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News

Device Association Brings Down Retail Fraud Ring

Iovation : 26 March, 2012  (Application Story)
Fraudulent charges come to a halt at 20 retailers targetted by fraud ring foiled by iovation
Device Association Brings Down Retail Fraud Ring
iovation, the Device Reputation Authority protecting online businesses from fraud and abuse, has assisted in busting a fraud ring that victimized at least 15 people and resulted in tens of thousands of dollars in fraudulent charges. The fraud ring was identified by the Kirkland, Washington police department thanks to the device association capability of iovation’s ReputationManager 360 online fraud prevention solution.

“This is a unique case because it wasn’t exclusively an online or offline crime,” said Detective Adam Haas of the Kirkland Police Department Investigation Division. “Offline clues helped, but the online digital bread crumbs sniffed out by iovation were critical in tying everything together, leading to a much bigger crime ring than we originally suspected.”

The case originally began in January 2011 with a report of $5,000 in fraudulent charges via credit card at a large electronics store and two department stores. Detective Haas checked with the credit issuer, who used iovation’s ReputationManager 360 to track fraudulent credit applications to one specific computer. But that was just the tip of the iceberg. ReputationManager 360 was then able to associate this same device with a second identity theft fraud victim. In fact, using a combination of multiple device-to-account associations, ReputationManager 360 helped identify more than a dozen additional victims. The Kirkland detective used this information, surveillance videos and other offline detective work to identify the primary suspect as a male working out of various hotel rooms in concert with others. The suspect used stolen residential mail to apply for online credit and to manufacture fraudulent identification cards.

“ReputationManager 360 was developed specifically to bust fraud rings like this,” said Jon Karl, Vice President of Corporate Development at iovation. “This private-public partnership is an example of how sharing data through iovation helps limit losses for both businesses and consumers.”

ReputationManager 360 makes it possible for online sites to visualize associations between devices and individuals, often exposing fraud rings that would otherwise remain hidden. In this case it did just that, helping retailers, credit issuers and police connect the dots between fraudulent transactions and high-risk devices. ReputationManager 360 tracks 900 million devices, from computers to tablets to mobile phones, across a broad range of industries. It has protected more than 7 billion total online transactions to date.

What started out as a small state case with one victim has now turned into a federal indictment with nine counts, including bank fraud and aggravated identity theft. The suspect is scheduled to be sentenced this April and could face many years in prison.

Identity Theft Expert Robert Siciliano, Jon Karl of iovation and Detective Adam Haas will present how iovation’s device intelligence and the Kirkland Police Department helped take down this fraud ring during a session at the Merchant Risk Council’s (MRC) 10th Annual e-Commerce Payments & Risk Conference at 9am PDT on March 29 at the Wynn Resort Convention Center in Las Vegas, Nevada.

ReputationManager 360, iovation’s cyber fraud solution, is also a finalist for the MRC’s Emerging Technology Award (METAward). For more information, visit iovation at booth number 310 at the MRC e-Commerce Payment & Risk Conference.
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