Technology and Virtual Business Services Used for Fraud

Modern technology and business services are also useful to business identity thieves

Through the use of modern technology and business convenience services, criminals can disguise their location and execute their scams from anywhere.

To be clear, each of these services are entirely legal and they are regularly and legitimately used for their intended purposes by millions of consumers and businesses each day. However, like any other service, they can also be misused by persons for illegal purposes.

These services allow thieves to identify and target victims around the block, across town, five states away, or halfway around the world. They can set up virtual shop anywhere they choose, in a manner that can even cause them to appear to be a local business, regardless of their true location.

The following are some of the common tools that thieves regularly use to hide their true location and make their activities appear legitimate. It is important for you to be aware of these methods, and how they can be used in an attempt to defraud you and your business.

Virtual Office Services

A virtual office is an office location, and corresponding mailing address, that is shared by many businesses. The company providing the virtual office service may provide a receptionist to greet visitors or take telephone messages, mail forwarding and fax services, and even a conference room that can be used for occasional client meetings. Each business using the virtual office location is charged a small monthly or annual fee.

Virtual office services are popular for out of state businesses that need to establish a presence within a state; for businesses that want to be able to utilize a prestigious street address (such as Pennsylvania Avenue or Wall Street); for businesses with remote employees that do not regularly meet with clients at the business' location; and for small businesses that would like to project a professional or big business appearance without the expense of renting a complete office suite.

Business identity thieves and fraudsters use virtual offices for the same convenience and appearance reasons as legitimate businesses, but with more nefarious purposes in mind. A local "office" address and telephone number can be quite useful in their scams, and there is even a professional receptionist to take messages which adds to the ruse. Regular mail forwarding allows them to be in any location and still receive their mail, while remaining physically outside of the jurisdiction in which they may be perpetrating their fraud. Many virtual offices can be rented almost immediately by phone or over the Internet, without the criminal ever being seen or setting foot in the location.

Virtual Telephone Service

VoIP (Voice over Internet Protocol) telephone services have become very popular in recent years. VoIP services allow users to place and receive calls over their Internet connection. Many consumers and businesses alike have dropped their traditional local telecom companies in favor of the low cost VoIP services.

An additional advantage to these virtual telephone services is that subscribers can obtain local telephone numbers in any location, regardless of the subscriber's actual location. This feature is popular with companies that want to offer more "local" service, or at least give that appearance. For example, a business located in New York, with a large number of customers in New Jersey, can obtain both a New York number and a New Jersey number. Even though the business is physically in New York, the New Jersey number can be used when dealing with New Jersey customers and vice-versa.

Criminals like to use virtual phone services for this same reason. For example, the criminal can be located in Arizona, and obtain a local number for Chicago, Illinois if he or she wants to make bogus calls to prospective victims in that area. Overseas scammers have found this technology quite beneficial in expanding their scams to the United States. Some virtual phone services also allow the subscriber to customize the information transmitted to caller ID displays. This can be used to trick traditional land line telephone caller ID systems into displaying whatever information the thieves want their target to see. There have been numerous reported cases of thieves employing this tactic using the names of large credit card companies, in efforts to trick their intended victims into revealing credit card information, PIN numbers, Social Security numbers, and other sensitive personal information. 

Cellular Telephone Service and Disposable Phones

In addition to VoIP telephone services, criminals also use disposable (pre-paid) cellular phones to commit their scams. They purchase these phones, register them under a deceptive name, and then use them to contact unsuspecting victims. Such disposable phones can be extremely difficult, if not impossible, for law enforcement authorities to trace. Once the scam has ended, the criminals simply throw the phone away and buy a new one for the next scam.

In one example, in the State of Georgia a group of criminals purchased a cell phone and registered it under the name of "Georgia Powers." In doing so, when they placed a call the name Georgia Powers was displayed on a victim's caller ID. Over a five month period, the thieves called at least 86 elderly persons who, upon seeing the name on the caller ID, thought that they were speaking with their utility company, Georgia Power. The thieves told the victims that their bills were overdue and their electricity would be cut off if they didn't make immediate payment. They then demanded credit card numbers, Social Security numbers, and other personal information. Numerous victims fell for the scam.¹

Websites and the Internet

"Wow! That's a great looking website. These guys must be legit."  Be careful. As the old saying goes, you can't always judge a book by its cover.

Any one can build a website quickly and easily, and for very little cost. Many companies offer simple website programs, complete with easy to use templates, that can enable someone to create a nice looking basic website in just minutes.

Criminals routinely use email and websites to commit their fraud schemes and lure in unsuspecting victims. To add an additional appearance of credibility and legitimacy, criminals often place hijacked business confidence marks on their sites. A confidence mark is a service offered by many organizations that indicates the business has been vetted or verified in some way by the organization issuing the mark, and it is intended to instill confidence in consumers that the business is legit. The merchant or business is provided a graphic to include on their website to show site visitors they are a credible organization to do business with. While some of these graphic marks are static images, many also include a feature that allows the site visitor to click on them and verify the business' good standing.

Criminals can easily copy confidence marks and place them on their fraudulent websites. An average unsuspecting site visitor may simply see the mark, gain a false degree of confidence, and look no further - even if the mark states "click to verify".  Because these bogus marks are merely copied graphic images, some cyber-criminals will simply embed a link to an equally bogus verification page that will display if a visitor clicks the image to verify.

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¹ Rankin, Bill. "Scams more high-tech, vicious," The Atlanta Journal-Constitution, May 27, 2011