Originally published by John Floyd.
Any online banking accounts or credit cards are subject to fraudulent takeover. There was a time not so long ago when fraudsters targeted credit card numbers. With the advent of EMV chip-card technology, credit card fraudsters are now going after a complete account takeover because the financial gain is obviously greater.
Patrick Reemts, president of ID Analytics in San Diego, says that “account takeover is a type of identity theft where a fraudster uses parts of the victim’s identity such as an email address to gain access to financial accounts.”
Once the fraudster gains access to the account, Reemts says, “the perpetrator often reroutes communication about the account, keeping the victim in the dark so the thievery can continue longer. Affected accounts can include credit cards, checking and savings accounts, brokerage accounts and store loyalty rewards accounts …”
Reemts compares this new type of fraud to relationships. He says that when a person steals a credit card, he has “stolen one relationship,” but when he or she accomplishes an account takeover, they have “access to several relationships.”
Clearly, account takeover has proven to be more lucrative for fraudsters than simply stealing a credit card number. What used to be one-time credit card fraud schemes have turned into longer schemes that can affect multiple accounts.
And account takeover is not as difficult as one might think. Once a fraudster gains access to a victim’s password, they can open the door to the house that then leads to every room inside the house.
Think of how many passwords you have, and how many accounts use the same password. With normal credit card fraud schemes, the fraudster loses access to the person’s money as soon as the card is cancelled (which is usually done within a few days of the victim finding out someone stole their information). However, it may take quite a bit longer for victims to go and change all of the passwords for their bank accounts, PayPal accounts, email, and so on.
This type of fraud scheme is quickly gaining in popularity.
In the first quarter of 2015, account takeover fraud jumped 112%. It grew an additional 31% from 2015 to 2016, and losses to victim grew 61% to $2.3 billion.
Penalties for Account Takeover Fraud
Like most white collar crimes, sentences for bank fraud and other charges related to account takeover schemes are based on the amount of money stolen. Many of these crimes are tried and sentenced in federal court. Federal offenses do not have parole eligibility and the offender must serve roughly 85 percent of their sentence before securing a good conduct release. Other penalties may include paying restitution to victims, which could reach tens (or even hundreds of thousands of dollars depending on the amount that was stolen.
Let’s look at one example.
In early 2017, six individuals were sentenced on bank fraud and identity theft charges. The scheme was classic account takeover fraud: one of the fraudsters impersonated an account holder with their information to transfer out $150,000. A related account takeover resulted in the transfer of $500,000. That’s a big scheme, so the fraudsters received big penalties.
Of the six fraudsters, Darnell Crutcher received the harshest sentence. He was one of the main individuals involved with obtaining the victims’ account information. He received nine years and one month behind bars, five years of supervised release, and ordered to pay $794,825.90 in restitution. The least sentence imposed was13 months, which was probate d, and three months of home confinement. In addition, there was a $222,825.90 restitution order that had to be satisfied. This sentence, though relatively lenient for a federal offender, was for merely assisting one of the fraudsters in their scheme.
The charges and penalties for account takeover fraud are not to be taken lightly. The more you take, the more you will have to pay back if you are convicted. If you have been arrested or charged for bank fraud schemes, talk to a federal criminal defense lawyer.
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