As Tom Taulli wrote earlier today, the number of accounts being infiltrated by computer hackers in Eastern Europe and Asia continues to rise, and your accounts at an online brokerage firm may be at risk. While E*Trade, TD Ameritrade, Schwab and Fidelity have promised to reimburse customers who lose money in their accounts due to fraud, the problem continues to grow. Who knows what the thieves will do with the information once they've gotten it by infiltrating your account?
E*Trade reported on a conference call last week that it spent $18 million in the third quarter to compensate customers affected by trading fraud, according to a report from Bloomberg. TD Ameritrade also admitted to losses, but gave no numbers. We may get more details when it reports its numbers, expected later today. Charles Schwab told Bloomberg that it didn't see "anything unusual enough to warrant a financial disclosure." Well, if I were a Schwab customer and my account were infiltrated, I certainly would consider it important enough for disclosure. I hope Schwab is being more candid with its customers. Fidelity did not comment on Bloomberg's story.
Bloomberg also reported that the FBI, the SEC and the NASD are trying to unravel exactly what is happening and how its being done. There are actually two types of fraud they are seeing. One is a classic "pump and dump," where hackers are opening an account in someone else's name and using it for illegal trading to pump up a stock. The person whose name was used for the account looks like the one responsible for the crime. Was the information used to open the account initially obtained by infiltrating an account at another online broker? No one knows for sure yet how it's done. The second type of fraud is straight theft, where hackers use personal information such as social security numbers to break into accounts. Once they have control, they sell securities and then wire the proceeds outside the U.S.
Javelin Strategy and Research of Pleasanton, California, estimates that identify theft will cost Americans $56.6 billion this year, according to Bloomberg. That doesn't even begin to account for the time it takes to clean up the mess after you've been a victim of identity theft. It can take years and hundreds of hours to get your financial history back on track. Good information about how to prevent identity theft and what to do if you are a victim is available from the U.S. Department of Justice.











Reader Comments (Page 1 of 1)
10-25-2006 @ 1:09PM
Gary E. Sattler said...
Now, this is where the rubber hits the road.
Is anyone aware that even the largest computer security firms are not safe from the attacks of brilliant computer hackers? You, your computer and your accounts are at such risk right now that if you really knew the truth, you'd probably sever all connections from your personal information to the internet... right now.
I cite an article in the October issue of Popular Science:
"The CEO of... Blue Security created a method of flooding junk emailers... with opt out requests- essentially spamming the spammers. Within a few months... six of the worlds largest junk emailers had agreed to stop spamming his customers.
Then this last may, a Russian spammer known as PharmaMaster fought back. Using a botnet he launched... a distributed denial of service, or DDOS attack... it overwhelms the servers that host the site and shuts it down... And PharmaMaster didn't stop there. He took down Blue Security's blog service, it's ISP, and the security firm hired to repel the original attack. Then he sent Blue Security's customers emails infected with a virus. After two weeks of relentless attacks, Blue Security just gave up."
(My thanks to author Dan Tynan and Popular Science Magazine.)
Now, the above referenced situation does not address the issue of actual financial account entry, but it does serve to enlighten us to the ease with which a brilliant covert operation can cause unlimited misery. You are not protected... yet. There are some good people working on possible solutions but most of them are years from being anything substantial. Most of the efforts are focused on personal PC security. What about the internet? That's the place where the most damage can be done.
Consider an online auction site named eBay. With 200 million registered users (an inflated number of course), how easy would it be for an organized effort to siphon millions of dollars from our country in a matter of moments? I dare say folks, the ground work is being laid right as I type this.
Ebay's Paypal division just recently issued invitation to it's account holders to open a multi user portal... ON PAYPAL'S END. If you can't see that as a financial holocaust in the making, well, then you'd better spend a moment of your time considering the realities of it. Most every account holder using Paypal has an alternate source of funds option activated. What this does is allows Paypal's account system to enter your chosen bank account to withdraw funds for payment just in case your Paypal account is too low to pay for your purchase. Couple that with the possible alternate funding options that you have selected for your bank to exercise and you have a pathway into your entire account system.
The many unsuspecting individuals who innocently adopt or unwittingly have otherwise activated that multiuser portal with Paypal have much to be concerned about. How easy will it be for a fake account proxy to be initiated? Too easy I'll hazard to say. I know a setup when I see one. I've schooled long and hard on the concepts of fraud. The Paypal account system is being prepared for mass withdrawls.
God I hope I'm wrong.
Will somebody PLEASE have the DOJ look into this?
.
10-25-2006 @ 11:26PM
David Szwak said...
If you are having ID Theft problems, please look at the Forum at www.MyFairCredit.com and www.MyFairDebt.com. These are the best sources of legal information, not arm-chair quarterbacking on how to cure ID Theft.
10-26-2006 @ 2:37AM
Pascal said...
From what I see, most of these supposed hacking cases are mere phishing acts, a stupid scam where someone poses as an administrator, and even thou every single online company would NEVER ask for login information, these scammers do... But worse still, the folks affected then give them said information.
10-30-2006 @ 10:37AM
CC said...
It would help if the banks when after the crimminal instead of going after the one who had there money stolen. Who says crime does not pay... I pay for it every day.
Cime does pay that is why we are such a rip you off place now.. no one want to punish the crook.
10-30-2006 @ 11:47AM
powellski said...
How can anyone keep thier SS# private, hospitals, banks, state agencies and the Fed. etc ALL require the number to get the services you want. I recently attempted to get a non resident hunting license in Montana and they wouldn't sell me one becasue I refused to give them my SS#, the person that was selling the licenses was a retail clerk in a small shop. She would have had my SS# and my checking acct number, so I declined. What we need is another number that can be used for ID only and can't be used for financial tracking. The fed. is the worst, all documents sent to or rec'd by the fed has your SS# on them and goes thru the mail where hundreds of employees along the chain have access to the mail. I am speaking of tax papers, medicare, medicaid, SS checks all have the number. Up untill a year ago the state I live in had the SS number on the drivers license, they finally woke up and took it off.
10-30-2006 @ 3:19PM
victim said...
credit card companies, brokerage and banks have lobbyists to get their agenda through politicians. Terms that make comsumer get into more debts and deeper problems. Relax security policies and credit policies...all policies that are favorable to those financial institutions. Consumer groups do not have such lobbyists to represent their best interests. It comes to the point that it should be the government's responsibility to protect the general public such as setting policy and stringent regulations for those big, financial institution to invest in better computer security infrustructures, account policies, credit worthiness evaluations..etc. Government should impose fines and penalties for the financial institutions and take more proactive roles to protect its citizens