Fraudsters launder cash though grants startup

By on
Fraudsters launder cash though grants startup

Gittip implements whitelist, flags anti-fraud heuristics.

A new crowd-source funding startup has begun whitelisting users after fraudsters infiltrated the community to funnel cash from stolen credit cards.

Gittip, described as "genius grants for the rest of us", allows users to donate regular small amounts of money to other users ostensibly to help them continue productive or charitable work.

But founder Chad Whitacre together with users spotted at least six accounts of a total base of 6200 that were said to have been used to siphon cash from stolen cards into Gittip accounts.

“I have identified six Gittip accounts that I strongly believe are linked to stolen credit cards,” Whitacre said in a blog.

“Together, these accounts have been used to steal US$488.15 since 27 September . The total charge volume during this six week period was US$8414.92, so the money stolen through these six accounts comprises 6 percent of Gittip’s volume during that time.”

A large number of failed credit card transactions indicated that more cash had been funnelled through the platform, however it was unclear precisely how much was stolen.

The scam worked by issuing stolen funds from one account to a receiver account. Scammers fell through when they failed to create a convincing fake profile and linked Twitter or Github account which would justify why they had received donations.

Gittip will now review each giver prior to accepting their donations. “I’ve already started adding [an administrator user interface] to facilitate this and updating the payday script to enforce it,” Whitacre said.

This process would need to become automated as the platform grew.

Jareau Wade, co-founder of Balanced, Gittip's payments provider, said the platform may be unattractive for fraudsters wanting to dump funds from stolen credit cards.

The site exchanges donations weekly, and will funnel about US$1600 this week. It has US$11,243 in donations escrowed.

Copyright © SC Magazine, Australia

Tags:

Most Read Articles

Log In

Username:
Password:
|  Forgot your password?