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Articles Tagged with Fraud


football-1134963-m.jpgWhat does investigating Insurance Fraud have in common with the FIFA World Cup currently taking place in Brazil? More than you might think, especially if you’re a world-class goalie trying to stop a penalty kick.

The hardest job in all of soccer, or football as the rest of the world calls it, arguably is that of the goalkeeper on a penalty kick. Think of how big that goal really is. Now think of how small that keeper actually is. There is no comparison between the two. Add in the fact that tied games are decided on penalty kicks, and you’ll understand the pressure involved, especially when you’re playing for the World Cup and know that two World Cup Finals have been decided on penalty shootouts. Many people complain about how unfair it is to decide a game that way, especially when, as they see it, a goalie has to get lucky to stop a penalty kick. Just yesterday, Sunday June 29, 2014, an article in the New York Times by Rob Hughes lamented the fact that Brazil just beat Chile on penalty kicks, especially because Chile’s last one didn’t go in because it hit the goalpost.

How does a keeper have any chance at all to stop the open, unimpeded shot, from 12 yards away, when the penalty-taker has all that room to kick at? As it turns out, he does it in much the same way a fraud investigator detects a lie: He does his homework, knows what to look for, and then goes on instinct. Unlike a fraud investigator, though, not many people expect the keeper to get it right.

A study recently was conducted to see if there was any way to help the goalkeepers with their nearly impossible task. It came up with a few answers, which also, though inadvertently, may give some pointers on how to conduct a fraud investigation. Entitled “The development of a method for identifying penalty kick strategies in association football”, it is authored by Benjamin Noël, Philip Furley, John van der Kamp, Matt Dicks and Daniel Memmert, and is published in the Journal of Sports Sciences.
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chain-1-1105094-m.jpgThe Federal Trade Commission’s effort to force businesses to take reasonable precautions to protect their clients’ sensitive personal information from data breaches is back in the news this week, as is at least one big, new data breach. What the FTC does, and what it tries to get businesses to do, about cybersecurity, should be important to everyone. Sooner or later, it seems, any business could have their customers’ data stolen and face FTC charges as a result.

Why you should pay attention: EBay just announced a large data breach. According to an article published in the Seattle Times on May 21, 2014, hackers stole some of the company’s employees’ log-in credentials and used them to gain access to EBay’s corporate network, which includes customers’ names, addresses, dates of birth, and encrypted passwords. It happened between late February and early March 2014 but was discovered only two weeks ago. EBay said there was no evidence that any of its customers were harmed by the breach. They did, however, ask each of their active users to change their passwords. To put it into perspective, they reportedly have 145 million active users. There might not be any damage, but it is a big deal.

What you should pay attention to: The latest FTC enforcement action to make the news is the administrative law trial of the medical testing company, LabMD, Inc. The FTC has alleged that its lax security measures exposed, and compromised, the private information of almost 10,000 customers. One of the main issues, according to a report in the May 20, 2014 National Law Journal by Jenna Greene, is whether the FTC overstepped its bounds by bringing the charges.

The FTC’s effort to enforce what amounts to a “reasonable precautions” cybersecurity standard is not new. As we noted a few weeks ago, in a separate case the FTC brought against Wyndham Worldwide Corp, Federal District Court Judge Esther Salas on April 7, 2014, upheld the Federal Trade Commission’s right to police corporate cybersecurity practices under its authority, pursuant to Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. §45(a), to prohibit unfair or deceptive acts or practices in, or affecting, commerce.

The Wyndham case was interesting because it involved hundreds of thousands of people who allegedly had their debit and credit card information stolen because they did something everyone does: pay for a hotel room. The LabMD case might be a lot smaller, but there was a lot more at stake.

LabMD did more than merely expose the personal financial information of its customers; it allegedly exposed their confidential medical information as well, according to the FTC’s August 29, 2013 press release. These allegedly included the results of medical tests, including for cancer, according to the National Law Journal Report. Those medical records make the case important.
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butterfly-1427284-m.jpgMost people by now have heard of the Heartbleed bug. It’s the programming flaw in one of the most common encryption methods on the internet: OpenSSL. It makes what should be secure websites, and the personal information they contain, vulnerable to hackers. It is more important, though, than just another internet threat. Every business should consider whether it can be liable for depending on the vulnerable encryption software in the first place. This is especially important in light of the Federal Trade Commission’s efforts to ensure that businesses take reasonable precautions to protect their customers’ digital data.

The same day the Heartbleed bug was announced, April 7, 2014, Federal District Court Judge Esther Salas, upheld the Federal Trade Commission’s right to police corporate cybersecurity practices. As we previously mentioned, the court denied Wyndham Worldwide Corp.’s motion to dismiss a suit the FTC brought against it which arose out of three separate alleged hacking incidents that occurred over a two year period.

According to a story by Matt Egan published on April 8, 2014 in Fox, the FTC sued Wyndham Worldwide Corp. and three subsidiaries, alleging that Wyndham, unreasonably and unnecessarily, exposed consumers’ personal data to unauthorized access and theft that resulted in hundreds of thousands of customers having their payment card account information exported to a domain registered in Russia and a fraud loss of more than $10 million. The suit reportedly alleged that, among other things, Wyndham:

  • Failed to use readily available security measures like firewalls;
  • Allowed software to be configured inappropriately;
  • Failed to ensure hotels implemented adequate information security policies;
  • Failed to remedy known security vulnerabilities.

[Emphasis supplied]

What makes the ruling especially relevant to the Heartbleed bug is the way that the encryption software the bug affects is developed and maintained.
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