Posts tagged with "Fraud"

Fishy business: Bogus seafood is everywhere, even in port cities

January 29, 2019

Is your seafood retailer telling—and selling you on—a “fish story”? In New York City according to State Attorney General Letitia James, if you are buying lemon sole, red snapper, or wild salmon, it is likely that’s not what you’re taking home.

Late last month the James’ office issued a report  asserting that 43%t of the time, when premium-priced fish (fetching between $19 and $29 per pound) — like grouper, cod, halibut, striped bass, and white tuna —is purchased, inferior varieties farmed in foreign countries with very little or no regulatory oversight are substituted without the buyer’s knowledge.

“I’m very happy to see law enforcement getting involved says,” Larry Olmsted, author of “Real Food/Fake Food: Why You Don’t Know What You’re Eating and What You Can Do about It,”  recently told Salon.

“Mislabeling is rampant in the seafood industry, and if you can’t reliably get the fish you want in a port city like New York, just imagine what levels of fraud are like further inland,” Olmstead said to Salon, adding, “This business has had a fraud problem for years and years—and the only people tracking it have been public interests groups,”

In the investigation leading up to the release of the new report . samples from 155 seafood retailers were purchased and tested. Farmed salmon samples were purposely mislabeled as “wild” 27% of the time. Sixty-seven percent of red snapper fillets were mislabeled; and virtually every piece of fish labeled as lemon sole (87%) was something entirely different and cheaper.

Across the board, substitutes were cheaper, less desirable, and less environmentally sustainable species. This, while the U.S. per capita consumption of seafood for 2017 has increased to 16 pounds from 14.9 pounds in 2016.

“For white-fleshed fish, supermarkets and grocery stores that are jerking their customers around usually sub-in Asian catfish varieties called swai, panga and basa,” Robert DeMasco, owner of Pierless Fish in Brooklyn, a seafood wholesaler with a client list including many of the country’s most celebrated restaurants, told Salon. .

These catfish varieties don’t even rate compared to the more well-known durable darling of American aquaculture, tilapia. “There’s no way of knowing how swai and the others are raised, what kind of antibiotics are used on them— though, you can bet whatever it is, there’s a ton of it being used. There’s no way of knowing what they get fed,” DeMasco told the news outlet.

“In Asia—Thailand, Cambodia and Vietnam mostly—there’s very little regulation and you know what’s crazy? Ninety percent of the fish Americans eat is coming from foreign countries,” DeMasco revealed.

Compare that to the 18% of the total supply of vegetables that are imported, and the less than 30% of total beef eaten each year that is imported, and the challenge ahead for well-regulated domestic fishermen begins to take shape.

“For the most part, the fish Americans eat is already filleted,” says author Olmsted. “The majority of it is already prepared and served in restaurants and we all know that means battered and fried, so there’s not a lot of opportunity for consumer education and that’s what it is going to take to cut down on fish fraud.

“This is the same thing that happened with the organic movement,” Olmstead told Salon. “It can be done, it will just take time and the kind of oversight that’s being signaled from New York.”

“In the fish business there are words that sell fish. ‘Snapper’ is one of those words. Another word is ‘grouper.’ It is really hard to sell a fish that is not called snapper or grouper, so of course they’re the most ripped-off fish in the store, but people just aren’t interested in lieu de mer, or even pollack, really. Turbot? That’s a nice fish,” says Demasco. “Very hard to sell.”

On menus people like descriptions. I think it’s the romance, the story in their head,” DeMasco continues. “‘Line-caught’ this, ‘day boat’ that.’ ‘Diver scallops’ is a big one. People love a diver in a wetsuit getting their scallop for them. There are some, sure. I know a lot of the guys. But how many menus in this city, this country have a ‘diver scallop’ on it? There aren’t that many divers. No. Scallops are dredged. ‘Dredged?’ Dredged is not a sexy word.”

One of the solutions is to know where your fish is coming from. “I’m a big fan of some of the branding efforts that are going on in aquaculture, it makes it easier to identify and patronize the good guys,” says Olmsted, adding, “There are good American outfits farming salmon, even shrimp. People want this stuff and companies know it.”

Research contact: @mannyhoward

Feds look at Trump inaugural fund and super PAC for illegal foreign donations

December 17, 2018

When President Donald Trump was sworn in on January 22, 2017, his first instinct was to place his right hand on his own book, The Art of the Deal, rather than the Bible. Looking back, some might say that the how-to book would have been the better choice, in light of the financial machinations that allegedly took place leading up to that day.

Federal prosecutors in New York now are investigating whether foreigners illegally funneled donations to Trump’s inaugural committee and to a pro-Trump super PAC in hopes of “buying influence” in the administration, The New York Times reports.

That would pose a big problem for the White House, because U.S. law prohibits foreign contributions to federal campaigns, political action committees, and inaugural funds.

The inquiry has focused in on money emanating from nations in the Middle East—including Qatar, Saudi Arabia, and the United Arab Emirates. Prosecutors are interested in finding out if entities from those nations used “straw donors” to disguise their donations to the two funds.

Thomas Barrack Jr., a billionaire financier and a longtime associate of Trump’s, raised money for both funds—but his spokesperson, Owen Blicksilver, told the news outlet, “Tom has never talked with any foreign individual or entity for the purposes of raising money for or obtaining donations related to … the campaign, the inauguration, or any such political activity.”

The super PAC, Rebuilding America Now, was formed in June 2016—during a period when the Trump presidential campaign reportedly was short of cash and out of favor with Republican donors. While Trump was adamant that he could finance his own campaign, he refused to dig too deeply into his own pockets.

According to several Times sources, Paul Manafort, the campaign manager at the time, suggested that Barrack step in to raise funds for the PAC, which could collect unlimited amounts of money as long as it avoided coordinating closely with the candidate.

However, in an interview with investigators a year ago, the Times said, Barrack commented that Manafort seemed to view the political committee as an arm of the campaign, despite laws meant to prevent such coordination, according to a person familiar with the interview.

In fact, Manafort asked two campaign aides, Laurance Gay and Ken McKay, to help run the operation. A press officer said at the time that the committee violated no rules because the campaign never paid the two men. Neither man returned repeated phone calls from the Times seeking comment.

According to filings with the Federal Election Commission, the committee raised $23 million and provided funds for Trump advertisements, polls, and other political expenditures. While most of the money came from U.S. donors, prosecutors have asked witnesses whether anyone from the Middle East also contributed to the kitty, perhaps using American intermediaries to cover the transactions.

After the election, the Trump campaign had money rolling in, raising an astounding $107 million for the inauguration—four times as much as the pro-Trump PAC and twice as much as the amount raised for President Barack Obama’s first inauguration.

Today, the question remains, how was that money used for Trump’s much smaller-scale inaugural event—and what happened to any unspent dollars?

Last week, for the first time, Ivanka Trump became publicly involved in the POTUS’s election probe.  According to reports by Newsweek and ProPublica, she hiked the rates for the meeting rooms and the ballrooms at the Trump International Hotel in Washington DC specifically during the days that visitors to the inauguration would be in the city. Any extra profits would have gone straight to the Trump Organization.

The inaugural committee complied with all laws and “has not been contacted by any prosecutors,” Blicksilver, who is also a spokesman for the fund, told The New York Times. Its finances “were fully audited internally and independently,” and donors were fully vetted and disclosed to the Federal Election Commission, as required, he said.

That remains to be seen. If there has been an audit, there is no external evidence of it. Although many news outlets, including the Times, have requested a copy of the financial analysis, none has been made available.

However, prosecutors certainly would be able to obtain those documents, if they exist.

Research contact: @nytimes

Payment card chips fail to halt fraud, study finds

November 9, 2018

Of the more than 60 million payment cards that have been compromised or stolen within the past 12 months, chip-enabled cards represented a staggering 93%, according to results of a study released  recently by Gemini Advisory.

In 2015, the global financial industry began a massive migration to the EMV (Europay, MasterCard, Visa) standard in response to overwhelming levels of payment card fraud. The chip-enabled cards were supposed to provide end-to-end encryption during card-present transactions; and to prevent payment card counterfeiting.

However, the New York-based cyber consulting firm says—although most card issuers have adopted the standard—retailers and other merchants have failed to comply with the EMV implementation. 

Indeed, key findings of the study are alarming—among them:

With most large U.S. merchants fully transitioned to EMV, Gemini say that gas pump terminals and small/medium size businesses have become the victims of opportunity. Smaller businesses are only now beginning to understand the importance of EMV programs, as well as to provide a sufficient budget allocation toward them.

Because Gemini Advisory believes that criminal groups will always sway to the path of least resistance, the firm predicts that financially motivated threat groups such as Fin6  and Fin7 are likely to turn their resources toward small- to medium-size businesses with  between 10 to 50 locations.

The bottom line: Until EMV implementation is more widespread among U.S. merchants, Gemini Advisory recommends the usage of mobile payment systems such as Android Pay, Google Pay, and Apple Pay. Such payment systems are not susceptible to shimming devices or POS malware—making them the most secure payment method currently available.

Research contact: @geminiadvisory

 

Don’t trust that online product review!

May 11, 2018

Do you habitually check Amazon’s product reviews before you place your orders? If so, BuzzFeed has a cautionary tale to tell—and although the names have been changed, the alleged “fraud” is all too real, the website claims.

It involves manufacturers/merchants that will pay for five-star ratings—and sellers such as Amazon that cannot root out or thwart fake product evaluations.

As BuzzFeed reports, one morning in late January, “Jake” picked up a shipping box, tore through the packaging, found the enclosed iPhone case, snapped a photo, and uploaded it to an Amazon review he was busy composing.

The review raved about the case’s sleek design and cool, clear volume buttons. He finished it off with a glowing title (“The perfect case!!”) and rated the product a perfect five stars. Click. Submitted.

There’s just one problem: Jake had never tried the case. He doesn’t even have an iPhone, BuzzFeed notes.

He then copied the link to his review and pasted it into an invite-only Slack channel for paid Amazon reviewers. A day later, he received a notification from PayPal, alerting him to a new credit in his account: A $10 refund for the phone case he will never use, along with $3 for his efforts.

“Jake” and four other reviewers who spoke to BuzzFeed for the story asked to remain anonymous for fear Amazon would ban their accounts.

They are part of an underground network—a complicated web of subreddits, invite-only Slack channels, private Discord servers, and closed Facebook groups—and, according to BuzzFeed, the incentives are simple: Being a five-star product is crucial to selling inventory at scale in the intensely competitive online marketplace — so important that manufacturers and merchants are willing to pay thousands of people to review their products positively.

And it works, time after time: In a 2011 Cone survey, 87% of consumers said that a positive review confirmed their decision to purchase a product; online customer reviews are the second most trusted source of product information, behind recommendations from family and friends. But only 3% to 10% of “real” customers leave reviews.

It’s not that Amazon and other marketplaces haven’t tried: In October 2016, Amazon banned free items or steep discounts in exchange for reviews facilitated by third parties.

But , already, they are back. Tommy Noonan, CEO of ReviewMeta, a site that analyzes Amazon product ratings, said what he calls “unnatural reviews —that is, reviews, that his algorithm indicates might be fake—have returned to the platform. In June 2017, Noonan noticed an uptick in unnatural reviews along with an increase in the average rating of products, and the rate of growth hasn’t slowed since.

Amazon won’t reveal how many reviews—fraudulent or tota—it has, BuzzFeed says. But based on his analysis of Amazon data, Noonan estimates that Amazon hosts around 250 million reviews. Noonan’s website has collected 58.5 million of those reviews, and the ReviewMeta algorithm labeled 9.1%, or 5.3 million of the dataset’s reviews, as “unnatural.”

A word to the wise: An unnatural review doesn’t necessarily mean a product is substandard. But the problem with paid-for reviews is that they make it difficult for consumers—even savvy ones (and we know you are)—to determine whether what they’re buying is actually good or bad.

Research contact: nicole.nguyen@buzzfeed.com