HOBOKEN, N.J. — There's nothing like a good case of identity theft or fraud to put a damper on holiday cheer.

Increased spending and online transactions during the holiday season can make it easier for fraudulent activity to go undetected. Deb Geister, director of fraud prevention and compliance solutions at LexisNexis, said that this is the time of year that really knowing the customer comes into play.

“This is a stressful time of year and, especially in tough times with low consumer confidence, it's expected that consumers will be reducing holiday spending. So if you see real erratic spending on an account, that should be a red flag,” Geister said.

With the Red Flag regulations now in effect, Geister said that financial institutions should be equipped to be even more diligent in recognizing fraudulent activity.

“Larger financial institutions should have detections in place and should have the framework to assess transactions. Smaller institutions have more challenging issues but should be able to identify consumers and notice a spike in spending,” Geister said.

Particularly during times of increased economic pressure, consumers are more likely to fall victim to scams targeted at holiday shoppers.

Key scams Geister said they've found are lottery scams and auctions scams. Gift card fraud with retail and bank cards, she said, is also very common during the holiday season.

For retail cards, Geister said consumers should know to be careful with cards being sold near the register at the point of sale. Criminals will copy down gift card numbers and watch to see when the card balance has been initiated and then go shopping with the card number. Geister also said employees in on the scams will run a gift card for a customer and give the customer back a blank card.

Consumers should be warned to always examine the card before purchasing and after a transaction, and, if possible, not buy gift cards off the rack or from Internet auctions.

Online retailers also tend to relax shipping rules and address match up rules during the holiday season, making it easier for criminals make fraudulent purchases.

“Retailers will relax shipping requirements and will allow customers to ship to an address different from their regular address. This allows fraudsters to do the same thing and ship purchases to places different from the billing address on the card. During the holidays especially, with the amount of volume retailers see, this activity will go fairly undetected,” Geister said.

Doug Brunt, president/CEO of Authentium, a developer of security software solutions, said that while online transactions are known to increase during the holiday season in general. During a financial crisis and times of unemployment, online transactions tend to increase as well with more people at home and online.

Consumers should be educated to know how to look for valid sites and recognize the symbols that show it's a secure transaction, Geister said. She also recommended that consumers keep receipts, check statements right away and call customer service immediately if they notice anything suspicious.

Brunt explained that the online environment now is very different from what it used to be a few years ago, with many more viruses out there. From 1992-2001, according to Brunt, the company had approximately 100,000 antivirus signatures. From 2001-2003 he said they had about 100,000 antivirus signatures and now they have approximately 100,000 antivirus signatures a month.

With such increased development of viruses that can steal financial information, Brunt said that traditional malware and antivirus companies just can't keep up.

Brunt cited a Trojan called Sinowal, also know as Torpig, as an example. Over a three-year period the Trojan has stolen log-in credentials from approximately 500,000 online bank accounts and credit and debit cards.

“The scary thing is that cyber crime has exponential growth and there's no international police to deal with it,” Brunt said.

One of the best things financial institutions can do during this time of year, Geister suggested, is educate consumers on key things to watch out for.
Geister is working with some financial institutions to hold education sessions for both businesses and consumers on what to watch out for during the holidays.

“We're seeing some financial institutions get creative, which is great,” Geister said.

The National Foundation for Credit Counseling has also created a Web site with tips and information about identity theft at www.protectyourIDNow.org.

–lsiegriest@cutimes.com

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&#039;Tis the Season: Education Key to Helping Members Fight Holiday Fraud

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