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Archive for the ‘financial crime and fraud’ Category

CRS — Health Care Fraud and Abuse Laws Affecting Medicare and Medicaid: An Overview (September 8, 2014)

September 15, 2014 Comments off

Health Care Fraud and Abuse Laws Affecting Medicare and Medicaid: An Overview (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

A number of federal statutes aim to combat fraud and abuse in federally funded health care programs such as Medicare and Medicaid. Using these statutes, the federal government has been able to recover billions of dollars lost due to fraudulent activities. This report provides an overview of some of the more commonly used federal statutes used to fight health care fraud and abuse and discusses some of the changes made to these statutes by the Patient Protection and Affordable Care Act (ACA).

Title XI of the Social Security Act contains Medicare and Medicaid program-related anti-fraud provisions, which impose civil penalties, criminal penalties, as well as exclusions from federal health care programs on persons who engage in certain types of misconduct. ACA amends these administrative sanctions and authorizes the imposition of several new civil monetary penalties and exclusions.

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The Check is in the Mail: Monetization of Craigslist Buyer Scams

September 10, 2014 Comments off

The Check is in the Mail: Monetization of Craigslist Buyer Scams (PDF)
Source: George Mason University, Department of Computer Science

Nigerian or advance fee fraud scams continue to gain prevelance within the world of online classified advertisements. As law enforcement, user training, and website technologies improve to thwart known techniques, scammers continue to evolve their methods of targeting victims and monetizing their scam methods. As our understanding of the underground scammer community and their methods grows, we gain a greater insight about the critical points of disruption to interrupt the scammers ability to succeed. In this paper we extend on previous works about fake payment scams targeting Craigslist. To grow our understanding of scammer methods and how they monetize these scams, we utilize a data collection system posting ”honeypot advertisements” on Craigslist offering products for sale and interact with scammers gathering information on their payment methods. We then conduct an analysis of 75 days worth of data to better understand the scammer’s patterns, supporting agents, geolocations, and methods used to perpetuate fraudulent payments. Our analysis shows that 5 groups are responsible for over 50% of the scam payments received. These groups operate primarily out of Nigeria, but use the services of agents within the United States to facilitate the sending and receiving of payments and shipping of products to addresses both in Nigeria and the United States. This small number of scammer organizations combined with the necessity of support agents within the United States indicate areas for potential targeting and disruption of the key scammer groups.

Hat tip: ResearchBuzz

See also: Scambaiter: Understanding Targeted Nigerian Scams on Craigslist (PDF)

The SEC’s Focus on Cybersecurity: Key considerations for investment advisers

September 9, 2014 Comments off

The SEC’s Focus on Cybersecurity: Key considerations for investment advisers
Source: Deloitte

The growing number and complexity of cybersecurity risks facing investment advisers (IAs) has triggered an increased interest in cyber risk management by the United States Securities and Exchange Commission (SEC). Cyber risks and the SEC’s related focus are particularly relevant for mutual funds, hedge funds, and private equity managers.

In this point of view, we outline key considerations arising from the cybersecurity Risk Alert issued by the SEC’s Office of Compliance Inspections and Examinations (OCIE) and describe how IAs can prepare for an OCIE cybersecurity examination and leading practices for IAs to utilize when addressing cybersecurity threats.

Deloitte expects the SEC and its staff to continue to focus on cybersecurity, particularly as the results of a planned sweep of fifty cybersecurity exams unfold. It is critical that IAs not only meet SEC expectations in the cybersecurity arena, but also invest in a program to become secure, vigilant, and resilient in the face of cybersecurity risks.

USPS OIG — eCommerce Customer Registration

August 28, 2014 Comments off

eCommerce Customer Registration (PDF)
Source: U.S. Department of Health and Human Services, Office of Inspector General

Background
The U.S. Postal Service’s Customer Registration application allows customers to create accounts through USPS.com to purchase products and services through over 40 eCommerce applications such as Every Door Direct Mail, Premium Forwarding Service, Click-N-Ship, and the Postal Store. Customers must provide personally identifiable information to create an account. There were over 24 million Customer Registration users as of June 2014 and revenue totaled about $1.2 billion in fiscal year (FY) 2013.

Our objective was to determine the effectiveness of controls used to safeguard the eCommerce Customer Registration process and reduce online credit card fraud.

What the OIG Found
Controls used to safeguard the eCommerce Customer Registration process and reduce online credit card fraud need improvement. Management has not established a threshold for fraud-related chargebacks (transactions rejected by credit card companies) for the four eCommerce applications in our review. As a result, management cannot objectively measure when to increase oversight and controls to reduce fraud.

Of the four applications, Click-N-Ship’s credit card fraud-related loss of $4.6 million was above the industry’s recommended threshold for acceptable levels of credit card fraud in FY 2013. In addition, management did not always ensure all credit card company chargebacks were validated.

Further, seven of the eight Customer Registration controls we tested worked as management intended. However, we identified one vulnerability that could permit a cyber criminal to impersonate a valid user and obtain postage using stolen credit card data. Finally, we did not identify any critical or high-risk vulnerabilities when conducting over 3,000 additional tests of the USPS.com login page.

What the OIG Recommended
We recommended management establish a threshold for credit card fraud and develop a policy defining chargeback roles and responsibilities. We also recommended management maintain chargeback research results from all eCommerce managers and configure eCommerce applications to prevent the noted security vulnerability.

TIGTA Issues Report on the IRS’s External Leads Program

August 28, 2014 Comments off

TIGTA Issues Report on the IRS’s External Leads Program
Source: Treasury Inspector General For Tax Administration

Participation in the Internal Revenue Service (IRS) External Leads Program is growing, resulting in the receipt of a significantly larger volume of leads about questionable tax refunds, but the IRS is not always verifying the leads timely, according to a new report by the Treasury Inspector General for Tax Administration (TIGTA).

The IRS’s External Leads Program receives leads about questionable tax refunds identified by a variety of partner organizations that include financial institutions, brokerage firms, government and law enforcement agencies, State agencies and tax preparers. The questionable tax refunds include Treasury checks, direct deposits, and prepaid debit cards.

The overall objective of this review was to assess the effectiveness of the IRS’s External Leads Program in recovering questionable tax refunds.

Since taking over the External Leads Program in January 2010, the IRS’s Wage and Investment Division has performed outreach in an effort to continuously increase the number of organizations participating in this program, TIGTA found. Participation and the number of questionable refunds returned and dollars associated have grown significantly. The IRS measures the External Leads Program’s success by volume and dollars associated with questionable returned refunds.

The program has grown from 10 partner financial institutions returning $233 million in 2010 to 258 partner financial institutions and partner organizations returning more than $576 million in 2013.

“The IRS’s External Leads Program has more than doubled the amount of questionable refunds returned over the past three years, thus saving tax dollars,” said J. Russell George, Treasury Inspector General for Tax Administration. “However, opportunities exist to improve the program,” George added.

According to the report, the IRS is not always verifying leads timely, and verification time frame goals differ significantly based on the lead type. The timely verification goals do not take into consideration the burden on legitimate taxpayers whose refund is being held until the verification is completed.

In addition, leads are inconsistently tracked in multiple inventory systems, and the inventory systems do not provide key information such as how the lead was resolved.

TIGTA recommended that the IRS establish more consistent time frames to verify leads; communicate these verification time frames to external partners; develop a process to ensure that leads are verified timely; consolidate the current lead inventory tracking systems into a single tracking system; and ensure that key information is captured as to how each lead is resolved.

The IRS agreed with TIGTA’s recommendations and is evaluating the treatment streams and work processes associated with the various types of referrals received in the External Leads Program to identify appropriate time frames; working to improve the effectiveness of existing reporting capabilities in evaluating program quality and timeliness; and evaluating the feasibility and potential benefits of consolidating the independent inventory tracking databases into one system.

New From the GAO

August 21, 2014 Comments off

New GAO Report
Source: Government Accountability Office

Supplemental Nutrition Assistance Program: Enhanced Detection Tools and Reporting Could Improve Efforts to Combat Recipient Fraud. GAO-14-641, August 21.
http://www.gao.gov/products/GAO-14-641
Highlights – http://www.gao.gov/assets/670/665382.pdf

Survey: lawyers ready to join in major push to spot and report financial fraud targeting older Americans

August 12, 2014 Comments off

Survey: lawyers ready to join in major push to spot and report financial fraud targeting older Americans (PDF)
Source: Investor Protection Trust (IPT), the Investor Protection Institute (IPI), and the American Bar Association (ABA)

Nine out of 10 practicing attorneys surveyed by the Investor Protection Trust (IPT), the Investor Protection Institute (IPI), and the American Bar Association (ABA) are willing to take part in a new campaign to address the estimated 20 percent of older America ns who have been the victims of investment fraud and financial exploitation.

In releasing the survey findings, the three groups announced that they are launching the Elder Investment Fraud and Financial Exploitation (EIFFE) Prevention Program Legal. The EIFFE Prevention Program Legal will develop, test, and implement a model national continuing legal education (CLE) program to teach lawyers to: (1) recognize clients’ possible vulnerability to EIFFE due to mild cognitive impairment (MCI); (2) identify EIFFE in their clients; and (3) report suspected instances of EIFFE to appropriate authorities. In June 2010, the Investor Protection Trust released a national survey showing that one out five older Americans are victims of financial swindles.

+ Survey Results (PDF)

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