Monday, March 30, 2009

Report says online crime surging in recession

Fraud on the Internet reported to U.S. authorities increased by 33 percent last year, rising for the first time in three years, and is surging this year as the recession deepens, federal authorities said.

Internet fraud losses reported in the United States reached a record high $264.6 million in 2008, according to a report released on Monday from the Internet Fraud Complaint Center, run by the FBI and the National White Collar Crime Center.

Online scams originating from across the globe -- mostly from the United States, Canada, Britain, Nigeria and China -- are gathering steam this year with a nearly 50 percent increase in complaints reported to U.S. authorities in March alone.

Last year's losses compared with $239.1 million in 2007 and dwarfs the $18 million of losses of 2001. The most common complaint of 2008 was non-delivery of promised merchandise, followed by auction fraud, credit card fraud and investment scams, according to the report.

Scammers in the United States comprised 66 percent of complaints referred to authorities, followed by Britain at 11 percent, Nigeria 7.5 percent, Canada 3 percent and China 1.6 percent.

Within the United States, the bulk originated in California (16 percent), followed by New York and Florida. Fraudulent sales on online auction sites like eBay Inc and classified sites like craigslist.com contributed to a 32 percent rise in the hottest area of online fraud -- non-delivery of promised merchandise, the report said.

That area alone made up about 33 percent of all complaints serious enough to be referred to law enforcement.

Other important areas included investment scams such as mini-versions of the $65 billion Ponzi scheme committed by New York financier Bernard Madoff in which money from new investors is used to pay existing investors.

About 74 percent of the scams were through e-mail messages last year, especially spam, while about 29 percent used websites. But criminals were increasingly tapping new technologies such as social networking sites and instant messenger services, said Kane.

The report highlights one new "significant' identity-theft scam involving e-mail messages that give the appearance of originating from the FBI but seek bank account information to help in investigations of money being transferred to Nigeria. Recipients of the e-mails are told they could be richly rewarded by cooperating.

The report said almost 80 percent of known perpetrators of online scams are male. Of those bringing complaints, nearly half are between the ages of 30 and 50. The median dollar loss was $931 per complaint, although the median losses for check fraud reached $3,000 and that for investment scams was $2,000.

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