Cyber-crime, Internet Fraud on Upswing as Lawmakers Discuss Strategy

Recent reports by the FBI and security vendors such as Finjan and ScanSafe highlight the cyber-crime issues we are facing as U.S. lawmakers debate data security regulations. The FBI reports Internet fraud jumped 33 percent in 2008, while security vendor Finjan notes that large botnets are getting sold for tens of thousands of dollars in the cyber-underground.

While U.S. lawmakers discuss new data security requirements, cyber-thieves are making a killing.

Officials at ScanSafe reported that in 2008, 14 percent of all ScanSafe Web malware blocks were the result of encounters with data theft Trojans, more than twice the percentage of 2007. The highest levels occurred in October and November, when the credit crunch was in full swing.

Statistics released by the FBI on Internet fraud contain more bad news. In a report issued earlier this week, the FBI revealed that Internet fraud complaints to the agency by consumers increased more than 33 percent last year. A total of 275,284 complaints were filed in 2008 with the Internet Crime Complaint Center (IC3), a joint effort between the FBI and the National White Collar Crime Center. In 2007, the IC3 received 206,844 complaints.

Of the total, 72,940 cases of fraud were referred to federal, state and local law enforcement. The total loss suffered by consumers in those cases was $246.6 million, up from $239.1 million in reported losses in 2007. According to the report, the highest median dollar losses came from check fraud, to the tune of $3,000 per incident. Confidence fraud and the well-known West African 419 scams were second and third, with median dollar losses of $2,000 and $1,650, respectively.

Failure to delivery of merchandise and/or payment accounted for roughly 33 percent of all referred cases, with Internet auction fraud making up 25.5 percent and credit/debit fraud making up 9 percent of referred complaints, respectively.

Many of the nation's cyber-crooks call Washington, D.C., home. The city ranks first in terms of online fraud perpetrators per 100,000 residents, according to the report. Nevada and Washington state are second and third.

More sophisticated cyber-crooks are also at work. A recent report by Finjan on the market for rogue anti-virus products estimated revealed a group of cyber-crooks running a rogueware affiliate network had hauled in an average of $10,800 a day in profits. The market for compromised computers is also booming.

"Based on posts on various hacking forums we found that 1,000 bots (infected computers) are rented for $100-$200 per day," said Finjan CTO Yuval Ben-Itzhak.