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Internet fraud growing, driven by recession
29 April, 2009
By Chris Talbot |
The number of cases of cyber-crime and Internet fraud have been rising since 2008, and that's shocking enough, but statistics don't take into account the number of unreported cases, said the president of a consumer identity monitoring service company.
According to the FBI's Internet Fraud Complaint Center, Internet fraud in the U.S. increased 33 per cent in 2008, which marked the first time it had risen in three years. With the economic recession in full swing, the number of cases are only rising more quickly, with a 50 per cent increase in reported Internet fraud complaints between February and March 2009.
"I think identity theft in and of itself and outside of any externals factors ... has great momentum," said Justin Yurek, president of ID Watchdog.
Cyber-crime is the fastest growing crime segment in the U.S., he noted. It's growing because it's easy to perpetrate, difficult for law enforcement to police and also difficult to get convictions. According to Yurek, the conviction rate for cyber-criminals is as low as one in 700, so for a lot of people, it's a type of crime that is low in risk and high in payback.
"I think compounding that, especially this year, is the recession in the United States and the slowdown in the economy has created more criminals," Yurek said.
As people become more desperate, they look for other ways to supplement their incomes, some of which are criminal. To them, Internet fraud can seem like a low-risk way of earning some extra money. Add in the fact that many cyber-crime cases cross several state borders, and which law enforcement agency has jurisdiction gets confusing, he said.
Additionally, a lot of law enforcement agencies won't prosecute cases that are under a monetary threshold -- and that threshold can be $25,000 (US) or more, he said. They go after the larger cyber-criminals and leave the smaller cases alone, he said. They're just too busy to go after every single case of Internet fraud.
That doesn't lessen the impact on the victims, though.
"Some criminals really ring out an identity. I've sen it where at first they will obtain identification in somebody's name, so they'll try to get a driver's licence with somebody's name and address but the thief's picture," Yurek explained. Then they'll get credit cards, utilities, even homes in those names. When the credit becomes so bad, they'll file the papers for bankruptcy, which actually gives a bump in the credit rating so they can continue for a bit longer.
Yurek said he's even seen cases where cyber-criminals will apply for death certificates in their victims' names because it can be financially beneficial.
"That's a rare case, but there's a small percentage of people that will go about it in that kind of systematic and comprehensive way," he said.
Almost 10 million Americans are victims of identity fraud each year, with 80 per cent of it being unrelated to credit. With that number growing, companies like ID Watchdog are seeing a spike in their sales. For $20 a month, ID Watchdog will monitor a customer's identity through 10,000 databases, notify the customer when somebody does something like open a credit card in their name, and even deal with fixing the problem.
"We're able to spot those crimes and let you know when they're happening," he said. |
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