To The Point Podcast Episode 4: The Changing Face of Fraud in the Post-Pandemic Era

The changing face of fraud

A Point Predictive Podcast with Dr. David Maimon

Dr. David Maimon, Principal Product Manager at GeoComply and director of the Evidence-Based Cybersecurity Research Group at Georgia State University, explains the pandemic era explosion of homegrown identity fraud, what that means for auto lenders and other financial institutions, and how technology can be used to guard against it.

The conversation also explores the fast-growing use of AI and its implications for fraud attacks and prevention.

Listen now at the link or read the transcription below.

“To The Point” is a production of Point Predictive.


This is To the Point, a podcast from Point Predictive.

Jeff Goldberg, Host 

Hi, this is Jeff Goldberg from the 2023 Auto Lending Fraud Roundtable presented by Point Predictive, I’m joined by Dr. David Maimon fraud expert with the organization Geo Comply, as well as Georgia State University. Dr. Maimon, when you look at what’s happening across the fraud industry right now, you cover so much ground, what is worrying you most about some of the trends you’re seeing? 

Dr. David Maimon 

I think the most important thing that bothers me is the use of identities to establish new bank accounts, new businesses, and new credit lines, at a pace that I’ve never seen before. What is different today, in my perspective, than what we’ve seen a couple of years ago, is the fact that we have a lot of local actors using those identities to engage in fraud.

In the past, we have seen a lot of gangsters all have sort of organized crime groups using those identities. But on a lower scale than we’re seeing right now. In the past, most of the actors that we were seeing came from other places around the globe, we’re talking about Russia, we’re talking about North Korea, we’re talking about Romania, we’re talking about China, of course.

But starting three years ago, with the pandemic, a lot of local actors realized that there’s really no need for them to stand on the street and cause damage. And you know, try to make money doing that way, all they have to do is just grab our identities and start manufacturing fake driver’s licenses and very high-quality documents in very high quality as well. (Then) Use those documents in order to establish bank accounts, apply for unemployment benefits, apply for SBA loans, put together sports bets, open businesses, without really anybody stopping them. And so, the use of identities nowadays in our society, stolen identity, synthetic identities in our society, is just mind boggling. And to me, that is the most disturbing thing that we’re experiencing right now in the ecosystem. 

Jeff Goldberg 

Lower risk, higher reward, less penalties. And you said the pandemic was a big sort of catalyst for this. And you see it going in directions you’ve never seen before. Where is this going when you look 2, 3, 5 years down the line? 

Dr. David Maimon 

I mean, we are definitely seeing the criminals forming more and more businesses, fictitious businesses. Businesses which actually operate. Those businesses will be used to hire employees, those businesses will be used to hire fake employees. Those businesses will be used to submit or request credit lines, requests from those businesses will be used to ask for loans of course. These businesses will be used to engage in so many types of fraudulent activities. And we’re seeing the group, the criminals, using those identities, those business identities, right now opening business bank accounts. 

Jeff Goldberg 

And you describe this as sort of a criminal supply chain in a sense, right? I mean, it all feeds itself. And there’s a sense of legitimacy to it, which is how it persists and grows. Is that accurate? 

Dr. David Maimon 

That’s it precisely. Yeah. You know, you’re seeing a business, you’re seeing a legitimate business sort of speaking asking for, you know, a loan, the business has employees in the business. If you look at the bank account of the business, you see money transactions from legitimate individuals, right, legitimate bank accounts.

So anyway, you have no reason to be suspicious about the fact that this endeavor is fraudulent and criminal. So you know, the banks, the government, the list of red flags that they will have in the future unless they do something about this right now is going to decrease dramatically. So you know, there’s gotta be a way right for the- for those entities to use some of the information from the ecosystem in order to help improve the way they are- they do prevention and mitigation. 

Jeff Goldberg 

So that brings us to that topic and I want to talk specifically about the auto loan industry. When it comes to lenders when it comes to dealers. Prevention is critical, what do you see as some of the proactive pre-emptive steps that can be taken to mitigate the impact of fraud in that field? 

Dr. David Maimon 

Sure. So again, you mentioned the supply chain. In the context of stolen identities. One of the things that we see happen a lot in auto dealerships is the prevalence of insiders. Unfortunately, we find a lot of checks, a lot of money orders, a lot of bank accounts being uploaded on the markets we oversee, which come directly from insiders within the auto industry.

I think that’s a huge thing that the industry needs to pay attention to try to prevent this specific type of crime because this is definitely something that is on their hand. In addition to that, yes, we will see many of the identities that the criminals have formed during the last three years, some of them during the last 10 years to lease new cars, to finance, you know, car loans.

So, you know, to try and prevent and mitigate that effort, I think that there’s a lot of attention that should be given to collecting information from the ecosystem directly from the ecosystem, directly from the Darknet, directly from the places where the criminal essentially discloses all this information themselves. One important thing to understand about the criminal and the ecosystem is the fact that folks are talking to each other all the time. And they do that because of all kinds of reasons; they do it to teach each other how to engage in fraud.

And, you know, we see a lot of criminals offering tutorials, for engaging in different types of crime. But also to brag about their operation. One of the interesting things that sort of blew my mind, every time I’m going on those platforms is how brazen these guys are. The fact that they expose their faces, they will not expose their names, but their faces are out there. Their voices are out there. They show the bank accounts they’re able to open from the banks themselves. They upload videos of them leasing apartment and leasing cars. Nobody really cares, right about the fact that this information could be used against them in the future, potentially, by law enforcement. So I think that aspect needs to be changed as well. I’m not sure that the car industry could do anything about that specific thing, but law enforcement should definitely try and prevent more of that right? 

Jeff Goldberg 

Is it ego? Is it brazenness? Is it stupidity? I mean, what’s going on? Because you would probably ask plenty people on the street and they would say, ‘I can’t believe that happens’, but happens all the time.  

Dr. David Maimon 

I don’t think it’s stupidity. I think it’s ego. I think, you know, folks like to brag about what is it that they’re able to steal. They want to show their jewelry, they want to show their accomplishment, like all of us. So there’s a lot of that. But there’s a lot of marketing as well. Remember, I mean, what I’m seeing is essentially vendors offering their commodities for sale. So if you’re a vendor, you want to convince customer that what you have is legit, what you have could really work. And this is how successful you are because of the fact that the commodity really works.

So you know that that is the main reason, in my opinion, (Jeff: It’s good for business) well, we see all that it’s great for business. I mean, if you show that you’re able to open a bank account, like a business bank account, and then you take a picture of your Rolex next to the computer screen that shows the zero balance. It’s great for business. 

Jeff Goldberg 

So if you’re a lender, I want to focus again, on the sort of auto loan industry. If you are a vendor or lender, rather, you’re a car dealership. You have to stay one step ahead. Extremely difficult. I know that some of the work Point Predictive is doing is critical in terms of gathering information. But how can these organizations stay a step ahead? 

Dr. David Maimon 

So some of the work that we do as well try to get us a step ahead. Having said that, it’s very difficult to be a step ahead because of the fact that we as an industry, have all those regulations, right. And we have all those controls that we have to comply by. And so we are in any state at any point of time. We’re like five or even 10 steps behind the criminals.

But you know, we can definitely try and push that a little bit, I think, again, being out there getting the identities, this is one of the solutions that we work on getting the stolen identities, having them in the repository, which will allow lenders to actually match the name of the person who is just asking for new loan on a car with the list of identities that, you know, that are known to arrive from those specific platforms, as well as the time in which those identities have been found.

One of the interesting thing that we found in our research, and unfortunately, based on personal experience as well, is that once an identity is being uploaded on those markets, it takes between 5-10 minutes for the criminal to start using it. And I’m saying start using it, I’m saying manufacture fake driver’s licenses, using the identity in order to open bank accounts, using the identity in order to try and establish credit lines under the identities. You know, we see that happens all the time. And we know that there’s a very small windows of opportunities for the criminals to actually take the identity and use it without the banks actually realizing that the identities up for sale. So we’re talking about between 5 minutes to 2 days.

And then it’s a there’s another window, that window will be between 3-6 months after the identity has been used or have been posted on the platform. So once you know that, and once you have a data repository, which allows you to match the record of the individual who just got an application from I think you’ll be in a better place to do some prevention, as well as mitigation. 

Jeff Goldberg 

Understood, it all makes your head spin. And as if all the things you’re talking about are not bad enough. There is now AI in a big, big way in terms of tool that criminals are leveraging. Talking about takeaways from what you heard today. Frank McKenna, from Point Predictive really hit on this topic, and that seemed to impact you based on the conversation you and I were having earlier. What is your biggest takeaway from the roundtable today, especially when you talk about AI? 

Dr. David Maimon 

So first of all, if there’s a talk I will never miss, in any event I go to is Frank’s talk, right? Because he’s, you know, so accurate and so well versed in this in this world of fraud that every time he talks I know I will get something from his lecture. So this time, and I heard him speak, he talked a little bit about the use of AI, and how the generative AI and some of the AI tools that we use in our daily work are being used also by the criminals. And I think that point is very important. Because we are seeing signs of the use of AI already in the field.

We are seeing the criminals for example, using AI tools in order to doctor videos, images of individuals. So, for example, they will take over a Facebook or Twitter page, or even a LinkedIn page. They will take the images directly from the page. And then they will use those images as a filter in video conversations that the run in order to engage with targets. We see obviously, the use of images of very attractive individuals. And we see that those images are being taken off those platforms. And then they’re placed on all kinds using all kinds of AI tools on the cameras. And on the on the technology that the fraudsters are using in order to deceive the victims.

Many videos that we post out there where we see criminals from all over the world. Nigeria is definitely one of the hot beds right now this you see a fraudster using two phones to communicate with a with a with a target, right so one of the phones will take the image from the Facebook page. But the technology that the phone will have on it will allow the criminal to move his lips as well as his head. The other phone will show the first phone and the victim will essentially see the image from Facebook and not the image of the fraudster. So we see a lot of that happen right now in the context of grooming, in the context of romance scams. But I believe that it’s only a matter of time until we start seeing that in the context of verification of identities before you sort of apply for a loan or a credit line, or where have you. 

Jeff Goldberg 

Scary stuff and prevention, and it’s so critical to try and stay a step ahead. Dr. Maimon, what is it that keeps you going? What is it that… Where does your passion come from? On this topic of understanding fraud and doing all you can to try and prevent it for individuals for organizations as best you can? 

Dr. David Maimon 

So first and foremost, I’m a scientist. And I’m curious about the world around us. And I’m curious, I tell the truth, I really didn’t want to do the type of academic work I was doing 10 years ago, once I graduated with a PhD in Sociology. Because I didn’t think that I would be able to contribute and learn a whole lot about the world using the tool we had back then. And so I wanted to just leave everything and go and move to Australia and chase the Giant Squid and the Angler fish, because I’m sure you know that. (Jeff: Sounds cool!) Yeah, so we know more about the moon than we know about the deep even today. So I just wanted to be out there in the environment that allows you to just look left and find a new fish.

And you look right and, and you find another new fish that nobody else has seen before. I couldn’t do that because of my wife. She did not allow us to be poor for four more years. And so I had to find someone, something else that will make me go. And diving into this area of fraud, it was really good in this sense because one of the cool thing I really appreciate about the fraudsters is the fact that their modus operandi changes on a daily basis, pretty much.

We have several really cool studies where we actually were able to look at the inboxes of fraudsters. And we were able to see how they shift gears from one operation to another on a weekly basis, stealing millions of dollars that way. So, the curiosity and the fact that we’re discovering new things on pretty much a weekly basis that’s what makes me go. It’s fascinating to see how these guys adapt and how the ecosystem adapt to changes we have in our society. And that is my driver. 

Jeff Goldberg 

And of course, trying to help people in organizations prevent it.  

Dr. David Maimon 

That’s the cool side effect of it. But you know, the truth I mean, I’m really curious about that because these things are developing, they’re evolving. I mean, I’m looking at if you think about it, I’m looking at the fish that nobody else has looked at in the past, so to me, that is extremely cool. 

Jeff Goldberg 

Yeah, very interesting. Dr. David Maimon, thank you so much for joining us from the 2023 Auto Lending Fraud Roundtable presented by Point Predictive. 

Dr. David Maimon 

Thank you so much for having me. 


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