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admin2 On March - 9 - 2011

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Cyber criminals have been busy using eBay and PayPal to scam companies out of big bucks. Two Vietnamese exchange students attending Minnesota’s Winona State University have been arrested so far. The pair had made more than $1.2 million using eBay to sell products purchased with stolen credit card numbers.

The scam is brilliantly simple. The cyber criminals would first set up eBay and PayPal accounts under other people’s names. They would then offer popular but expensive products at discounted prices on eBay. When legitimate buyers buy the products using PayPal, the criminals would then order the items from the manufacturer using stolen credit card numbers. The items would be shipped directly to the buyer.

The legitimate buyers would receive the products none the wiser. By the time the genuine credit card holder would discover and report the fraudulent transactions, the money has already left PayPal and been moved to another bank account out of the country.  The online merchants are out of pocket and the credit card holder is left with a giant mess to clean up after the fraud.

Many major companies have been hit with this scam, including eBay, PayPal, Amazon, Apple, Dell and Verizon Wireless.

The cyber criminals open up the eBay and PayPal accounts online, using proxy IP addresses to hide the user’s origin. The personal information they use to open up the accounts is obtained by hacking into people’s computers or into merchant databases. It is also possible for them to purchase credit card numbers from underground online marketplaces.

When PayPal froze some of the culprits’ accounts due to suspected fraudulent activity, the two students created fake passports, utility bills and bank statements and provided them to PayPal. The money was subsequently released.

The FBI has tracked about $1.2 million in fraudulent activity linked to the two suspects. The Vietnamese cyber crime underground economy they contributed to is suspected of stealing hundreds of millions of dollars. The entire global underground economy has recently been estimated to cost companies $750 billion per year. The Internet and globalization have been a giant boom to organized crime groups. 

So please take steps to avoid becoming a victim. Don’t make it easy for hackers to get your personal and financial information. Be cautious about the information you upload onto your social network accounts.  Use security software and change your passwords often. 

The time and effort you take to protect your personal information is far, far less than the time and effort that will be necessary to clean up after fraud and identity theft.

You should consider storing your personal and financial information somewhere other than on your computer. Online data storage programs such as CollectionMine allow you to keep your valuable information accessible to you but safe from prying eyes.  


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