Telegram raid sheds light on app’s role in rampant check fraud

Bloomberg News

The volume of Check Telegram fraud has reached unprecedented levels and renews concerns about the role of the messaging app in the increase in check fraud in the last three years.

The Charges against Telegram CEO Pavel Durov took a closer look at the ways in which messaging apps facilitate check fraud and what banks can do to prevent it.

In a report published Thursday, a Boston-based cybersecurity firm found that nearly a million images of stolen checks were posted on Telegram in the first half of the year. The images of stolen checks were posted on over 700 Telegram sources and tended to be reposted up to six times, a sign that check fraud is pervasive on Telegram, an encrypted messaging service whose users are notoriously difficult to track, experts said.

“That’s the dilemma banks face,” said Noah Nguyen, senior threat analyst at Recorded Future and co-author of the report. “Telegram is a major source of check data, and it’s difficult to take action on this volume and scale – tracking a million checks – without completely exhausting their budgets and resources.”

Unlike other messaging apps, Telegram does not prohibit illegal activities and end-to-end encryption of messages allows criminals to collude with each other without any oversight. On Wednesday, Durov was charged with aiding and abetting crimes such as the distribution of pornography, drug trafficking and fraud. He was also accused of failing to respond to court orders to hand over data.

Telegram has played a key role in both the sale of stolen checks and mail fraud. The app is used to promote the sale of universal U.S. Postal Service arrow keys that criminals have stolen and sold to open blue USPS mailboxes from Maine to California.

“Telegram’s role in facilitating fraud is threefold,” said Haywood Talcove, CEO of LexisNexis Risk Solutions’ Government Group. “They advertise the USPS’s universal arrow keys, they sell stolen checks online and they teach people how to launder a check, which is actually quite simple.”

“Mail fraud is a big deal because people don’t understand that criminals always do what’s easiest for them,” Talcove said, adding that he believes fraud is one of the biggest threats to national security.

Bankers are aware that criminals use apps like Telegram and FraudGPT, but they have little control over the circulation of stolen checks or their images and customer data being sold through encrypted websites.

“I’m not aware of anything our bank can do to prevent the illegal use of ‘safe’ apps,” says Steven Gonzalo, president and CEO of American Commercial Bank & Trust in Ottawa, Illinois, which has assets of $1.6 billion.

Check fraud caused $21 billion in losses for banks worldwide last year and was the second leading source of fraud against banks after payment fraud. a global financial crime report from NasdaqMore than 80 percent of fraud losses are borne by banks in the United States and Canada, experts say.

“Telegram (and) TikTok have created an industry of scammers that can teach you how to tamper with a check,” said Kerry Cantley, vice president of digital banking strategy at Mitek Systems, a digital identity and fraud prevention company in San Diego. Mitek’s software is used by most banks for mobile deposits.

Mitek is trying to educate customers about the need to integrate check fraud technology into deposit channels that gives the depository bank the information it needs to determine fraud risk. This can be done during check deposit and protects both customers and banks from potential losses. But banks are in a bind when it comes to check fraud technology: many banks are using old legacy systems and no longer want to invest in them, while at the same time trying to invest heavily in real-time payment technology, which they see as the wave of the future.

“Check fraud has become the biggest fraud problem considering how much money banks lose in this multi-billion dollar fraud industry,” Cantley said, adding that “banks cannot respond quickly enough” to combat the fraud.

“A bank may not know about the fraud until the money is gone,” she said, describing how Mitek is able to compare check images as they are captured and assign a risk score to each check, giving banks more information to decide whether to hold a suspicious check.

Although large cities have the highest concentration of stolen checks, the Recorded Future report analyzed geospatial data on Telegram to identify “hotspots” where check fraud originates. New York City recorded the highest number of stolen checks, suggesting that many “threat groups” are active throughout the city, the report said.

The report also examined Baton Rouge and neighboring St. Landry Parish in Louisiana, which saw a spike in thefts of state checks during tax season, suggesting a high number of local fraud groups.

Many consumers still write checks, typically to pay rent or utilities, and banks are reluctant to tell their customers to stop using checks. The check volume is decliningThe pandemic led to an increase in check fraud due to the combination of massive government stimulus programs, Reduction of postal inspectors And the rise of social media platforms like Telegram.

On Monday, a Postal worker in Peoria, Illinois, was robbed at gunpoint and her mail bag was stolen.

Gonzalo, whose bank is 90 miles from Chicago, said criminals are increasingly targeting rural banks to evade banks’ efforts to crack down on fraudulent checks.

“It appears that fraudsters realize that this type of fraud is easier to carry out in rural bank branches and drive up to three hours to open fraudulent accounts in person,” Gonzalo said.