Wednesday, April 30, 2008

The creation of IC3 has resulted in a joint operation between the Federal Bureau of Investigation and the National White Collar Crime Center to make a U.S. data base for cyber crime complaints from private persons and businesses and to help develop a comprehensive strategy for law enforcement.

In 2007 there were over 200,000 claims of Internet-related crime reported to the FBI's Internet Crime Complaint Center (IC3), with 90,000 referred to U.S. law enforcement, which caused losses of almost $240 million, making an increase of $40 million in net losses over 2006. The most widely cited web scam was ripoffs using Internet auctions. Others top frauds include non-delivery of purchases and credit/debitcard theft.

The creation of IC3 has resulted in a joint operation between the Federal Bureau of Investigation and the National White Collar Crime Center to make a U.S. data base for cyber crime complaints from private persons and businesses and to help develop a comprehensive strategy for law enforcement. The National White Collar Crime Center is a Bureau of Justice Assistance program, and helps connect agencies working in the stopping, investigation, and bringing to justice economic and tech-related crimes, and also joins these entities with Homeland Security.

FBI Cyber Division Assistant Director James E. Finch says, "The Internet presents a wealth of opportunity for would-be criminals to prey on unsuspecting victims, and this report shows how extensive these types of crime have become. What this report does not show is how often this type of activity goes unreported. Filing a complaint through IC3 is the best way to alert law enforcement authorities of Internet crime."

The report listed some interesting findings, such as the fact that three-quarters (75.8%) of perpetrators were male, and typically lived in the U.S. in the following states: California, Florida, New York, Texas, Illinois, Pennsylvania and Georgia. Much Internet crime originated outside the U.S., especially from the United Kingdom, Nigeria, Canada, Romania, and Italy. As well, most victims were also male (57.6%), and half of those defrauded were between 30-50 years of age. The states most victimized were California, Florida, Texas, and New York, being the most populous states. Also, many complaints were lodged against the following countries, in order of frequency, from Canada, the United Kingdom, Australia, India, and Mexico.

For those reporting monetary fraud, the mean dollar loss was $2,529.90, while the median was $680.00. Almost sixteen percent (15.5%) claiming such frauds resulted in less than $100.00. And slightly more than forty percent (41.5%) claimed thefts between $100.00 and $1,000.00. This means over half of those losing money reported being swindledof less than $1,000.00. Almost a third (30.7%) claimed losses between $1,000.00 and $5,000.00, whereas a little over ten percent (12.2%) claimed thefts of over $5,000.00. Check frauds had a median loss of $3,000.00 and Nigerian letter fraud claimed a median loss of almost two-thousand dollars ($1,922.99), revealing the other high dollar losscategories. Credit/debit card fraud median loss was under three-hundred ($298.00).

While the FBI and other agencies are getting better at understanding Internet fraud, the problem still remains exceedingly difficult to address and may be the hardest area of crime to tackle, for many reasons. For example, one thing making investigation and prosecution harder is that offender and victim often reside in different parts of the world, differentiating web scams from more "traditional" crime. This means that jurisdictional issue must be tackled, such as cooperation of multiple agencies, before any persons can be prosecuted.

There may be some reasons to feel optimistic, as while the overallnet loss is up by $40 million, the number of complaints has dropped by 25,000 a year from 2005. This may be linked to the education of the general public of Internet users, as they have become more savvy and less likely to believe everything they see on the Internet, and also being more careful with emails from strangers. For areas of web commerce that consumers need to be especially careful when being involved in, it is remarkable that fully 60% of Net fraud is Internet auction fraud (35.7%), and non-delivery of purchased items (24.9%).