Schneier on Security

L. Burke Files • December 18, 2006 11:28 AM

Good stuff by the way.

I travel about 75,000 miles by air each year and I am regularly subject to TSA (Thousands Standing Around Screening) – so far I have had to remove a piece of metal from a carry one because it could be used as a shank (poke an eye out) and lost three bottles of sun screen because the bottle did not say on it 3oz. Too funny.

Other items

Passwords
Don’t get monkey huh? With small children monkeys are all the rage along with penguins – check out Bobby Jack on the web and in t-shirt and apparel sales. Then you will get it J

Notary Fraud.

Simple go order a notary stamp from Office Max / BizMart and you have a notary stamp, or if you are lazy, and who isn’t this time of year, scan one off a publicly filed document and over print it on what you want notarized. Thieves are lazy liars so please don’t think to hard, think as though a lazy shifty person were going to do. BTW I come across many of these each year as a fraud investigator. EVERY TIME I have a notarized document for court I call the notary on the document to see if indeed they notarized the document. Many times they have not and end up in court testifying that they did not notarized XYZ bond or letter or ?????

Erasable Ink

The check paper is usually chemically treated to react to solvents used to remove ink, not for reacting to an ink. Thus disappearing or erasable ink do not trigger the chemicals in the paper.

Pretexing

As an investigator it is needed to go after bad people. What may be interesting will be the unintended consequences for Law Enforcement. Is undercover work pretexting? Actually it is. There is also the principle of Comity not prohibiting the private citizen from doing what the government can do, though it can be regulated.

While passing the pretexing bills will stop PI from getting information and going after the bad guys that Law Enforcement cannot figure out how to, it will not stop the people who have been pretexting for years to get what they want no matter the consequences.

ID theft from inside banks.

NOTE: It has always been a problem – it is not new. We work many cases tracing information stolen from banks. What you don’t see is publicity since the banks rarely prosecute because of adverse publicity. And adverse publicity will cause a run on a bank. I have seen it. Well Fargo can take it, but Local Credit Union cannot not. What the bank need to do is update their employment agreements ad clearly add clauses protecting their intellectual property and confidential information so when and if something leaks out, the employee is immediatly subject to contractual penalties of significant monetary amounts. Also have many other solution that work, but until they get stung who will used them????

Unintended Consequences of Laws….

Now may places are scanning checks and clearing your check right from the register or from their office. It part of what is called Check 21. But what happens to the original checks and how long are they retained?

Check 21 didn’t address the issue of when the checks should be destroyed because the law was written to allow financial institutions and the Fed to move checks around the country when the normal airplane-based check processing system was grounded. The Fed was a driving force behind Check 21.

When all airplanes were grounded after the September 11 attack, the Fed’s long-distance check-clearing system – which is based on chartered airplanes – came to a screeching halt. The Fed’s daily check float went from several hundred million dollars to more than $47 billion. In order to keep the country’s financial system running, the Fed was forced to continue accepting checks . Since it couldn’t transport those checks, it was giving, say two-day credit for a check that it could not clear at all. This amounted to a loan to the presenting banks. If the Fed had refused to accept any more checks, our financial system would have come to a screeching halt because vendors and banks would have refused to accept non-local checks.

The Fed didn’t want this to ever happen again, so it pressed for legislation that would allow it to electronically move checks around the country. Check 21 was that legislation.

The issue of destroying the original checks wasn’t addressed in the law because it wasn’t important. After all, only the Fed and some larger financial institutions would be using the law. They could be trusted to set up the proper systems.

Nobody ever thought that vendors and corporations would take this law and turn it into a popular product – like remote deposit capture.

This sort of unintended consequences is not unusual. One important reason why the federal government enacted the U.S. Interstate Highway system in 1956 was that it gave the government a way to move troops around the country in case of a Soviet invasion. The law even specified that one mile of roadway out of every five had to be straight – so the Air Force could use it as an emergency airport runway system. Even though the Soviet Union never invaded, the Interstate Highway system has proved useful for other purposes.

Keep up the good work.

L. Burke Files
LBF@feeinc.com