This week the Federal Government scored a major victory over a massive worldwide network of cybercriminals by shutting down Liberty Reserve, a criminal business venture disguised as a bank that was fronting a secret money system for everyone from credit card and identity thieves to Ponzi scheme peddlers, hackers for hire, and money launderers. Liberty Reserve was thought to have carried out millions of criminal transactions worth $6 billion that hid the proceeds of crimes including credit card fraud, child pornography, identity theft and drugs trafficking.
Liberty Reserve’s popularity was a direct result of its anonymity. Reputable online payment systems like PayPal require verification from users for security and tracking purposes, and help to keep personal financial data private. By contrast, account holders at Liberty Reserve were not required to provide proof of their identity when opening an account; with only an email address, anyone could begin moving money within the Liberty Reserve system, making transactions untraceable. This made the system downright irresistible to cybercriminals, which is part of the reason Liberty Reserve has had over a million users and served an estimated 55 million transactions since 2006.
In the short term, the closing of Liberty Reserve is a major blow to cybercriminals who have relied on the bank to fund illegal activities and receive payments. However, it won’t be long before other virtual money systems appear to fill the gap left behind.
Consumers like us can protect ourselves by being vigilant about who we do business with online and how we protect our information. Once credit card or other financial information is stolen, shady characters can buy, sell, and trade that information at will. To prevent this from happening to you:
- Always confirm that the companies you are doing business with online are legitimate enterprises
- Use secure passwords and change them frequently
- Remember that legitimate financial institutions and organizations will not send you emails or text messages asking you to share your account numbers or passwords
- Keep tabs on your financial records. Look for any transactions that seem out of the ordinary and question your bank about them immediately
- Do your online banking only on a secure network. If you use a mobile device to access online banking, be sure to use your mobile data network (probably 3G or 4G) instead of open Wi-Fi
- Install comprehensive security on all your devices, including smartphones or tablets, as well as on your computers that helps protect your identity and data, like McAfee® LiveSafe™.
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