June 2, 2008 in Business

Pennies add up to chances for online fraud

From Staff and Wire Reports The Spokesman-Review
 

A California man has been charged with online fraud for an alleged scheme to siphon $50,000 from online brokerage accounts, using a basic loophole that gained him a few pennies each time he created a bogus user account.

As reported in several Web newspapers, the man created accounts at Etrade and Schwab.com, many of them using the names of TV cartoon characters.

Michael Largent, of Plumas Lake, Calif., allegedly exploited a loophole in a common procedure those online brokerages use, allowing a customer to receive a few pennies as a mini-deposit to verify a bank account to be used for funds.

Largent allegedly used a script to open 58,000 online brokerage accounts in the names of cartoon characters and other aliases. Among the names he favored, according to federal investigators, are Johnny Blaze, “King of the Hill” patriarch Hank Hill, and Rusty Shackelford — the alias used by the paranoid exterminator Dale Gribble on “King of the Hill.”

A Secret Service search warrant affidavit alleges that Largent tried the same thing with Google’s Checkout service, accumulating $8,225.29 in eight bank accounts at Bancorp Bank.

Largent was quoted saying he read Google’s terms of service, and that it didn’t prohibit multiple e-mail addresses and accounts. “He stated he needed the money to pay off debts and stated that this was one way to earn money, by setting up multiple accounts having Google submit the two small deposits,” he was quoted in an article at Wired.

Russian music sites down and out

The once popular download site AllofMp3.com is long gone and the people who went after it, the Recording Industry Association of America, are claiming a major victory against online music infringement.

The site, based in Russia, was active from 2000 to 2007, when it shut down. The organizers of the site next put up a companion download site, Mp3Sparks.

This past week, the RIAA dropped its federal lawsuit against MediaServices LLC, the parent company of AllOfMP3.com. In a court filing, the recording industry dismissed the case without prejudice (meaning that it can be filed again) but provided no information on why it was abandoning the effort now.

An RIAA spokesman indicated that the group had won, that MediaServices was out of business, and that MP3sparks was badly crippled.

The people behind the sites claimed they were legal, since downloaders paid some money — usually less than 13 cents a song. The site managers also claimed the sites followed Russian copyright and royalty laws.

The main reason the RIAA can claim the victory is that AllofMp3.com and Mp3Sparks no longer could process credit card payments from anyone outside Russia. Due to agreements among international financial services firms to not allow the sites to use cards, the Russian owners had their air supply cut off.

European agency wants better social network laws

Europe’s top Internet security agency, the European Network and Information Security Agency, is calling for new legislation to police social networking sites such as MySpace or Facebook.

“Social networking sites are very useful social tools but we must make recommendations for how to better protect people from the risks these sites create,” said Andreas Pirotti, executive director of ENISA.

He said the group wants EU legislation expanded “to cover the taking of photos of people and posting them on the Internet.” In particular the concern is over the ability of others to post a photo of someone without the subject’s consent.

He also said there is a “crucial need” to raise awareness about how social networking sites work. Few people realize they can be offered up as friends to people they don’t know. Also, many people don’t realize it’s virtually impossible to erase material once it has appeared on the Web, Pirotti said.


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