett Brosseau agreed to a preliminary injunction that also continues the terms of the order.

    *American Business Builders LLC; ENF LLC, also doing business as Network Market Solutions; UMS Group LLC; United Merchant Services LLC; Universal Marketing and Training LLC; Unlimited Training Services LLC; Shane Michael Hanna, also known as Shane Michael Romeo; and Stephen Spratt took tens of thousands of dollars from consumers, falsely promising that they would set up a profitable credit card processing business for the consumers.  According to the FTC’s complaint, the defendants told consumers that, for a fee typically ranging from $295 to $495, they could operate a home-based business selling the defendants’ payment processing services, credit card terminals, and merchant cash advances to merchants in the consumers’ local communities.  The defendants claimed consumers would earn substantial income from this business opportunity in several ways, including by earning a commission on each payment processing terminal sold or leased, a percentage of each merchant cash advance, and a percentage of each merchant’s monthly sales volume.  The defendants also sold consumers merchant leads for the consumers’ businesses, promising they would conduct telemarketing sales campaigns on the consumers’ behalf that would generate customers and income for the business.  The defendants typically charged $10 per lead, with some consumers paying up to $40,000.  The FTC alleged that the defendants did not obtain customers for consumers, and that consumers did not earn any income.

    The Commission vote authorizing the staff to file the complaint was 5-0.  The complaint was filed in the U.S. District Court for the District of Arizona.  On November 6, 2012, the court halted the defendants’ allegedly deceptive practices, froze their assets, and put the companies into receivership pending a court hearing.

    *The Online Entrepreneur Inc., also doing business as The Six Figure Program and Ben and Dave’s Program; Ben and Dave’s Consulting Associates Inc.; Benjamin Moskel; and David Clabeaux sold consumers a no-risk, money-back guaranteed opportunity to make money via their own website.  According to the FTC’s complaint, they claimed that, for a $27 fee, they would enable consumers to affiliate with the websites of “big companies,” including Prada, Sony, Louis Vuitton, Verizon, and earn commissions when Internet users clicked through the consumers’ websites and bought something from the “big” retailers.  After buying the programs, consumers found they could use their website only if they purchased a domain name and hosting services, but some consumers who paid the extra money could not get their website to function, and those whose websites did work did not earn the promised income of up to $15,000 per month or at least up to $15 within seven days.  Consumers allegedly found it hard to reach the defendants for assistance, and those who sought refunds typically got an automated response saying someone would call them within 24 hours.  The FTC alleged that refund requests were often ignored, even after consumers contacted the Better Business Bureau.

    The Commission vote authorizing the staff to file the complaint was 5-0.  The complaint was filed in the U.S. District Court for the Middle District of Florida.  On November 6, 2012, the court halted the defendants’ allegedly deceptive practices, froze their assets, and put the companies into receivership pending a court hearing.

    Career Advancement Group.  According to the FTC’s complaint, the defendants have operated a nationwide job scam by placing ads in classified sections of newspapers and on job search websites that appear to be postings for jobs with the U.S. Postal Service.  In fact, however, the defendants’ ads are not a legitimate job opportunity, and consumers who call the defendants to apply for a Postal Service job are tricked into spending over $100 for what turns out to be a booklet of general job-seeking advice, the FTC alleges.  The defendants are Career Exams Inc., also doing business as Career Advancement Group; O’Brien Marketing Inc., also doing business as O’Brien Consulting and O’Brien Answers; Jeryn B. Lee; and Derek Jackson.

    The Commission vote authorizing the staff to file the complaint was 4-1, with Commissioner Rosch voting no.  The complaint was filed in the U.S. District Court for the Western District of Kentucky.  On November 2, 2012, the court temporarily halted the defendants’ deceptive practices and froze their assets pending resolution of the case.

    *Smart Tools LLC and Kirstin Hegg sold a home-based business opportunity that promised purchasers they could become “Government Insurance Refund Processors.”  According to the FTC’s complaint, Smart Tools and Hegg mailed thousands of postcards falsely claiming consumers could earn up to $38,943 per year – just by finding those eligible for refunds of their mortgage loan insurance premiums and charging them a fee to tell them how to get those refunds.  Consumers were persuaded to pay $3.91 for a manual describing how to find people who are owed refunds, in addition to paying a recurring monthly charge of $29.99 (after a free trial period) for access to lists of refund-eligible persons and some refund-processing software.  Although Smart Tools and Hegg led consumers to believe that the lists of those eligible for refunds were not available free of charge, they allegedly buried on page 8 of their 31-page manual an inadequate, inconspicuous disclosure that the Department of Housing and Urban Development offers the same lists for free online.

    The Commission vote authorizing staff to refer the complaint to the Department of Justice was 5-0.  The DOJ filed the complaint on behalf of the Commission in the U.S. District Court for the District of Oregon, Portland Division.

    *Rebate Data Processor.  Christopher Andrew Sterling, doing business as rebatedataprocessor.com, sterlingvisa.com, and creditcardworker.com, and via links to those websites from other websites, allegedly claimed consumers could earn from $200 to more than $1,000 per day by processing applications for rebates or credit cards offered by certain marketers.  In fact, all Sterling allegedly provided, if anything, was information on how to become an affiliate marketer by creating your own Internet ads for credit card offers.  The ads would generate income only if someone saw an ad and made a purchase.  According to the FTC’s complaint, Sterling promised that, for a minimum fee of nearly $50, he would provide customers for the data processing services.  One of his websites stated, “Rebate Processing Jobs – You Can Process Simple Customer Rebates from Home and Earn $15 each GUARANTEED!”  His claims included a statement that people could earn “$15,526 in 29 days.”  In fact, few, if any, consumers were likely to make the kind of income Sterling claimed, the complaint alleges, because he misrepresented the nature of the business opportunity, because affiliate marketing is complicated and highly competitive, and because Sterling sometimes failed to provide any information in return for a purchase.

    The Commission vote authorizing staff to refer the complaint to the Department of Justice was 5-0.  The DOJ filed the complaint on behalf of the Commission in the U.S. District Court for the Southern District of California.

    *The Zaken Corp. and Tiran Zaken used direct mail and a website to sell a plan that, for a fee of $148 or more, supposedly would enable consumers to earn thousands of dollars per month.  Consumers would find businesses with excess inventory to sell, and the defendants would find a buyer for the inventory and pay consumers a “finder’s fee” of half the sales price.  The defendants’ mailers asked, “What Would You do With an Extra $5,000 (or more) a Month?” and falsely claimed consumers would earn at least $4,000 or more in the first 30 days and, on average, $4,280 per deal.  The FTC alleged that consumers did not earn substantial income from this business opportunity.

    The Commission vote authorizing staff to refer the complaint to the Department of Justice was 5-0.  The DOJ filed the complaint on behalf of the Commission in the U.S. District Court for the Central District of California.

    In bringing these cases, the FTC acknowledges assistance from the Attorney General’s offices in Arizona, Florida, Maryland, New York, Kentucky, Oregon and Vermont.

    **The amended Business Opportunity Rule requires business opportunity sellers, including work-at-home offers such as envelope stuffing, to disclose, in a one-page document:

    • the seller’s identifying information;
    • whether the seller makes a claim about the purchaser’s likely earnings (and, if the seller checks the “yes” box, the seller must provide information supporting any such claims);
    • whether the seller, its affiliates or key personnel have been involved in certain legal actions (and, if yes, a separate list of those actions);
    • whether the seller has a cancellation or refund policy (and, if yes, a separate document stating the material terms of such policies); and
    • a list of persons who bought the business opportunity within the previous three years.

    Misrepresentations and omissions are prohibited under the Rule, and for sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

    Other FTC Actions

    The operation includes a $478 million judgment the FTC obtained in August 2012 against John Beck Amazing Profits, the return of more than $5 million to consumers this year from FTC actions against Infusion Media Inc., AED Inc., and Abili-Staff Ltd., and the FTC’s case, filed in May, against North American Marketing and Associates LLC.

    To learn more about these kinds of scams, go to the FTC’s Business Opportunity Scams, or Estafas de Oportunidades de Negocio, and read articles including the FTC’s Bogus Business Opportunities, Government Job Scams, Work-at-Home Businesses, and Mystery Shopper Scams.  Business opportunity sellers should visit the FTC’s Franchises, Business Opportunities, and Investments and read Selling a Work-at-Home or Other Business Opportunity? Revised Rule May Apply to You, or watch The Business Opportunity Rulevideo.

    NOTE:  The Commission files a complaint, or refers a complaint to the DOJ for filing, when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.  The complaint is not a finding or ruling that the defendants have actually violated the law.  The case will be decided by the court.

    The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

    MEDIA CONTACT:
    Frank Dorman
    Office of Public Affairs

    202-326-2180
     
    STAFF CONTACT:
    Shopper Systems
    Thomas M. Biesty and Janice L. Kopec
    Bureau of Consumer Protection
    202-326-2550
    American Business Builders
    Stacy Procter, Faye Chen Barnouw and Nicholas May
    FTC Western Region Office – Los Angeles
    310-824-4343The Online Entrepreneur
    Barbara Bolton and Ryan Holte
    FTC Southeast Region Office
    404-656-1362Career Advancement Group
    Daniel O. Hanks and Emily Cope Burton
    Bureau of Consumer Protection
    202-326-2472, 202-326-2728Smart Tools
    Laureen France and Kathryn C. Decker
    FTC Northwest Region Office
    206-220-4471Rebate Data Processor
    Bureau of Consumer Protection
    Craig Tregillus
    202-326-2970The Zaken Corp.
    Dana C. Barragate
    FTC East Central Region
    216-263-3402

  11. SFA Reporter February 23, 2013 at 5:26 am Reply

    Illinois State Legislatures Approves Internet Posting Removal Act

    Status
    February 13 2013 – Referred to Assignments
    Pending: Senate Assignments Committee
    Text: Latest bill text (Introduced) [HTML]

    Summary
    Creates the Internet Posting Removal Act. Provides that a web site administrator shall, upon request, remove any posted comments posted by an anonymous poster unless the anonymous poster agrees to attach his or her name to the post and confirms that his or her IP address, legal name, and home address are accurate. Effective 90 days after becoming law.

    http://legiscan.com/IL/bill/SB1614

  12. SFA Reporter March 18, 2013 at 4:46 am Reply

    $200 Million Card Fraud Scheme Alleged

    18 Arrests in Global Case that Reveals Cross-Channel Gaps
    By Tracy Kitten, February 12, 2013. Follow Tracy @FraudBlogger

    Arrests in connection with an alleged $200 million global credit card fraud Bank info security2ring offer an important reminder about gaps in cross-channel and cross-account fraud detection, says one anti-money-laundering expert.

    Banking institutions must practice more due diligence when it comes to account activity monitoring – and greater reliance on big data would help, the expert advises.

    On Feb. 5, federal authorities arrested 13 individuals allegedly connected to one of the biggest payment card schemes ever uncovered by the Department of Justice. The defendants’ alleged criminal enterprise – built on synthetic, or fake, identities and fraudulent credit histories – crossed numerous state and international borders, investigators say.

    The scheme involved the creation of false identities used to create fraudulent credit profiles, falsified information to establish creditworthiness with the credit bureaus and large loans that were never repaid by the fraudsters, according to court records that were recently unsealed.

    The defendants have been accused of moving millions of dollars through accounts under their control, as well as wiring millions of dollars overseas. An investigative analysis of 169 bank accounts allegedly used by the defendants, their “sham” companies and/or complicit businesses identified $60 million in proceeds that had flowed through the numerous accounts, with most of those funds being withdrawn in cash, investigators say.

    Additionally, those charged allegedly wired millions of dollars to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan, authorities say. Due to the massive scope of the case, which involved more than 25,000 fraudulent credit cards, loss calculations are ongoing. Final figures may grow beyond the confirmed losses of more than $200 million.

    Cybercrime experts from the Federal Bureau of Investigation have been investigating the case for 18 months. Several other individuals allegedly connected to the scheme were arrested earlier. So far, 18 individuals have been charged with bank fraud and face up to 30 years in prison and a $1 million fine.

    Difficult to Trace

    Micah Willbrand, director of AML market planning for LexisNexis’ financial services division, says the two-year alleged scheme, which involved opening numerous business bank accounts, establishing high-scoring credit reports and moving funds to accounts in high-risk international markets, should have raised flags sooner. Unfortunately, international schemes are often the most difficult to trace, he says.

    Bank Secrecy Act and AML regulations do not require banks to identify or scrutinize the recipient of funds associated with high-risk transactions, Willbrand says. “Laws and regulations today only require that the bank have KYC [know the customer] in place for the sender, not the receiver of money,” he says.

    And financial institutions have been reluctant, until recently, to push the envelope. Jurisdictional challenges related to international transactions would require banks to do a lot more leg work to verify the authenticity, risk and identity of a recipient to parallel the due diligence and KYC controls they have in place for senders, Willbrand says.

    But card fraud schemes demonstrate why it’s imperative to have KYC controls in place for both senders and recipients, he adds.

    “With FACTA [Fair and Accurate Credit Transactions Act], all countries are realizing we need to know more about who’s receiving the money. We need to be more transparent about how money is moving around the world, and that is something everyone is coming around to.”

    Moving Money

    Authorities charge that the defendants and their conspirators in this case allegedly created more than 7,000 false identities and fraudulently obtained tens of thousands of credit cards they used to purchase lavish goods and stockpile large sums of cash.

    The enterprise allegedly maintained more than 1,800 so-called “drop addresses,” including houses, apartments and post office boxes, used as the mailing addresses for the synthetic identities. These IDs were used to create dozens of sham companies that did little or no legitimate business, investigators allege. Through those sham companies, the defendants and their co-conspirators purchased credit card terminals used to run up charges on fraudulent credit cards, authorities charge.

    The sham companies established merchant accounts with merchant processors, investigators say. Those processors deposited funds they received from the credit card companies for charges made by the sham companies into business bank accounts opened by the alleged criminal enterprise. If a merchant processor shut down an account for some reason, the conspirators established a new business name and applied for new terminals, investigators allege.

    The fake companies also served as “furnishers,” providing false information to the credit bureaus about the credit histories of the synthetic identities they had affiliated with the companies. They then used lines of credit to increase their borrowing ability from card issuers and added authorized users to their credit card accounts to improve credit histories.

    Authorities charge that the alleged criminal enterprise also relied on complicit businesses, including several jewelry stores in Jersey City, N.J., to conduct sham transactions on fraudulent cards to receive the proceeds from the credit card companies. Those proceeds would then be split with the alleged conspirators, investigators say.

    “This elaborate network utilized thousands of false identities, fraudulent bank accounts, fake companies, and collusive merchants to defraud financial institutions of hundreds of millions of dollars in order to facilitate extravagant lifestyles they could otherwise not afford,” FBI Special Agent David Velazquez says in the arrest announcement.

    The Big Data Challenges

    Willbrand says banking institutions have not done enough to monitor accounts or risk profiles after the initial review at account opening.

    “Transaction monitoring and core banking systems, when they do risk ratings, tend to work in a vacuum,” he says. “They set rules and say if something goes outside those boundaries, something is wrong. But the systems don’t take into account any customer information or due diligence after the account is created.”

    Once the bank accepts who the owner of an account is, then that account owner is not typically reviewed again, Willbrand explains. “If they had gone back to review some these identities in this case, then some of that would have come out sooner,” he adds.

    Credit reporting bureaus, however, are building in more monitoring around synthetic identities, Willbrand adds, but their information is limited. “They are only looking at their files, rather than comparing their information with all of the other data out there, like where these ‘identities’ live and have lived, what their profiles are internationally, and what their credit is with the other bureaus.”

    Those challenges are amplified when transactions and accounts start crossing international borders. Data about identities is not combined internationally, Willbrand says. The only way to get an accurate profile is by cross-checking public records with utility bills and bank accounts around the world, he says.

    Banking institutions are just starting to address some of these big data concerns, Willbrand adds. “[Recently] we have seen a high level … of attention being paid to enhancing this due diligence area.”

    Willbrand says the manual review and overlaying of information can be too demanding for some banking institutions, especially smaller ones. But a number of companies are now offering automated or partially automated services to help banks and credit unions develop more inclusive profiles of customers and members, he says.

    “To a certain extent, it is a big data approach,” Willbrand says. “It allows you to bring out red flags that you would not have been able to raise four or five years ago.”

    Source: BankInforSecurity

  13. SFA Reporter April 20, 2013 at 11:04 pm Reply

    Brian Kerbs ~ KerbsOnSecurity Explains His Horrific Ordeal

    It’s not often that one has the opportunity to be the target of a cyber and kinetic attack at the same time. But that is exactly what’s happened to me and my Web site over the past 24 hours. On Thursday afternoon, my site was the target of a fairly

    English: A in Fairfax County, .

    English: A in Fairfax County, . (Photo credit: Wikipedia)

    massive denial of service attack. That attack was punctuated by a visit from a heavily armed local police unit that was tricked into responding to a 911 call spoofed to look like it came from my home.

    Well, as one gamer enthusiast who follows me on Twitter remarked, I guess I’ve now “unlocked that level.”

    Things began to get interesting early Thursday afternoon, when a technician from Prolexic, a company which protects Web sites (including KrebsOnSecurity.com) from denial-of-service attacks, forwarded a strange letter they’d received earlier in the day that appeared to have been sent from the FBI. The letter, a copy of which is reprinted in its entirety here, falsely stated that my site was hosting illegal content, profiting from cybercriminal activity, and that it should be shut down. Prolexic considered it a hoax, but forwarded it anyway. I similarly had no doubt it was a fake, and a short phone call to the FBI confirmed that fact.

    Around the same time, my site came under a series of denial-of-service attacks, briefly knocking it offline. While Prolexic technicians worked to filter the attack traffic, I got busy tidying up the house (since we were expecting company for dinner). I heard the phone ring up in the office while I was downstairs vacuuming the living room and made a mental note to check my voicemail later. Vacuuming the rug near the front door, I noticed that some clear plastic tape I’d used to secure an extension cord for some outdoor lights was still straddling the threshold of the front door.
    Fairfax County Police outside my home on 3/14/13

    When I opened the door to peel the rest of the tape off, I heard someone yell, “Don’t move! Put your hands in the air.” Glancing up from my squat, I saw a Fairfax County Police officer leaning over the trunk of a squad car, both arms extended and pointing a handgun at me. As I very slowly turned my head to the left, I observed about a half-dozen other squad cars, lights flashing, and more officers pointing firearms in my direction, including a shotgun and a semi-automatic rifle. I was instructed to face the house, back down my front steps and walk backwards into the adjoining parking area, after which point I was handcuffed and walked up to the top of the street.

    I informed the responding officers that this was a hoax, and that I’d even warned them in advance of this possibility. In August 2012, I filed a report with Fairfax County Police after receiving non-specific threats. The threats came directly after I wrote about a service called absoboot.com, which is a service that can be hired to knock Web sites offline.

    One of the reasons that I opted to file the report was because I knew some of the young hackers who frequented the forum on which this service was advertised had discussed SWATting someone as a way of exacting revenge or merely having fun at the target’s expense. To my surprise, the officer who took my report said he had never heard of the phenomenon, but promised to read up on it.

    One of the officers asked if it was okay to enter my house, and I said sure. Then an officer who was dressed more like a supervisor approached me and asked if I was the guy who had filed a police report about this eventuality about six months earlier. When I responded in the affirmative, he spoke into his handheld radio, and the police began stowing their rifles and the cuffs were removed from my wrists. He explained that they’d tried to call me on the phone number that had called them (my mobile), but that there was no answer. He apologized for the inconvenience, and said they were only doing their jobs. I told him no hard feelings. He told me that the problem of SWATting started on the West Coast and has been slowly making its way east.

    The cop that took the report from me after the incident said someone had called 911 using a Caller ID number that matched my mobile phone number; the caller claimed to be me, reporting that Russians had broken into the home and shot my wife. Obviously, this was not the case, and nobody was harmed during the SWATing.

    It’s difficult to believe the phony FBI letter that Prolexic received, the denial-of-service attack, and the SWATting were somehow the work of different individuals upset over something I’ve written. The letter to Prolexic made no fewer than five references to a story I published earlier this week about sssdob.ru, a site advertised in the cybercrime underground that sells access to Social Security numbers and credit reports. That story was prompted by news media attention to exposed.su, a site that has been posting what appear to be Social Security numbers, previous addresses and other information on highly public figures, including First Lady Michelle Obama and the director of the FBI.

    Interestingly, there are strong indications that a site named booter.tw may have been involved in the denial-of-service attack on my site yesterday. For some bone-headed reason, the entire customer database file for booter.tw appears to be available for download if you happen to the know the link to the archive. A search through that record shows that on Thursday afternoon Eastern Time, someone paid booter.tw to launch a series of denial-of-service attacks against my Web site. The account that paid for the attack used the nickname “Starfall,” using the email address “starfall@gmail.com.”

    Update, Mar. 16, 8:09 a.m. ET: It seems that I and several other folks who looked at the SQL file from booter.tw made the same mistake in misreading the table: The account that ordered the DDoS against KrebsOnSecurity.com was not Starfall but instead one that used the nickname “countonme,” and the email address “countonme@gmail.com.”

    Full Story ~

  14. SFA Reporter May 11, 2013 at 8:34 am Reply

    Bank Heist Impressed Cybercrime Experts With its Technical Sophistication, Effectiveness

    NEW YORK – A bloodless bank heist that netted more than $45 million has left even cybercrime experts impressed by the technical sophistication, if not the virtue, of the con artists who pulled off a remarkable internationally organized attack.

    “It was pretty ingenious,” Pace University computer science professor Darren Hayes said Friday.

    On the creative side of the heist, a small team of highly skilled hackers penetrated bank systems, erased withdrawal limits on prepaid debit cards and stole account numbers. On the crude end, criminals used handheld devices to change the information on the magnetic strips of old hotel key cards, used credit cards and depleted debit cards.

    Seven people were arrested in the U.S., accused of operating the New York cell of what prosecutors said was a network that carried out thefts at ATMs in 27 countries from Canada to Russia. Law enforcement agencies from more than a dozen nations were involved in the investigation, which was being led by the Secret Service.

    Here’s how it worked:

    First, the hackers, quite possibly insiders, broke into computer records at a few credit card processing companies, first in India and then the U.S. This has happened before but here’s what was new: They didn’t just take information. They actually raised the limit on prepaid debit cards kept in reserves at two large banks.

    “It’s pretty scary if you think about it. They changed the account balances. That’s like the holy grail for a thief,” said Chris Wysopal, co-founder of security company Veracode.

    The next step was technically simpler, almost an arts-and-crafts activity.

    Crime ring members in 27 countries ran used plastic cards, just about anything with a standard magnetic strip, through handheld magnetic stripe encoders, widely available online for less than $300. Those devices allow users to change information on magnetic stripes or to write new cards with a simple swipe.

    In this case, the stripes were rewritten with information from the hackers. That allowed the thieves to turn the cards into gold, instantly transforming them into prepaid debit cards with unlimited amounts of money stored on them.

    Read more: http://www.foxnews.com/us/2013/05/10/bank-heist-impressed-cybercrime-experts-with-its-technical-sophistication/#ixzz2T0HYRswV

  15. SFA Reporter June 27, 2013 at 2:55 pm Reply

    19 April, 2013 10:04AM AWST

    Sophisticated Scam Starts
    With Innocent Sounding Text Message

    By Emma Wynne

    A message warning of interruptions to your mobile phone service could be the first sign that your bank account is about to be drained.

    Texting on a qwerty keypad phone

    Texting on a qwerty keypad phone (Photo credit: Wikipedia)

    Andrew O’Connor, presenter of 730WA, and his wife have just been the victims of a sophisticated scammers who hacked into their bank accounts

    “It started when my wife received a text message last Friday saying that network upgrades were being done by Telstra and that some customers might experience some interruption in their services,” Andrew said.

    “The interruptions never occurred but several days later she received the same text message. Two minutes later she received another message saying that her voicemail pin had been reset.

    “Then her phone went dead.”

    Two hours later, $10,000 had been taken out of the O’Connor’s accounts. Within 14 hours of the phone going dead, $18,000 had been stolen from the accounts.

    At the time, they simply thought it was a malfunctioning phone but when they contacted Telstra, Telstra said the phone number had been transfered to another carrier, and the number was now attached to another SIM card with a different provider.

    A few days later, Andrew checked his accounts and found they were all empty. The thieves had left just $48 and Andrew contacted his bank.

    “At no stage did I connect the malfunctioning phone with any potential risk to our bank accounts.”

    What appears to have happened is that the fraudsters have first hijacked the phone number, and then accessed the O’Connors internet banking identity, and set up another account with another bank to transfer the money to.

    Part of the bank’s security systems involves an SMS to the customer to verify that they want this go ahead, hence the hijacking of the phone.

    “I had no clue that when we received that text message telling us about a ‘Telstra upgrade’ that that was the start of a con,” Andrew said.

    “There doesn’t seem to be any information warning people about this, so if anyone gets a message like this they should immediately be suspicious and call their bank.”

    The bank has investigated, traced the receiver of the money and is working with police to track down the scammers.

    The good news is that the O’Connors will recover their stolen funds.

    David Hillyard, Director of Consumer Protection’s ScamNet, says it’s a scam that has been around for the last 12 months.

    He says that while the text message was the first sign, it likely started much earlier with malware on a home computer allowing the hackers to get into the online banking account.

    He says the department hasn’t seen many cases, but they have been significant.

    He advises people who do get a message about their phone service to contact their carrier and verify that independently.

    “You also need to adequately maintain security on your computer and make sure you’ve got anti-spyware on your computer.”

    A harmless-sounding text message could be the first sign that you’ve been hacked (ABC News: Simon Brown)

    Source:ABC Central Victoria

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