Business briefs
By NewsPress Now
Justice Dept. makes arrests in North Korean identity theft scheme
WASHINGTON | The Justice Department on Thursday announced the arrests of three people in a complex stolen identity scheme that officials say generates enormous proceeds for the North Korean government, including for its weapons program.
The scheme involves thousands of North Korean information technology workers who prosecutors say are dispatched by the government to live abroad and who rely on the stolen identities of Americas to obtain remote employment at U.S.-based Fortune 500 companies, jobs that give them access to sensitive corporate data and lucrative paychecks.
The fraud is a way for heavily sanctioned North Korea, which is cut off from the U.S. financial system, to take advantage of a “toxic brew” of converging factors, including high-tech labor shortage in the U.S. and the proliferation of remote telework, Marshall Miller, the Justice Department’s principal associate deputy attorney general, said in an interview.
The Justice Department says the cases are part of a broader strategy to not only prosecute individuals who enable the fraud but also to build partnerships with other countries and to warn private-sector companies of the need to be vigilant about the people they’re hiring. FBI and Justice Department officials launched an initiative in March and last year announced the seizure of website domains used by North Korean IT workers.
“More and more often, compliance programs at American companies and organizations are on the front lines of protecting our national security,” “Corporate compliance and national security are now intertwined like never before.”
The Justice Department says the conspiracy has affected more than 300 companies — including a high-end retail chain and “premier Silicon Valley technology company” — and generated more than $6.8 million in revenue for the workers, who are based outside of the U.S., including in China and Russia.
The three people arrested include an Arizona woman, Christina Marie Chapman, who prosecutors say facilitated the scheme by helping the workers obtain and validate stolen identities, receiving laptops from U.S. companies who thought they were sending the devices to legitimate employees and helping the workers connect remotely to the company.
According to the indictment, Chapman ran more than one “laptop farm” where U.S. companies sent computers and paychecks to IT workers they did not realize were overseas.
At Chapman’s laptop farms, she allegedly connected overseas IT workers who logged in remotely to company networks so it appeared the logins were coming from the United States. She also is alleged to have received paychecks for the overseas IT workers at her home, forging the beneficiaries’ signatures for transfer abroad and enriching herself by charging monthly fees.
The other two defendants include a Ukrainian man, Oleksandr Didenko, who prosecutors say created fake accounts at job search platforms and was arrested in Poland last week, and a Vietnamese national, Minh Phuong Vong, who was arrested Thursday in Maryland on charges of fraudulently obtaining a job at a U.S. company that was actually performed by remote workers who posed as him and were based overseas.
It was not immediately clear if any of the three had lawyers.
Separately, the State Department said it was offering a reward for information about certain North Korean IT workers who officials say were assisted by Chapman.
And the FBI, which conducted the investigations, issued a public service announcement that warned companies about the scheme, encouraging them to implement identity verification standards through the hiring process and to educate human resources staff and hiring managers about the threat.
Changes from Visa mean Americans will carry fewer cards
NEW YORK | Your wallet may soon be getting thinner.
Visa on Wednesday announced major changes to how credit and debit cards will operate in the U.S. in the coming months and years.
The new features could mean Americans will be carrying fewer physical cards in their wallets, and will make the 16-digit credit or debit card number printed on every card increasingly irrelevant.
They will be some of the biggest changes to how payments operate in the U.S. since the U.S. rolled out chip-embedded cards several years ago. They also come as Americans have many more options to pay for purchases beyond “credit or debit,” including buy now, pay later companies, peer-to-peer payment options, paying directly with a bank, or digital payment systems like Apple Pay.
“I think (with these features) we’re getting past the point where consumers may never need to manually enter an account number ever again,” said Mark Nelsen, Visa’s global head of consumer payments, in an interview.
The biggest change coming for Americans will be the ability for banks to issue one physical payment card that will be connected to multiple bank accounts. That means no more carrying, for example, a Bank of America or Chase debit card as well as their respective credit cards in a physical wallet. Americans will be able to set criteria with their bank — such as having all purchases below $100 or with a certain merchant applied to the debit card, while other purchases go on the credit card.
The feature, already being used in Asia, will be available this summer. Buy now, pay later company Affirm is the first of Visa’s customers to roll out the feature in the U.S.
Some of Visa’s new features are in response to online-payments fraud, which continues to increase as more countries adopt digital payments. The San Francisco-based company estimates that payment fraud happens roughly seven times more often online than it does in person, and there are now billions of stolen credit and debit card numbers available to criminals.
Other new elements are also in response to features that non-payments companies have rolled out in recent years. The Apple Card, which uses Mastercard as its payment network, does not come with a printed 16-digit account number and Apple Card users can request a fresh credit card number at any time without having to dispose of the physical card.
Visa executives see a future where banks will issue cards where the 16-digit account number, if the new cards come with them, is largely symbolic.
Among the other updates unveiled by Visa are changes to tap-to-pay features. Americans will be able to tap their credit or debit cards to their smartphones to add the card to mobile wallets, instead of using a smartphone’s camera to scan in a card’s information, or tap the card to their smartphones to approve a transaction online. Visa will also start implementing biometrics to approve transactions, similar to how Apple devices use a fingerprint or face scan to approve transactions.
The features will take time to filter down to the banks, which will decide when or what to implement for their customers. But since the banks and credit card companies are Visa’s customers, and issue cards with the Visa label, these are features that the financial institutions have been asking for.
Long-term mortgage rates retreat for second straight week
The average rate on a 30-year mortgage in the U.S. fell for the second straight week, giving some relief to home shoppers already facing sky-high prices and a shortage of supply.
The average 30-year rate fell to 7.02% from 7.09% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.39%.
The recent pullbacks followed a five-week string of increases that pushed the average rate to its highest level since November 30. Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing options.
“The decrease in rates, albeit small, may provide a bit more wiggle room in the budgets of prospective homebuyers,” said Sam Khater, Freddie Mac’s chief economist.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also declined this week, trimming the average rate to 6.28% from 6.38% last week. A year ago, it averaged 5.75%, Freddie Mac said.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Treasury yields have largely been easing since Federal Reserve Chair Jerome Powell said earlier this month that the central bank remains closer to cutting its main interest rate than hiking it.
Still, the Fed has maintained it doesn’t plan to cut interest rates until it has greater confidence that price increases are slowing sustainably to its 2% target.
Until then, mortgage rates are unlikely to ease significantly, economists say.
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage stayed below 7% this year until last month.
Last month’s rise in rates were an unwelcome development for prospective homebuyers in the midst of what’s traditionally the busiest time of the year for home sales. On average, more than one-third of all homes sold in a given year are purchased between March and June.
Sales of previously occupied U.S. homes fell in March as homebuyers contended with elevated mortgage rates and rising prices.
U.S. applications for jobless benefits come back down
Fewer Americans applied for unemployment benefits last week as layoffs remain at historically low levels even as other signs that the labor market is cooling have surfaced.
Jobless claims for the week ending May 11 fell by 10,000 to 222,000, down from 232,000 the week before, the Labor Department reported Thursday. Last week’s applications were the most since the final week of August 2023, though it’s still a relatively low number of layoffs.
The four-week average of claims, which evens out some of the week-to-week fluctuations, rose by 2,500 to 217,750.
Weekly unemployment claims are considered a proxy for the number of U.S. layoffs in a given week and a sign of where the job market is headed. They have remained at historically low levels since millions of jobs were lost when the COVID-19 pandemic hit the U.S. in the spring of 2020.
In April, U.S. employers added just 175,000 jobs, the fewest in six months and a sign that the labor market may be finally cooling off. The unemployment rate inched back up to 3.9% from 3.8% and has now remained below 4% for 27 straight months, the longest such streak since the 1960s.
The government also recently reported 8.5 million job openings in March, the lowest number of vacancies in three years.
Moderation in the pace of hiring, along with a slowdown in wage growth, could give the Fed the data its been seeking in order to finally issue a cut to interest rates. A cooler reading on consumer inflation in April could also play into the Fed’s next rate decsion.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in a bid to stifle the four-decade high inflation that took hold after the economy rebounded from the COVID-19 recession of 2020. The Fed’s intention was to loosen the labor market and cool wage growth, which can fuel inflation.
Many economists thought there was a chance the rapid rate hikes could cause a recession, but jobs remain plentiful and the economy still broadly healthy thanks to strong consumer spending.
Though layoffs remain at low levels, companies have been announcing more job cuts recently, mostly across technology and media. Google parent company Alphabet, Apple and eBay have all recently announced layoffs.
Outside of tech and media, Walmart, Peloton, Stellantis, Nike and Tesla have recently announced job cuts.
In total, 1.79 million Americans were collecting jobless benefits during the week that ended May 4. That’s up 13,000 from the previous week.
—From AP reports
