Thankfully most criminals are not that bright. Article in the Arizona Republic this morning about a group of three Mexican nationals who were on a little shopping spree in the Valley of the Sun. The trio was going to various electronic retailers and making purchases with fake credit cards. The cards appeared to be legitimate card stock from legitimate Mexican banks, but account numbers from valid U.S. accounts.

The trouble started when they bought a laptop from a WalMart, then went out to the car, only to find that the laptop was missing. The WalMart employees legitimately messed up, and the box they provided the ‘customers’ was empty, and no one seemed to notice until after the group left the store.

In what I assume was an unintentional remake of the classic scene ‘Somebody ripped off the thing I ripped off’, they got mad and went back to the store to complain. Loudly. To the point where the WalMart employees called the cops, panic ensued, with the three running out of the store flinging bogus credit cards around the parking lot … allegedly. Reports of their yelling ‘Whoop-whoop-whoop-whoop’ have not been independently confirmed. The three men were arrested and are being held on forgery and fraud charges pending an investigation.

The real question in my mind will be where did the valid credit card account numbers originate from and who provided them. They were stolen from somewhere, and if the crooks had 19 cards made up, that should be enough to provide a statistically meaningful sample to match up with a point of origin. We have seen a lot of credit card number theft over the past several years, which tends to be highly publicized. We see much less on the use/fraud side. I am going to be interested to see what the police uncover … if it makes the news that is.

-Adrian

What do you think our new financial law will be? What piece of legislation will be enacted by our government to protect us from the greed that caused this current financial crisis? Last time it was Sarbanes-Oxley. Who will be the poster child for our current financial crisis? Who will be the “Keating 5” this time around? You know it is coming. It has every other time greed has torpedoed our economy. And it is an easy target for any politician when there is only one side to an issue. I mean, how many voters are pro-financial crisis?

I am actually asking this as a serious question. I am really at a loss for a plan of action that would be effective in stopping financial institutions from making bad loans, or how the government could effectively regulate and enforce. The typical downsides to bad business practices (falling stock value & bankruptcy) have been nullified with mergers and government funding. In this case the blind greed seemed to be evident from top to bottom, and not just within a company or region, but the entire industry. From financial institutions, to buyers, and most of the parties in between. Yes, lenders skirted process and sanity checks to be competitive, but it took more than one party to create this mess. Buyers wanted more than they could afford, and eagerly took loans that led to financial ruin. Real estate agents wrote the deals as quickly as they could. Mortgage brokers looked for any angle to get a loan or re-fi done. Underwriters in absentia. Appraisers “made value” to keep business flowing their way. You name it, everyone was bending the rules. 

So that really is the question on my mind: what will comprise the new regulation? How do you keep businesses from saying ‘no’ to new business? How do you keep competitive forces at bay to reduce this type of activity from happening again? My guess about this (and why I am blogging about it) is that enforcement of this yet-to-be-named law will become an IT issue. Like Sarbanes-Oxley, much of the enforcement, controls and systems, along with separation of duties necessary to help with fraud deterrence and detection, will be automated. Auditors will play a part, but the document control and workflow systems that are in place today will be augmented to accommodate.

Let’s play a game of ‘trifecta’ with this … put down the name of the company you think will will be the poster child for this debacle, the name of the politician who will sponsor the bill, and the law that will be proposed. I’ll go first:

Poster Child: CountryWide

Politician: John McCain

Law: 3rd party credit-worthiness verifications and audit of buyers

If you win I will get you a Starbuck’s gift card or drinks at RSA 2010, or something.

-Adrian