Friday, August 28, 2009


Technology and fraud

Fraud has been around as long as people have. I’m convinced that back when people lived in caves, some troglodyte took another’s kill in exchange for a “spacious” cave that turned out to just be an indentation in a rock next to a swamp.

People have perpetrated fraud door-to-door, by mail, by telephone, out of an actual office, whatever. It’s even entertaining, when it’s fictionalized. We delighted to the story of “Professor” Harold Hill in The Music Man. A 10-year-old Tatum O’Neal won an Oscar playing with her father, Ryan, in Paper Moon; the same year’s The Sting won Best Picture, along with six other Academy Awards.

There’s nothing entertaining about it, though, when it’s done for real, and there’s a lot that’s the same between the snake-oil salesman in his horse-drawn wagon in the old west... and the folks selling remedies to improve one’s “love rocket” (as a recent message in my spam folder called it) on the Internet.

There’s also a lot that’s different, and those differences are what enable modern fraud to work on such a vast scale.

The huckster in the wagon had a rough job. He needed that wagon and horses, for one thing, and he had to feed and care for the horses. He rode all over, usually riding more than selling, and when he got to where he could sell he became a performer. He also sometimes became a fugitive, driven out of town with threats of tar and feathers, or worse — and hot tar is a punishment that’s far less comical than jokes make it out to be.

Moving through the years, printing brochures and other advertising material and setting up fake offices took money and required special equipment (printing presses) and access (office space). Even cheating people by telephone necessitated one-on-one phone calls, a significant investment in time, and a fixed location that was prone to being raided by the authorities.

Technology and the Internet makes this all so much easier, and that’s what has really changed. Printing stuff? You can get professional results with an inexpensive ink-jet printer. Pre-paid mobile phones are untraceable and don’t tie you into a fixed location. But most useful are email and web pages.

Constructing a brick-and-mortar business is quite a task. But a web site can be put up in minutes, and abandoned as quickly. Email can be sent out in the millions, also in minutes. Set yourself up, and sit back and wait for the clicks. You can make it semi-legitimate (by actually sending out “product” in response to purchases) or not, as you please.

Worse, though, is how easy it is not just to set up a bogus business, but to mimic a real one. Building a fake Bank of America branch to lure people in with their money would have been next to impossible 20 years ago. Putting up a fake Bank of America web site that’s hard to distinguish from the real one is trivial today. Slipping someone a fake map or fake directions to send them to your storefront used to be an idea limited to the movies. Sending a phony URL by email, or rerouting traffic from an Internet café is no big thing.

It’s even easy to set up a fake “magazine” and suck in advertising revenue. It’s amazing how many unsuspecting folks will be willing to write for free, as “interns”. Even easier is to scan the Internet for interesting items and then just republish them on your own site, without permission. Throw in a bit of “search-engine optimization” to draw people to your ’zine (SEO is big business in itself, these days), and, again, you can sit back and collect the money.

It’s a new world, but I’m not sure how “brave”.

1 comment:

scouter573 said...

Worse, though, is how easy it is not just to set up a bogus business, but to mimic a real one.

Mr. Madoff demonstrated just how easy it is to set up and run a bogus business to the tune of billions of dollars. I continue to be astounded that a couple of people with a few PCs and a server or two can appear to run a legitimate trading business. Somehow they faked out hundreds of monthly statements. Even more amazing to me, they ran this business with little or no network traffic. As guilty as the financial fakes, the system admins and network admins must have been in on the plot. Or they should have ratted out the rats years ago.