CU SECURITY & TECHNOLOGY News - Providing a brief summary of news and information related to security and technology issues for credit unions - Plus some interesting and fun web sites.
(Click on photos to enlarge)
(Click on photos to enlarge)
Friday, January 30, 2009
Women Are Better at Financial Planning Than Men
Dan was a single guy living at home with his father and working in the Family business.
When he found out he was going to inherit a fortune when his sickly Father died, he decided he needed a wife with which to share his Fortune.
One evening at an investment meeting he spotted the most beautiful woman he had ever seen. Her natural beauty took his breath away.
"I may look like just an ordinary man," he said to her, "but in just a few years, my father will pass, and I'll inherit $20 million." Impressed, the woman obtained his business card and three days later, she became his stepmother.
Women are so much better at financial planning than men.
Monday, January 26, 2009
Beware the debit card swindlers
Five seconds.
"We've looked at the videotape, that's how long it took," said Detective Steve Cook of Hamilton Police Services major fraud unit.
Five seconds was all the fraudsters needed to install the equipment that would rig an automatic banking machine to capture the debit card information from unsuspecting users.
"One guy standing behind to block the view, the other guy takes the pieces out of a gym bag," said Cook. "Five seconds, he walks away, and it's ready to go."
But this is no amateurish duct-tape-and-chewing-gum job being pulled off.
To an untrained eye, it would be difficult to detect that the machine had been compromised.
The level of sophistication involved in today's typical debit card fraud is staggering -- tiny computer processors attached to bank machines, miniature cameras, Bluetooth wireless technology, magnetic stripe encoders, portable safes.
As technology evolves, there's a corresponding evolution in criminal techniques.
Read the rest of this interesting story at:
http://www.thespec.com/News/Discover/article/501278Scam alerts flooding several states
MADISON, Wis. (1/26/09)--
Credit unions nationwide are reporting that their members have been targeted by scams--including scams that have origins overseas.
Achieve FCU, Berlin, Conn. said that two dozen of its members lost money after sending debit card passwords to scammers that requested personal financial information (The Hartford Courant Jan. 23). The scammers had contacted members saying their accounts had been frozen.
One member lost $2.76--all she had in her account--while others lost $400, which is the maximum amount a member can withdraw in one day, Mary Budnick, Achieve vice president of operations, told the newspaper.
The scammers that targeted Achieve members were located in Romania and in Spain (Journal Register News Service Jan. 22).
The Federal Deposit Insurance Corp. (FDIC) warned its consumers, businesses and financial institutions Jan. 15 about fraudulent e-mails purporting to be from the Federal Reserve Bank. The e-mails state that a phishing attack has hit the Fedwire system and recipients are asked to click on links for more information.
More info at: http://www.cuna.org/newsnow/09/system012309-7.html?ref=hed
Credit unions nationwide are reporting that their members have been targeted by scams--including scams that have origins overseas.
Achieve FCU, Berlin, Conn. said that two dozen of its members lost money after sending debit card passwords to scammers that requested personal financial information (The Hartford Courant Jan. 23). The scammers had contacted members saying their accounts had been frozen.
One member lost $2.76--all she had in her account--while others lost $400, which is the maximum amount a member can withdraw in one day, Mary Budnick, Achieve vice president of operations, told the newspaper.
The scammers that targeted Achieve members were located in Romania and in Spain (Journal Register News Service Jan. 22).
The Federal Deposit Insurance Corp. (FDIC) warned its consumers, businesses and financial institutions Jan. 15 about fraudulent e-mails purporting to be from the Federal Reserve Bank. The e-mails state that a phishing attack has hit the Fedwire system and recipients are asked to click on links for more information.
More info at: http://www.cuna.org/newsnow/09/system012309-7.html?ref=hed
Saturday, January 24, 2009
Get Your Credit Union to Stand Out in a Crowd
If you really want to be noticed, get yourself a mascot. He’ll stand out in a crowd anywhere. We guarantee it. More credit unions today are using mascots to represent their credit union in a variety of different ways. Here are just a couple.
For more, visit Kincaid Karacter Mascots at http://www.kincaidkaracter.com/karacters/index.html
http://www.kincaidkaracter.com/
First Capitol Business Centre
2277 First Capitol Drive
Saint Louis, Mo. 63301
Phone 636-947-8822
karacter@kincaidkaracter.com
For more, visit Kincaid Karacter Mascots at http://www.kincaidkaracter.com/karacters/index.html
http://www.kincaidkaracter.com/
First Capitol Business Centre
2277 First Capitol Drive
Saint Louis, Mo. 63301
Phone 636-947-8822
karacter@kincaidkaracter.com
Friday, January 23, 2009
Locating a Private Individual
The following was posted on US.Gov on December 5, 2008.
Question
Locating a Private Individual
Answer
There are several organizations that might be able to assist you in locating a private individual. Please review the policies and guidelines for each agency/organization below.
Internal Revenue Service (IRS)
The IRS may forward a letter to someone when humane reasons are involved. For example:
* To notify someone of a serious illness, imminent death, or death of a close relative
* To seek an individual for a medical study to detect and treat medical defects
* To notify an individual, who cannot otherwise be located, that he or she is entitled to certain assets
* The IRS will forward a letter from an attorney, estate administrator, or other person who directly controls the assets
If you would like the IRS to help you locate an individual, place a personal letter addressed to the individual in a blank envelope. Include first class U.S. postage, and do not seal the letter. Place the unsealed letter in another envelope and address it as follows:
Internal Revenue Service
Office of Disclosure Operations
1111 Constitution Avenue NW
Washington, D.C. 20224
Social Security Administration (SSA)
The SSA will attempt to forward a letter to a missing person for reasons similar to those mentioned in the IRS section above. There is a $25.00 charge for forwarding letters to inform people about money or property they may be owed. Humanitarian letters are forwarded free of charge.
Follow the same guidelines above for sending a letter, and address it as follows:
Social Security Administration
Letter Forwarding
PO Box 33022
Baltimore, MD 21290-3022
The Salvation Army
The Salvation Army has operated a Family Tracing Service since 1885. The service is designed to help people establish contact with close relatives they may have lost touch with a few years ago or many years ago. The service is available in many of the 100 countries where the Salvation Army is located.
The Salvation Army will not help to locate someone in the following instances:
*
Friends
*
Situations where adoptions have taken place
*
Alleged fathers of non-marital children
*
Young people under 17 years of age
*
Former husbands or wives
*
Spouses for divorce purposes
*
Estate or similar business matters
*
Genealogies
In the United States, you may contact a Salvation Army territory office for your state. Local Salvation Army office numbers are listed in your local telephone directory.
Department of State (DOS)
The Overseas Citizens Services section of DOS will help locate relatives or friends who are overseas when there is concern about their welfare or a need to notify them of emergencies at home.
The Privacy Act requires that U.S. citizens over the age of 18 provide a Privacy Act waiver before information about them is released to a third party.
People in the United States may inquire about the welfare or whereabouts of U.S. citizens abroad by calling Overseas Citizens Services at 1-888-407-4747 or 1-202-501-4444. You may also contact the American Citizens Service Section of the nearest U.S. embassy or consulate directly.
You will need to include the following information before you call or contact the DOS:
* Your full name, address, telephone number and relationship
* The name of the person abroad
* Their date and place of birth
* Their passport number (if known)
* Their last known address and phone number
* Their itinerary
* Reason for their travel/residence abroad (business, tourism, etc.)
* Date of last contact
* Other points of contact abroad (friends, relatives, business associates, etc.)
For emergency messages, also include:
* Nature of the emergency
* What message should be provided to the person
* Name, address, telephone number and relationship of person you wish to be contacted after the emergency family message is delivered by the U.S. embassy or consulate
The United States Military
The military may also be able to help you locate the address of a servicemember. For immediate family members and government officials, the search is free. Other family members, civilian friends, businesses and others must pay $3.50. The check or money order must be made out to the U.S. Treasury and is non refundable.
You will need to provide as much identifying information on the military member as possible, such as:
*
Name
*
Rank
*
Last duty assignment
*
Last known military address
*
Service number
*
Social Security number
Please note: Because privacy regulations may limit the government's ability to provide you specific contact information for the person you are trying to locate, many people find that private sector resources can be quite helpful. While there are a number of free or fee-based services available through commercial sites on the Internet that you may opt to use in your search, the government cannot recommend or endorse any such service.
Question
Locating a Private Individual
Answer
There are several organizations that might be able to assist you in locating a private individual. Please review the policies and guidelines for each agency/organization below.
Internal Revenue Service (IRS)
The IRS may forward a letter to someone when humane reasons are involved. For example:
* To notify someone of a serious illness, imminent death, or death of a close relative
* To seek an individual for a medical study to detect and treat medical defects
* To notify an individual, who cannot otherwise be located, that he or she is entitled to certain assets
* The IRS will forward a letter from an attorney, estate administrator, or other person who directly controls the assets
If you would like the IRS to help you locate an individual, place a personal letter addressed to the individual in a blank envelope. Include first class U.S. postage, and do not seal the letter. Place the unsealed letter in another envelope and address it as follows:
Internal Revenue Service
Office of Disclosure Operations
1111 Constitution Avenue NW
Washington, D.C. 20224
Social Security Administration (SSA)
The SSA will attempt to forward a letter to a missing person for reasons similar to those mentioned in the IRS section above. There is a $25.00 charge for forwarding letters to inform people about money or property they may be owed. Humanitarian letters are forwarded free of charge.
Follow the same guidelines above for sending a letter, and address it as follows:
Social Security Administration
Letter Forwarding
PO Box 33022
Baltimore, MD 21290-3022
The Salvation Army
The Salvation Army has operated a Family Tracing Service since 1885. The service is designed to help people establish contact with close relatives they may have lost touch with a few years ago or many years ago. The service is available in many of the 100 countries where the Salvation Army is located.
The Salvation Army will not help to locate someone in the following instances:
*
Friends
*
Situations where adoptions have taken place
*
Alleged fathers of non-marital children
*
Young people under 17 years of age
*
Former husbands or wives
*
Spouses for divorce purposes
*
Estate or similar business matters
*
Genealogies
In the United States, you may contact a Salvation Army territory office for your state. Local Salvation Army office numbers are listed in your local telephone directory.
Department of State (DOS)
The Overseas Citizens Services section of DOS will help locate relatives or friends who are overseas when there is concern about their welfare or a need to notify them of emergencies at home.
The Privacy Act requires that U.S. citizens over the age of 18 provide a Privacy Act waiver before information about them is released to a third party.
People in the United States may inquire about the welfare or whereabouts of U.S. citizens abroad by calling Overseas Citizens Services at 1-888-407-4747 or 1-202-501-4444. You may also contact the American Citizens Service Section of the nearest U.S. embassy or consulate directly.
You will need to include the following information before you call or contact the DOS:
* Your full name, address, telephone number and relationship
* The name of the person abroad
* Their date and place of birth
* Their passport number (if known)
* Their last known address and phone number
* Their itinerary
* Reason for their travel/residence abroad (business, tourism, etc.)
* Date of last contact
* Other points of contact abroad (friends, relatives, business associates, etc.)
For emergency messages, also include:
* Nature of the emergency
* What message should be provided to the person
* Name, address, telephone number and relationship of person you wish to be contacted after the emergency family message is delivered by the U.S. embassy or consulate
The United States Military
The military may also be able to help you locate the address of a servicemember. For immediate family members and government officials, the search is free. Other family members, civilian friends, businesses and others must pay $3.50. The check or money order must be made out to the U.S. Treasury and is non refundable.
You will need to provide as much identifying information on the military member as possible, such as:
*
Name
*
Rank
*
Last duty assignment
*
Last known military address
*
Service number
*
Social Security number
Please note: Because privacy regulations may limit the government's ability to provide you specific contact information for the person you are trying to locate, many people find that private sector resources can be quite helpful. While there are a number of free or fee-based services available through commercial sites on the Internet that you may opt to use in your search, the government cannot recommend or endorse any such service.
..
How To Stop Receiving Spam from Your Friends & Family
The following is an e-mail which you can send to friends and family asking that they stop sending spam type e-mail . . . all done anonymously.
Hi,
One of your friends has sent you this message from StopForwarding.Us, the website that allows individuals to politely and anonymously email their friends and ask that they stop the habit of sending forwarded emails or FWDs.Please do not forward chain letters, urban legends, potentially offensive jokes, videos or photos without being asked or first receiving permission.
If you find something that you want to pass on and you genuinely think the recipient will enjoy it then forward it to that person only (not in an email blast to all your friends and family) and include a personal note about why you enjoyed it and why you think they will too. Avoid sending forwards to friends or relatives that you've grown distant with. It can be frustrating for the recipient when the only correspondence he or she has with someone is via impersonal, unwanted email.
For more tips on email etiquette, visit www.StopForwarding.Us
Thank you,
A Friend (via www.StopForwarding.Us )
Hi,
One of your friends has sent you this message from StopForwarding.Us, the website that allows individuals to politely and anonymously email their friends and ask that they stop the habit of sending forwarded emails or FWDs.Please do not forward chain letters, urban legends, potentially offensive jokes, videos or photos without being asked or first receiving permission.
If you find something that you want to pass on and you genuinely think the recipient will enjoy it then forward it to that person only (not in an email blast to all your friends and family) and include a personal note about why you enjoyed it and why you think they will too. Avoid sending forwards to friends or relatives that you've grown distant with. It can be frustrating for the recipient when the only correspondence he or she has with someone is via impersonal, unwanted email.
For more tips on email etiquette, visit www.StopForwarding.Us
Thank you,
A Friend (via www.StopForwarding.Us )
Worm Infects Millions of Computers Worldwide
January 23, 2009
<http://www.nytimes.com/2009/01/23/technology/internet/23worm.html?ref=science>
A new digital plague has hit the Internet, infecting millions of personal and business computers in what seems to be the first step of a multistage attack. The world’s leading computer security experts do not yet know who programmed the infection, or what the next stage will be.
In recent weeks a worm, a malicious software program, has swept through corporate, educational and public computer networks around the world. Known as Conficker or Downadup, it is spread by a recently discovered Microsoft Windows vulnerability, by guessing network passwords and by hand-carried consumer gadgets like USB keys.
Experts say it is the worst infection since the Slammer worm exploded through the Internet in January 2003, and it may have infected as many as nine million personal computers around the world.
Worms like Conficker not only ricochet around the Internet at lightning speed, they harness infected computers into unified systems called botnets, which can then accept programming instructions from their clandestine masters. "If you’re looking for a digital Pearl Harbor, we now have the Japanese ships steaming toward us on the horizon," said Rick Wesson, chief executive of Support Intelligence, a computer security consulting firm based in San Francisco.
Many computer users may not notice that their machines have been infected, and computer security researchers said they were waiting for the instructions to materialize, to determine what impact the botnet will have on PC users. It might operate in the background, using the infected computer to send spam or infect other computers, or it might steal the PC user’s personal information.
More information at:
<http://www.nytimes.com/2009/01/23/technology/internet/23worm.html?ref=science>
<http://www.nytimes.com/2009/01/23/technology/internet/23worm.html?ref=science>
A new digital plague has hit the Internet, infecting millions of personal and business computers in what seems to be the first step of a multistage attack. The world’s leading computer security experts do not yet know who programmed the infection, or what the next stage will be.
In recent weeks a worm, a malicious software program, has swept through corporate, educational and public computer networks around the world. Known as Conficker or Downadup, it is spread by a recently discovered Microsoft Windows vulnerability, by guessing network passwords and by hand-carried consumer gadgets like USB keys.
Experts say it is the worst infection since the Slammer worm exploded through the Internet in January 2003, and it may have infected as many as nine million personal computers around the world.
Worms like Conficker not only ricochet around the Internet at lightning speed, they harness infected computers into unified systems called botnets, which can then accept programming instructions from their clandestine masters. "If you’re looking for a digital Pearl Harbor, we now have the Japanese ships steaming toward us on the horizon," said Rick Wesson, chief executive of Support Intelligence, a computer security consulting firm based in San Francisco.
Many computer users may not notice that their machines have been infected, and computer security researchers said they were waiting for the instructions to materialize, to determine what impact the botnet will have on PC users. It might operate in the background, using the infected computer to send spam or infect other computers, or it might steal the PC user’s personal information.
More information at:
<http://www.nytimes.com/2009/01/23/technology/internet/23worm.html?ref=science>
Wednesday, January 21, 2009
Computer Worm Affected 10+ Million Computers
A complex computer worm has infected corporate networks and has affected more than 10 million computers this week, experts say. Infecting computers in the U.S., Europe and Asia, the Downadup worm - which focuses on Microsoft Windows - scans company networks trying to guess passwords in order to access corporate networks, experts found. If the password is guessed, the worm can then infect a computer and the entire network of servers it is connected to.
As a result, experts are calling for all computer users to install a patch from Microsoft and to use long, difficult passwords that cannot be deciphered.
Read the entire article at: http://blogs.techrepublic.com.com/security/?p=740&tag=nl.e550
As a result, experts are calling for all computer users to install a patch from Microsoft and to use long, difficult passwords that cannot be deciphered.
Read the entire article at: http://blogs.techrepublic.com.com/security/?p=740&tag=nl.e550
Card Data Compromised in Breach, Insurer Says Millions of Card Numbers Might Be Compromised
Despite Heartland Payment Systems' attempt to play down the significance of a security breach in a recent announcement, it appears that hackers were able to compromise a significant number of card accounts, according to CUNA Mutual Group.
"Although the exact number of affected cards is not known, it is expected to be many millions. Card-issuing credit unions and their members will be impacted by this breach," said Chuck Cashman, an executive with CUNA Mutual's Plastic Card Insurance.
The insurer reported that Visa and MasterCard have confirmed a significant number of credit and debit card accounts were compromised in the 2008 breach, which the company announced on Jan. 20.
Cashman said the insurer had been looking into a spike in card fraud since October 2008.
"CUNA Mutual Risk Management detected that something big was happening," Cashman said. "We reported our findings to both card associations to help facilitate an investigation to determine if a breach had occurred and, if so, its origin. It seems our worst fears are coming true, but we are relieved that it's finally been solved."
"Although the exact number of affected cards is not known, it is expected to be many millions. Card-issuing credit unions and their members will be impacted by this breach," said Chuck Cashman, an executive with CUNA Mutual's Plastic Card Insurance.
The insurer reported that Visa and MasterCard have confirmed a significant number of credit and debit card accounts were compromised in the 2008 breach, which the company announced on Jan. 20.
Cashman said the insurer had been looking into a spike in card fraud since October 2008.
"CUNA Mutual Risk Management detected that something big was happening," Cashman said. "We reported our findings to both card associations to help facilitate an investigation to determine if a breach had occurred and, if so, its origin. It seems our worst fears are coming true, but we are relieved that it's finally been solved."
Monday, January 19, 2009
Analyst: Obama may spend a billion on biometrics
The Obama administration is likely to spend $750 million to $1 billion on biometric applications this year, primarily in defense, intelligence and homeland security, according to a new report from Jeremy Grant, an analyst for the Stanford Group Co. research firm.
Key programs at the Defense Department could result in $500 million to $600 million in biometrics contracts, and intelligence programs could add another $250 million to $350 million, Grant said. Other major programs contributing to the growth include the Homeland Security Department’s U.S. Visitor and Immigrant Status Indicator Technology and Real ID Act of 2005, the FBI’s Next Generation Identification and Homeland Security Presidential Directive-12, he said.
“U.S. identity solutions projects should survive intact through the presidential transition and the industry should continue to do well in the Obama administration,” Grant wrote. “Still, the distractions of the transition -– magnified by the economic crisis -– will slow some projects and delay the creation of new ones.
We forecast flat government spending for 2009 outside of several key programs, as a new administration takes a year to review and reshape existing initiatives.”
Key programs at the Defense Department could result in $500 million to $600 million in biometrics contracts, and intelligence programs could add another $250 million to $350 million, Grant said. Other major programs contributing to the growth include the Homeland Security Department’s U.S. Visitor and Immigrant Status Indicator Technology and Real ID Act of 2005, the FBI’s Next Generation Identification and Homeland Security Presidential Directive-12, he said.
“U.S. identity solutions projects should survive intact through the presidential transition and the industry should continue to do well in the Obama administration,” Grant wrote. “Still, the distractions of the transition -– magnified by the economic crisis -– will slow some projects and delay the creation of new ones.
We forecast flat government spending for 2009 outside of several key programs, as a new administration takes a year to review and reshape existing initiatives.”
Samsung camera recognizes faces, names, shoe sizes...
Facial recognition is fast becoming a standard feature on compact cameras. But Samsung’s latest camera purports to take the technology to new heights.
The nine-megapixel ST10 can recognize individual people by analyzing faces as the shutter button is pressed, Samsung says.
The feature requires a little setting up. For example, you may have to take several snaps of Adam from different angles before the ST10 can automatically recognize him in future shots.
The technology also prioritizes friends, family and the frequently photographed so that the camera's smile mode will only take photos of recognized faces when they’re grinning.
The nine-megapixel ST10 can recognize individual people by analyzing faces as the shutter button is pressed, Samsung says.
The feature requires a little setting up. For example, you may have to take several snaps of Adam from different angles before the ST10 can automatically recognize him in future shots.
The technology also prioritizes friends, family and the frequently photographed so that the camera's smile mode will only take photos of recognized faces when they’re grinning.
Radical new tire design by Michelin. The next generation of tires.
These tires are airless and are scheduled to be out on the market very soon. The bad news for law enforcement is that spike strips will not work on these tires.This is what great R&D will do, and just think of the impact on existing technology: a... no more air valvesa... no more air compressors at gas stations and no more repair kitsS
CLICK BELOW AND SEE.These are actual pictures taken in the South Carolina plant of Michelin. It will be awhile before they are available to the automotive industry.
Technology to block phones in cars isn't foolproof
Many parents would love to be able to give their teenagers a cell phone that couldn't be used while driving. Now some inventors say they have come up with ways to make that possible, but they appear to be relying on wishful thinking.
One product to hit the market, $10-a-month software by Dallas-based WQN Inc., can disable a cell phone while its owner is driving. It uses GPS technology, which can tell how fast a person is traveling. But it can't know whether the person is driving — and therefore it can needlessly lock a phone. WQN, which sells cell phone and Internet security software under the name WebSafety, says it signed up about 50 customers for its first month of service.
(Read the rest of this interesting story at: http://news.yahoo.com/s/ap/20090119/ap_on_bi_ge/tec_cell_phones_driving
One product to hit the market, $10-a-month software by Dallas-based WQN Inc., can disable a cell phone while its owner is driving. It uses GPS technology, which can tell how fast a person is traveling. But it can't know whether the person is driving — and therefore it can needlessly lock a phone. WQN, which sells cell phone and Internet security software under the name WebSafety, says it signed up about 50 customers for its first month of service.(Read the rest of this interesting story at: http://news.yahoo.com/s/ap/20090119/ap_on_bi_ge/tec_cell_phones_driving
Wednesday, January 14, 2009
FINANCIAL PREDATORS ON THE PROWL
What Retirees and Near Retirees Should Know About Recognizing and Avoiding Fraud
— In a volatile economy consumers are susceptible to losing money. But one of the largest and fastest growing segments of society, the retirees, are being jeopardized by another risk—financial scams.
“Desperate to recover from market losses might compel investors to turn to alternative options. Retirees, in particular, are often lured by rogue investments or fraudulent scams,” says Brent Neiser, a Certified Financial Planner (CFP®) and director with the National Endowment for Financial Education® (NEFE®).
Many older Americans rely on their retirement savings nest eggs to supplement Social Security. But with frequent losses in the stock market, and receiving little to no return on some investments, many retirees seek ways to get higher returns and protect the assets that took a lifetime to build. This opens the door to the financial predators lurking in the shadows. While con artists don’t discriminate when it comes to initiating scams, perpetrators of investment and securities fraud frequently target wealthier Americans, particularly those who are retired or are nearing retirement. And the number of retirees as a percentage of the U.S. population will increase rapidly as approximately 75 million Americans turn age 60 over the next two decades.
“Avoidance of fraud by retirement-age Americans and their families is an essential part of retirement planning and management,” says Neiser, who is working on NEFE initiatives helping middle-income retirees protect their assets and make wise decisions about retirement. “Fraud can undo the best retirement plan and wipe out years of accumulated savings, assets and future investment returns to the point where they cannot be fully recovered.”
Defense against fraud comes with being able to identify the many different types of financial schemes that exist. According to the U.S. Securities and Exchange Commission, the following investment scams are commonly used to target Americans:
High-return or “risk-free” investments. Some unscrupulous brokers and investment advisers recommend unsuitable products that don’t meet the investment objectives or financial situations of investors. Inappropriate recommendations might occur when a broker sells speculative, high-risk investments such as options, futures or penny stocks to individuals who are near retirement or are retired and have a low-risk tolerance.
Pyramid schemes. In this classic scheme, fraudsters promise sky-high returns in a short period of time for doing nothing other than handing over money and getting others to do the same. Despite their claims to have legitimate products or services to sell, these deceivers spend much of the money on themselves and simply use money coming in from new recruits to pay off early stage investors. Although the products sold may be legitimate, eventually the pyramid will collapse. At some point the schemes get too big, the promoter cannot raise enough money from new investors to pay earlier investors and many people lose their money.
“Ponzi” schemes. These are a type of illegal pyramid scheme named for Charles Ponzi, who fooled thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. He told investors he could provide a 40 percent return in just 90 days compared with 5 percent for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period. Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons. Today, the Ponzi scheme continues to work on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.
Promissory notes. A promissory note is a type of debt that is similar to a loan or IOU and is used by a company to raise money. Typically, an investor agrees to loan money to the company for a set period of time. In exchange, the company promises to pay the investor a fixed return on the investment, typically principal plus annual interest. While promissory notes can be legitimate investments, those that are marketed broadly to individual investors often turn out to be nothing more than worthless paper. Most established companies have borrowing relationships with financial institutions, therefore this type of transaction among individuals is rare. Individual investors should exercise extreme caution with this type of investment.
Internet investment fraud. Internet investment fraud is similar to other fraud perpetrated over the phone or through the mail. Fraudsters use a variety of Internet tools, including bulletin boards, online newsletters, spam or chat rooms to spread false information. They also may build a sophisticated Web page to make their scam appear legitimate. The Internet has made off-shore scams very easy to implement and difficult to police because the perpetrators often reside outside of the U.S.
Affinity fraud. This fraud refers to investment scams that prey upon members of certain groups, such as religious or ethnic communities, the elderly or professional groups. Deceivers who promote affinity scams frequently are—or pretend to be—members of the group. They enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing people that a fraudulent investment is legitimate and worthwhile. Often, the leaders themselves become unwitting victims of the fraudster’s scheme.
— In a volatile economy consumers are susceptible to losing money. But one of the largest and fastest growing segments of society, the retirees, are being jeopardized by another risk—financial scams.
“Desperate to recover from market losses might compel investors to turn to alternative options. Retirees, in particular, are often lured by rogue investments or fraudulent scams,” says Brent Neiser, a Certified Financial Planner (CFP®) and director with the National Endowment for Financial Education® (NEFE®).
Many older Americans rely on their retirement savings nest eggs to supplement Social Security. But with frequent losses in the stock market, and receiving little to no return on some investments, many retirees seek ways to get higher returns and protect the assets that took a lifetime to build. This opens the door to the financial predators lurking in the shadows. While con artists don’t discriminate when it comes to initiating scams, perpetrators of investment and securities fraud frequently target wealthier Americans, particularly those who are retired or are nearing retirement. And the number of retirees as a percentage of the U.S. population will increase rapidly as approximately 75 million Americans turn age 60 over the next two decades.
“Avoidance of fraud by retirement-age Americans and their families is an essential part of retirement planning and management,” says Neiser, who is working on NEFE initiatives helping middle-income retirees protect their assets and make wise decisions about retirement. “Fraud can undo the best retirement plan and wipe out years of accumulated savings, assets and future investment returns to the point where they cannot be fully recovered.”
Defense against fraud comes with being able to identify the many different types of financial schemes that exist. According to the U.S. Securities and Exchange Commission, the following investment scams are commonly used to target Americans:
High-return or “risk-free” investments. Some unscrupulous brokers and investment advisers recommend unsuitable products that don’t meet the investment objectives or financial situations of investors. Inappropriate recommendations might occur when a broker sells speculative, high-risk investments such as options, futures or penny stocks to individuals who are near retirement or are retired and have a low-risk tolerance.
Pyramid schemes. In this classic scheme, fraudsters promise sky-high returns in a short period of time for doing nothing other than handing over money and getting others to do the same. Despite their claims to have legitimate products or services to sell, these deceivers spend much of the money on themselves and simply use money coming in from new recruits to pay off early stage investors. Although the products sold may be legitimate, eventually the pyramid will collapse. At some point the schemes get too big, the promoter cannot raise enough money from new investors to pay earlier investors and many people lose their money.
“Ponzi” schemes. These are a type of illegal pyramid scheme named for Charles Ponzi, who fooled thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. He told investors he could provide a 40 percent return in just 90 days compared with 5 percent for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period. Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons. Today, the Ponzi scheme continues to work on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.
Promissory notes. A promissory note is a type of debt that is similar to a loan or IOU and is used by a company to raise money. Typically, an investor agrees to loan money to the company for a set period of time. In exchange, the company promises to pay the investor a fixed return on the investment, typically principal plus annual interest. While promissory notes can be legitimate investments, those that are marketed broadly to individual investors often turn out to be nothing more than worthless paper. Most established companies have borrowing relationships with financial institutions, therefore this type of transaction among individuals is rare. Individual investors should exercise extreme caution with this type of investment.
Internet investment fraud. Internet investment fraud is similar to other fraud perpetrated over the phone or through the mail. Fraudsters use a variety of Internet tools, including bulletin boards, online newsletters, spam or chat rooms to spread false information. They also may build a sophisticated Web page to make their scam appear legitimate. The Internet has made off-shore scams very easy to implement and difficult to police because the perpetrators often reside outside of the U.S.
Affinity fraud. This fraud refers to investment scams that prey upon members of certain groups, such as religious or ethnic communities, the elderly or professional groups. Deceivers who promote affinity scams frequently are—or pretend to be—members of the group. They enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing people that a fraudulent investment is legitimate and worthwhile. Often, the leaders themselves become unwitting victims of the fraudster’s scheme.
Scams continue targeting CUs, consumers
Jim Bishop, a member of Park View FCU, Harrisonburg, Va., was so busy preparing for the upcoming holiday season last December that he didn't suspect anything was wrong when a scammer called him on Christmas Eve saying his account had been suspended.
Bishop received the call at 3:30 p.m. Bishop was told his Visa account had been suspended, and was asked to verify his card information. Bishop, who was in the middle of wrapping gifts and preparing food, provided his personal information to the "legitimate"-sounding individual (RocktownWeekly.com Jan. 3).
Shortly after hanging up, Bishop suspected that he had been duped. He quickly called Park View FCU, but received a recording that the credit union had closed at 3 p.m. for the holiday.
Read more on this story at: http://www.cuna.org/newsnow/09/system011309-5.html?ref=hed
Bishop received the call at 3:30 p.m. Bishop was told his Visa account had been suspended, and was asked to verify his card information. Bishop, who was in the middle of wrapping gifts and preparing food, provided his personal information to the "legitimate"-sounding individual (RocktownWeekly.com Jan. 3).Shortly after hanging up, Bishop suspected that he had been duped. He quickly called Park View FCU, but received a recording that the credit union had closed at 3 p.m. for the holiday.
Read more on this story at: http://www.cuna.org/newsnow/09/system011309-5.html?ref=hed
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