Cyber Fraud Steals $239 Million From Consumers

The FBI reports that online fraud is at an all time high which has stolen $239 million from consumers last year.
U.S. consumers reported losing more than $239 million from online fraud last year, up from $198 million in 2006, according to data released today by the FBI.

Internet auction fraud (35.7 percent) and merchandise non-delivery (24.9 percent) were the most frequently reported types of cyber fraud. The median loss amount per fraud incident last year was approximately $680, the report said. The most costly scams involved investment fraud, which cost consumers about $3,500 per incident -- and check fraud ($3,000). In nearly 74 percent of the cases, the perpetrators contacted the victim via e-mail.

The number of cyber cases in the FBI's investigative report come from nearly 220,000 fraud complaints reported last year to the IC3, a partnership between the FBI and the National White Collar Crime Center.

By: Jennifer Hong
Apr 4, 2008, 2:27 PM EDT

Portions of this article are from Brian Krebs' "Security Fix" blog at the Washington Post Web site. Brian Krebs offers pointers on updating you on computer security developments as they arise -- Internet scams, innovative viruses and worms, useful security tools and resources, and important security patches for popular software titles.

According to data released Friday by the FBI, US consumers reported losing more than $239 million from online fraud last year. That's up from $198 million reported in 2006.

Internet auction fraud (35.7 percent) and merchandise non-delivery (24.9 percent) were the most frequently reported types of cyber fraud. The median loss amount per fraud incident last year was approximately $680.

The most costly scams involved investment fraud, which cost consumers about $3,500 per incident while check fraud rose to $3,000. In nearly 74 percent of the cases, the perpetrators contacted the victim via e-mail.

The number cases in the FBI's investigative report come from nearly 220,000 fraud complaints reported last year to the IC3, a partnership between the FBI and the National White Collar Crime Center. As such, they should not be viewed as representative of the total cost of cyber crime, because most cyber fraud is not reported, said Tom Kellerman, vice president of security awareness at Core Security Technologies, a Boston based security firm.

"Most fraud is related to identity theft, such as setting up fraudulent lines of credit for individuals, and intellectual property theft for corporations which is very difficult to ascertain and measure," Kellerman said. "The real statistic to note is what percentage of cybercrime cases are actually noticed let alone investigated and those of us in the know fully understand that this number is marginal."

Security Fix recently published an analysis on the true costs of cyber crime that offered evidence to suggest the growing problem may cost businesses and consumers more than $100 billion a year. However, that number will remain purely speculative until financial institutions are forced to more accurately classify and report cyber-fraud in all its forms and until regulators start publishing more data about it.

Portions of this article are from Brian Krebs' "Security Fix" blog at the Washington Post Web site. Brian Krebs offers pointers on updating you on computer security developments as they arise -- Internet scams, innovative viruses and worms, useful security tools and resources, and important security patches for popular software titles.

Security Fix
Recently published an analysis on the true costs of cyber crime that offered evidence to suggest the problem may cost businesses and consumers more than $100 billion a year. But that number will remain purely speculative until financial institutions are forced to more accurately classify and report cyber-fraud in all its forms and until regulators start publishing more data about it.