The Washington Post reports that this holiday season, Cyber Monday expanded into an entire week of record-breaking online shopping. From Sunday, November 27 through Saturday, December 3, consumers spent nearly $6 billion over the Internet, a 15% increase over the same week in 2010. During the first 32 days of the November-December holiday season, online spending had already reached $18.7 billion, also a 15% increase from last year.

Which begs the question: when the dust settles, how much of this uptick in online sales will equate to online fraud? It is inevitable that some consumers will detect unauthorized charges on their credit and bank accounts, and many retailers will suffer high chargebacks.

Consumers should seek out and patronize businesses that implement a comprehensive, in-depth approach to protecting customers from identity theft and financial fraud. They should also check credit and banking statements carefully, scrutinize each and every charge, and call their bank or credit card company immediately to refute any unauthorized transactions.

Retailers should consider adding device identification technology to prevent more crime upfront before product ships and stolen credit cards are charged. This emerging technology examines the PC, smartphone, or tablet being used to conduct an online transaction in order to determine whether the device’s characteristics, behavior, and history indicate a high level of risk. The leading provider of device identification and device reputation services is iovation Inc. Take a look at iovation’s stats from Black Friday and Cyber Monday.

Fraud analysts from online retailers around the world interact with iovation’s database of device intelligence daily, and through sharing information and running real-time risk assessments, they block millions of online fraudulent attempts each year.

Robert Siciliano, personal security and identity theft expert contributor to iovation, discussesCyber Monday on Fox Boston. Disclosures

Auction fraud refers to fraudulent transactions that take place through auction and classifieds websites.  Either a product advertised may be misrepresented by the seller or the items sold are never delivered at all.

This holiday season, as you seek out hard-to-find gifts and look for the best prices, keep in mind that not everyone out there on the wild, wild web has good intentions.

Auction sites are ground zero for scammers. It’s very easy to set up a free auction page from anywhere in the world, collect people’s money, and run.

Here are four tips to keep you safe when shopping through auction websites.

1. Use strong passwords: Use complex passwords that are hard to crack but easy to remember. Passwords should include upper and lowercase letters as well as numbers, and, if possible, other characters.
2. Look out for phishing emails: Any email that appears to have been sent from an auction site should be considered suspect. Certainly there are legitimate communications being sent by eBay and similar sites, but none of them should require a direct email response. To confirm that a communication is legitimate, always go to the website directly via your favorites menu, log into your account normally, and check your “My Messages” folder, rather than clicking any links within the email.

Read the rest of this entry »

Today’s traveler, whether on business or vacationing at their favorite surf or ski resort, is becoming increasingly dependent on their electronic devices. While our smartphones, tablets and laptops allow us to be more business efficient and instantly share our travel moments with family and friends, our favorite handheld devices are also vulnerable to being lost, stolen or hacked while on the road.

In the USA Today article, “Travelers at high risk of identity theft, experts say,” travelers lost a total of 11,000 mobile devices at the busiest U.S. airports this year. And that only accounts for items lost before travelers reach their intended destinations. In a study of 200 data breaches, Trustwave’s SpiderLabs found that hotels and resorts are prime targets for crooks stealing financial information, with respondents saying 38% of data thefts took place at hotels or resorts.

John Sileo, an identity theft and fraud expert who experienced identity fraud first-hand while traveling to Disney World, says people can be particularly vulnerable when they are unfamiliar with their surroundings. In his case, he suspected someone took a photo of his card number at the theme park before his bank informed him that his credit card had been shut down when someone attempted to make $3,000 worth of online charges to his card. Read the rest of this entry »

A few week’s back, I wrote how iovation’s fraud prevention service had been named as a finalist for the 2011 Red Herring 100 Global Award. This week we are proud to announce that iovation was named a Top 100 Global Company.

It’s truly an honor to follow in the footsteps of some of the most recognizable technology companies in the world such as Google, YouTube, Skype and eBay, who have all been previously selected to Red Herring’s prestigious Top 100 Global list.

This recognition is a direct result of years of hard work evolving our fraud protection service into a full spectrum device reputation solution that supports native and web integrations for mobile and desktop devices, tagged and tagless device recognition, real-time transparent risk scoring, and on-demand and scheduled reporting. Our remarkable growth is attributed to the collaborative work and effectiveness of our global device intelligence network, which today protects billions of transactions for our clients representing multiple industries around the globe. Read the rest of this entry »

In the hours following the two most-anticipated shopping days of the year — Black Friday and Cyber Monday — we’ve already seen a number of impressive figures that defy earlier modest expectations for the holiday season.

According to the NY Times article, “Cyber Monday Shopping Surpasses Expectations,” both ComScore and IBM Benchmark reported that the $1.3 billion spent by online shoppers represented up to a 33% increase in online sales over last year. This followed record-breaking Black Friday weekend sales of $52.4 billion, which CNN Money reported is a 16% jump over 2010. Either way you cut it, there’s little doubt that retail and online sales over the weekend could make for a very profitable holiday season for merchants.

At iovation, we help our clients know who to trust online, by quickly recognizing their good online customers and isolating the fraudsters through shared device intelligence. By identifying bad actors upfront and flagging suspicious transactions in real-time, we help merchants decline fraudulent orders faster, minimize chargebacks and take more good business with confidence — all especially important during the holiday’s peak traffic.

Looking at iovation’s device reputation network on Black Friday and Cyber Monday, we found some interesting trends and year-over-year comparisons during the two hottest shopping days of the year, including:

• 400% increase in the rate of fraudulent transactions (from 1% to 4%) on Black Friday
• 25% increase in the rate of fraudulent transactions (from 3% to 4%) on Cyber Monday
• 15% greater transaction volume on Cyber Monday compared to Black Friday
• 4% mobile fraud rate on both Black Friday and Cyber Monday

While it was no surprise that credit card fraud, shipping fraud and account takeovers topped the list of fraud types reported to iovation’s database on these days, a noticeable drop in the share of mobile shopping activity was very unexpected.

Despite several industry surveys forecasting significant increases in mobile purchases over the holidays, iovation saw mobile transactions decrease as a share of overall activity on Black Friday and Cyber Monday. While mobile transactions usually account for 5% of queries to iovation’s service, mobile’s share of overall retail transactions dropped to 3.2% on Black Friday and 2.7% on Cyber Monday. At this point any conclusions would be only speculative as to why mobile transactions were down during these peak periods. Are consumers not ready to make purchases over their smartphones? Is the user experience of a smartphone checkout too cumbersome compared to the convenience of a desktop?  As retailers look to the mobile market as an increasingly important channel, it will be critical that they solve these issues.

Helping online businesses effectively and efficiently fight online fraud and abuse is our No. 1 goal here at iovation. And according to the team at Red Herring, we have performed exceptionally. For our work in stopping more than 50 million online fraud attempts for our customers this year, we are proud to announce that iovation’s fraud prevention service has been named a finalist for the 2011 Red Herring 100 Global Award.

For the 2011 Global Award, the Red Herring editorial team selected companies demonstrating the most innovative technologies and business models originating from over 1,000 companies from over 40 nations. The companies are judged on a range of qualitative and quantitative metrics, including technology innovation, financial performance, growth criterion, management’s execution standards, potential globalization of the strategy and market share improvement.

The 2011 Global finalists will be featured during the Red Herring event taking place at the Hyatt Regency Century Plaza on December 5-7, 2012. iovation’s CEO, Greg Pierson, will be presenting iovation’s winning strategy on Tuesday, December 6th and on the last night of the event, the Global winner will be announced. If you are attending the event and would like to schedule time to chat with Greg Pierson, please email info@iovation.com.

My goal is to not enter a single mall this holiday season. If I can do the majority of my holiday shopping at trusted online retailers, and the rest at Costco, then I’ve done well. To me, malls seem to be places for people with lots of time on their hands to drive around looking for parking spots and then stand in line with other people who apparently all enjoy being annoyed by each other’s pushiness. But maybe that’s just me.

Keep safe and sane this holiday season:

1. Look for indications of online security. Depending on your browser, there may be an icon of a yellow lock at the top of the window, near the address bar, or at the bottom, near the taskbar. If the website is secure, the yellow lock should be closed. Some browsers use a color coding system, displaying red to indicate that a website is not secure and may potentially be infected, or green to indicate that it’s okay.  Read the rest of this entry »

Bad guys know perfectly well that when the online bargains begin after Thanksgiving, specifically, on the Monday after Thanksgiving, you will be providing your credit card number to retailers all over the world.

1. Go big. Do your online business with major retailers, or those you already know, like, and trust. The chances of a major online retailer stiffing you, or of their database being compromised, are slimmer than those of an unknown.

2. Do your homework. If you search for a particular product and wind up at an unfamiliar website, do some research on the retailer before putting down your credit card number. Search for the company’s name and web address to see if there have been complaints. Read the rest of this entry »

As Internet traffic grows exponentially, the ability to identify all online transactions is an ongoing challenge for any organization. This challenge is even more significant for businesses whose sales revenues rely on online payments. For them, the ability to analyze and decipher the difference between a valid transaction and a risky one is critical to their business success.

As we inch closer to the holiday season, a pair of recent articles highlight the increasing volume of online transactions that are just around the corner for online merchants. If there is a security takeaway from these trends, it’s that IT fraud teams better be prepared for significant increases in online transactions over the next few weeks. Read the rest of this entry »

Every online user, including fraudsters, were granted a free pass by the Justice Department earlier this week for lying on the Internet. Okay, I know what you’re thinking: “How can we prosecute somebody for lying?” Fibbing is an age-old human behavior that even the DoJ says it doesn’t have the time or resources to bring cases against everyone who lies on dating websites.

According to the Politico article, “Free pass for dating site liars,” people can take comfort in knowing that they don’t have to worry about being prosecuted or hauled off to jail for telling a little white lie over the Internet. While this certainly makes sense, at the same time we’re still walking on shaky ground when it comes to online lies, falsifications, profile misinterpretations, or whatever you want to label it. The fact is, when it comes to identity fraud, fake accounts or other crimes on romance sites, lying is typically the basis for the crime. It sets the stage for deeper criminal activity that can cost victims both emotional and financial hardships, not to mention damage to the dating site’s reputation.  Read the rest of this entry »

Black Friday, the day after Thanksgiving, kicks off the holiday shopping season. Retailers advertise Black Friday bargains in order to lure you through their doors.

As far back as I can remember, police have been warning of thieves who target cars in parking lots, smashing windows to steal shopping bags left in plain sight. Then, we’d be warned that as the Christmas lights went up, thieves would target the wrapped gifts underneath the tree. I thought, “It can’t get worse than this?”

Then Cyber Monday came along. It was born as a marketing opportunity that has taken on a life of its own over the past five or six years. Online retailers promote their Cyber Monday offers throughout the fall, creating hype that whips shoppers into a frenzy. It’s become as essential to the retail community as Black Friday. Read the rest of this entry »

When it comes to victims of online dating fraud, we’ve heard the stories of how unsuspecting lonely hearts have lost tens of thousands of dollars. The emotional hardships and financial setbacks that victims of online romance scams go through can be devastating. This week, we saw another story that left one victim with no money, homeless, hungry, and eventually hospitalized with pneumonia in a foreign land thousands of miles from home.

In the article, “American Stranded in Ukraine in Online Dating Scam,” former write-in candidate for governor of Arizona, Cary Dolego, traveled to the city of Chernivti, Ukraine, eager to meet up with the woman he fell in love with online and one day hoped to marry. She never showed.

Turns out, Dolego was a victim of an online dating scam that stemmed from account takeover. Apparently, someone or some group hacked into a woman’s account on an international dating website and was communicating with Dolego on behalf of a woman named Yulia. While the woman later said the account on the dating site that Dolego had been corresponding with was hers, she claims she was not part of the scam. Read the rest of this entry »

Gearing up for the holidays, consumers are getting ready to pull a Wilma Flintstone and, “Charge it!” Many don’t realize that you cannot protect your credit card number. Every time you use a credit card, you increase the chances of that card number being used fraudulently.

1. When handing your card to a clerk or cashier, pay close attention. The card should be swiped through a point of sale terminal or keyboard card reader once, maybe twice. If your card is swiped through an additional reader, the card number may have been stolen.

2. Shop only at trusted sites. Phantom websites appear online all year round. They look legitimate, resembling well-known online retailers. But only do business those you recognize. Established online merchants are best.

3. Unsolicited emails that request sensitive data such as credit card numbers or lead you to a too-good-to-be-true offer are most likely phishing emails. Don’t disclose your information, and don’t click unknown links.

4. Check your credit card statements daily, if possible. Once a week is sufficient. Refute any unauthorized withdrawals or transactions within the time limit stipulated by your bank. For most credit cards, it’s 60 days, and for debit cards the limit can be 30 days or less. Read the rest of this entry »

Online dating websites are aware that scammers use their platforms to defraud men and women looking for love. With the holidays around the corner, many unsuspecting people will be used and abused by scammers, who will break their hearts, their bank accounts, or both.

Many of the stories of heartbreak and fraud look like this:

“After chatting via email, they arranged to meet, but their plans ‘collapsed’ when he told her that he had been held by tax authorities over an issue while he was attempting to fly out on business.

The so-called ‘Mr. Fields’ then asked the nurse for financial help, using emails from his fake solicitor to convince the nurse that this was merely an oversight and that his client would pay her back.”

No matter who someone is, what they say, or how they look, don’t automatically trust them.

Discussion of money or loans in any capacity is a red flag.

Don’t let your heart get in the way of basic common sense.

Sometimes loneliness trumps our ability to see the truth. Keep your head up and be attentive to people’s intentions. In context of the “Color Code of Mental Awareness” this would mean operating in the yellow zone (not in the white zone) while interacting with others on dating and social networking sites. Read the rest of this entry »

“Carders” are the people who test and sell credit card details (most likely phished) to other individuals who carry out the actual credit card fraud. Carders are the most visible of criminals who distribute and sell stolen data to whoever is willing to take it and burn it onto a white card or make purchases over the internet. “Dumps” is a term for the batches stolen credit card data they buy and sell.

Computerworld reports:

“Tony Perez III, of Hammond, Indiana, pleaded guilty to the charges on April 4. In his plea, Perez said he sold counterfeit credit cards encoded with stolen account information. Perez found customers through criminal ‘carding forums,’ Internet discussion groups set up to aid in the buying and selling of stolen financial account information and related services.”

“During a June 2010 search of Perez’s residence, Secret Service agents found 20,987 stolen credit card accounts on his computers, in his email messages, in an online account and on counterfeit credit cards he was in the process of manufacturing, according to court documents. Credit card companies have reported more than US$3.1 million in fraudulent charges associated with those accounts, court documents said.”

Carding is a full time profession for thousands of hackers worldwide. Retailers’, banks’, credit card processors’, and many other corporations’ databases often contain millions of credit card numbers, and are targeted in “advanced persistent threats.” Any entity that accepts credit cards online or in the physical world is a ripe target for fraud. Read the rest of this entry »