Fraud and Cryptocurrencies: An Alternative Payment System Exploited by Fraudsters Jane Hennessy Head of External Alliances, G2 Web Services January 12, 2018
What Payments Does He Use? Peer-to-Peer
E-Wallets
Mobile Pay
Bank Debits/Credits
ALTERNATIVE PAYMENTS METHODS MSBs
Pre-Paid Cards
Vouchers
Cryptocurrencies
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Alternative Payment Methods (APMs) are payment methods apart from credit/debit cards used to make online purchases or transfer money
•
While credit/debit cards are still the dominant online payment method, APMs are gaining ground rapidly
•
While card brands become better at detecting “front” businesses, APMs are only slowly realizing this threat
How Does He Work? A high-level overview with case studies
Payment Brand Protection The Payments Hustler is Working to Get Paid Point-to-Point
Prepaid Cards
MSBs
Cryptocurrency
Vouchers
Mobile Wallet
Bank
Fraudulent Merchant
What Are His Tactics? Plan A: Alternative Payment Networks (money transfer, P2P)
Plan B: Bank Payments (account-linked debits, credits)
Plan C: Cryptocurrencies (general: bitcoin, specialized: potcoin) • Bad actors probe less monitored payment types for weaknesses through trial and error • Alternative and emerging payments are often unprepared and find themselves unwittingly enabling crime
Illegal Drug Store — Bitcoin
Illegal Drug/Research Chemical Store — Litecoin & Etherum
What Does It Look Like In Practice? Month 1
Merchandise
Methods
Month 2
Month 4
What Does It Look Like In Practice?
“If you can’t fix it, feature it!” -Sir Ernest Shackleton
What Does It Look Like In Practice? Step 1
Step 2
What Does It Look Like In Practice? Step 3
Step 4
What Does It Look Like In Practice? Step 1
Step 2
Clearly this payment brand would not want to be seen as facilitating bestiality
Other Uses
Posing as others in the crypto-community
ICOs posing as legitimate actors for sales — seeking money pre-ICO — masquerading as agents
Securing proprietary information — e.g., insider information on M&A deals
Nigerian princess lives to see another day — in Bitcoin
Thank you! Jane Hennessy Head of External Alliances, G2 Web Services jhennessy@g2llc.com | 415-867-9293