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Fraud 2.0

Written on
Oct 26, 2007 
Author
DM Confidential  |
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Fraud 2.0

The Indy Virus flips the classic fraud model upside down, i.e. someone from overseas signing up as an affiliate. It has someone from the US signing up as an affiliate and using the same low wage / cost of living that makes it attractive for the overseas person to do fraud to hire that person to do fraud. Hearing about it only shows me the limitations of my imagination. It is the world is flat model only deviously leveraged. Those spreading the virus will post in an outsourcing forum like GetAFreelancer.com something like this, “I need 2500 free signups per day. Provider ll be selected with in 2 hours. PMB for more details. Indians preferred” He offered $100 to $300 had twelve bids at an average of $154. If it cost him $250, then he just found a cost per signup of ten cents. This particular person actually lives in India and if you view the services that his firm offers, you can’t help but have some suspicions, as you can hire his team for “….Captcha entry jobs, Emails creations (Yahoo, hotmail & gmail), Data submissions…Filling forms.” Another person looking for talent to fill out forms even offers those who work for him software to mask IPs and the data to use. You see this new breed of fraudsters realize that you can’t just fill out form, you have to really fill out forms. They arbitrage across continents – buying cheap user data from any number of firms that will sell user data then hand it over to the Indians (sorry guys) along with the links to the offers they should complete. And, to make the problem harder to identify, they will create tens if not more accounts at a particular affiliate network, where they will choose offers that are not exclusive / run by that network. That gives them an additional layer of hiding and could mean the difference between being caught early and getting the money. Plus, you can also see how someone in India who gets hired to do this might turn around and do it themselves, and PayPal makes that easier for them to accomplish. They can enter phony contact information and select payment via PayPal in many networks. No one really checks if they really have an office where they say.

To the networks, these affiliates will seem valid. They fill out information in the user flow and participate in offers, meaning the incentive promotion advertiser initially finds them OK as well. It isn’t until they start to receive emails like this:

“Recently I have be deluged with telephone calls from a variety of sources claiming that I filled out an survey online and they are following up. The name used by the person who has filled out the survey is the same as mine. However, the email address used by this person is NOT mine and I have confirmed this with several of the callers. Unfortunately, my personal home telephone as well as my cell phone number has been given to these clients…”

Those committing the Indy Virus aren’t just perpetrating fraud. This is identity theft. Many offers require just a phone number to initiate billing, and by filling out offers as someone else, these people are costing the real users money, let alone the time, headache, and frustration of receiving sales calls and not knowing why. And, just as scary, those in the identity theft business have realized that they can use the data they collect by becoming affiliates rather than trying to make money buying goods with the stolen information. While there isn’t a solution – we are just starting to become aware of its scale and prevalence – the pieces for a solution exist.

We can get halfway there with patience and process and the other half with technology. Credit card companies have to deal with fraud and have developed advanced algorithms for detecting irregular behavior. I believe we can implement similar predictive models and see what data doesn’t fit, to pick up anomalous patterns in all aspects of the data beginning with the affiliates’ very own.

Editor
DM Confidential
www.dmconfidential.com

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