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Date: Thu, 29 Oct 1998 16:27:52 -0700 (MST)
From: mea culpa <jericho@dimensional.com>
To: InfoSec News <isn@repsec.com>
Subject: [ISN] Electronic Identity Fraud Issue 1


[Moderator: New 'zine dealing with electronic identity fraud. Subscription
 info is in the 'Introduction'. I will probably not forward future copies
 to ISN.]

From: Edentifica@aol.com

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 E L E C T R O N I C  
 I D E N T I T Y
 F R A U D  
 
 		Issue 1
 		Oct 25, 1998
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 from        e-DENTIFICATION LLC
 voice       717 859 2430
 fax           717 627 5454
 email     EDENTIFICA@AOL.COM
 
 
 INTRODUCTION
 ==============
 Welcome to the introductory issue of this newsletter.
 
 If you are involved in .....electronic commerce.....electronic data
 interchange.....credit management.....security.....banking.....internet
 business.....you and your associates are invited to subscribe.
 
 Just send an email to:  ZRZZ31A@PRODIGY.COM.
  
 WHY THIS NEWSLETTER
 ======================
 
 The motivation for this newsletter is to share information about the growing
 problem of identity fraud. I hope that by providing a forum for sharing
 news, analysis and the early identification of emerging problems and trends
 in identity fraud, we can all become better equipped to fight this sneaky and
 costly crime. 
 
 Unfortunately, in many areas identity fraud is not acknowledged, is not
 treated as a crime and is rarely prosecuted. 
 
 WHO AM I ?
 ==========
 
 My background as an attorney led me into the problems of identity fraud
 which in turn led me to start a company called NBIB Inc. This company
 developed a system that has been used by 17,000 banks to screen new
 accounts to detect identity fraud.
 
 The growth of electronic commerce creates a new situation in which 
 business is being conducted between remote parties.  These parties have
 never met and therefore, substantial losses could be incurred by parties
 dealing with fraudsters using fake identities.
 
 This problem generated a solution that is addressed by my new company 
 e-DENTIFICATION LLC, which developed a system for companies
 engaged in electronic commerce to confirm the identity of their remote
 and unseen customers.
 
 DEFINE OUR FIELD OF INTEREST
 =============================
 
 Let’s whittle the crime scene down to our field of interest. We are not
 interested in crime in general, not in crime against persons, nor in crime
 against property where there was a face to face confrontation....such as
 robbery, burglary and embezzlement.
 
 We are concerned with the new field of electronic fraud where the message
 is conveyed electronically and where the opposing sides are remote and
 communicate only through electronic means.
 
 ELECTRONIC FRAUD
 ===================
 
 Recognizing that a digital identity is the key to the net worth of the
 individual, it has become an attractive target for criminal activity. I would
 offer the following quotation from Senator John Kerry to suggest the
 capabilities of the criminals involved in identity fraud:
 
 "Today's transnational criminal cartels use high-speed modems and
 encrypted faxes. They buy jet airplanes three and four at a time and even
 have stealth-like submersibles in their armadas. They hire the finest minds
to devise encryption systems and provide the complex accounting procedures any
multi-billion-dollar empire requires. They engage the ablest lawyers to defend
them, the craftiest spin doctors to spiff their images in the media, the most
persistent--and generous--lobbyists to influence legislative decisions. They
retain retired intelligence officers from the world's best secret services to
consult with them on security. Highly educated and well-trained scientists
ensure quality control in the production of narcotics...."
 
 quoted from Senator John Kerry in The New War, 1997, Simon & Schuster 
 
 PROSECUTING WHITE COLLAR CRIME
 ==================================
 
 When I was a practicing attorney, I had a senior prosecutor in one of
 America's largest cities tell me that, as a matter of policy, they did not
 prosecute white collar crime. To look to government for the solutions to
 this problem is to neglect the possibility of the best solutions. Self-help
 within the industry and among the individuals most affected is likely to
yield
 better results.
 
 However, in order to help ourselves we must become better informed about
 the problem. This is the mission I have established for myself and this
 newsletter is one means of accomplishing that mission.
 
 IDENTITY FRAUD
 ===============
 
 In each issue, I will try to identify at least one aspect of identity fraud
for all
 of us to think about. The first aspect I would like all of us to consider is
how
 we treat digital identities verses real or biologic identities (the one our
 mother's used in recognizing us).
 
 There is a recent television commercial that clearly illustrates the current
 status of digital identities verses biologic identities. In this commercial
 famous people are recognized with their celebrity status until they try to
cash a check. Then their biologic identity is denied and only the digital
identity of a credit cared will suffice.
 
 While somewhat humorous, this commercial accurately portrays the
 situation in the world today. There is an almost irrebuttable presumption in
 favor of digital identities over biologic ones. The reason for this is the
 convenience of processing billions of transactions using digital identities
over biologic ones, transcends the risks of fraud.
 
 DIFFICULT TO DETECT
 ====================
 
 However, the risks of fraud are increasing. It is impossible to alter a
 biologic identity and simple to alter a digital one. Further, it is very
difficult
 to detect an altered digital identity. In fact, if the legitimate and altered
 digital identities are placed side by side it is impossible to tell which is
which
 without additional information. One set of ones and zeros (which comprise
 the digital identity) look just like another.
 
 The criminals who practice identity fraud recognize this problem and alter
 digital identities by the hundreds of thousands. In one sense this problem
 was created when our digital identities assumed an existence separate from
 our biologic identities. The solution to the problem of favoring the digital
 identity over the biologic one can be effectively addressed by marrying our
 digital identities with our biologic identities. This will be a continuing
thread
 in this newsletter.
 
 RECAP
 ======
 
 I will work to keep this newsletter brief and breezy and publish it more
often
 rather than creating a tome that comes out less often and intimidates my
 readers by its length. Other features I will include in the future will be
 synopsis of news items and I will try to offer reviews of current and
 pertinent literature that sheds light on the problem of Electronic Identity
 Fraud.
 
 I welcome your suggestions.  
 
 John F. Ellingson, Madison, WI - Principal
 e-DENTIFICATION, LLC
 voice 717 859 2430
 fax     717 627 5454
 personal email address: JohnE37179 @ aol.com
  
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 IDENTITY THEFT TO BE FEDERAL CRIME
 
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 New legislation would make it a federal crime to assume someone's
 identity to commit financial fraud.  Legislation has passed Congress and
 was sent to President Clinton.
 
 The crime of Identity theft is defined as the unauthorized use of a
 person's name, address, birth date, Social Security number and mother's
 maiden name to fraudulently obtain credit cards, loans, and open bank
 accounts. It does not cover electronic commerce fraud, but it is a start.
 
 Clinton will sign according to Sen. Patrick Leahy, D-Vt. who sponsored
 the bill. Victims of identity theft would be able to obtain restitution. The
bill
 requires the FTC to establish a centralized complaints service.
 
 And equipment used in the crime would be forfeited. 40,000 people annually
 are estimated to have their identities stolen.
 
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 FINANCIAL FRAUD REPORT CENTER
 
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 A neighborhood watch program on cyberfraud was started by a state
 securities regulators' group. Program was announced by the North
 American Securities Administrators Assn. The address for reporting
 suspected Internet financial fraud is www.cyberfraud(at)nasaa.org.
 
 Complaints will be referred to the appropriate regulators and FTC.
  
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