Cyber-Crime Leads to Losses of More Than $525M in 2012

 
 
By Robert Lemos  |  Posted 2013-05-17
 
 
 
security

U.S. citizens reported almost 290,000 cases of fraud in 2012, costing them more than $525 million, according to the U.S. Department of Justice's clearinghouse for Internet-crime complaints.

In its latest report published May 14, the Internet Crime Complaint Center (IC3) released data from the 290,000 complaints it received last year, about 40 percent of which resulted in some cost to the victim. Online auto fraud, where criminals sell vehicles that they do not own, topped that list of crimes, costing U.S. consumers nearly $65 million, according to IC3, a partnership between the FBI and the National White Collar Crime Center.

The report's tally of damages is not out of line with other estimates, and is likely low, Al Pascual, senior analyst of security, risk and fraud at analyst firm Javelin Strategy & Research, told eWEEK.

"This is only the people who reported the fraud, so I think the total amount is probably much higher," he said. "I would not be surprised if numbers reported by IC3 double or triple over the next few years."

Online crime has taken off over the past decade. In its 2003 report, the IC3 processed 63,316 cases of fraud causing more than $125 million in damages, with a median dollar loss of $329. In the 2013 report, the organization processed more than quadruple the number of cases—289,874—with a sharp increase in the median dollar loss to about $600. The total number of complaints has hovered around 300,000 for the past five years, while damages in 2012 increased 8 percent year-to-year, the group stated.

"Criminals are increasingly migrating their fraudulent activities from the physical world to the Internet," Richard McFeely, executive assistant director of the FBI's Criminal, Cyber, Response and Services Branch, said in a statement.

The top three types of fraud were auto fraud, which accounted for $65 million in damages; romance fraud, which cost victims $56 million; and real estate scams, which cost $15 million. Other scams include intimidation and extortion scams, which cost $10.6 million, and scams in which the criminal impersonates the FBI, which cost victims $4.7 million.

Much of the fraud is fueled by the criminals' ability to mine information on individuals and target likely victims. Javelin Strategy & Research found that identity fraud affected 5.26 percent of consumers. One of every four consumers whose information was stolen in a data breach will be the victim of fraud, the firm estimates.

"The criminals are really preying on folks who are not technically savvy," said Pascual.

Ransomware, a scheme in which the victim's computer is technically locked and then a ransom demanded, has begun hitting users in the United States, but still has not amounted to a great deal of damage, according to the IC3 report. The scheme accounted for less than $140,000 in damages, the report stated.

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