Internet Crime Up 33 Percent, FBI Reports

Internet-based crime increased by 33 percent last year, making 2008 the biggest year ever for reported cybercrime incidents, according to an Internet Crime Complaint Center annual report.

The ICCC, a nonprofit organization run by the FBI and the National White Collar Crime Center dedicated to monitoring online fraud, issued a report Monday showing that fraud losses incurred from cybercrime reached a total of $264.6 million in 2008, compared to $239.1 million the previous year, Reuters reports. Losses in recent years pose a sharp contrast to cybercrime losses of $18 million in 2001.

"2009 is shaping up to be a very busy year in terms of cybercrime," said John Kane, director of the National White Collar Crime Center based in Richmond, Va., and the report's author, to Reuters.

Of the 275,284 complaints received by the ICCC in 2008, approximately 73,000 were referred to U.S. law enforcement agencies for prosecution. The most common complaint of 2008 was non-delivery of promised merchandise, followed by online auction fraud, credit card fraud and investment scams, according to the report. Kane said that crime incidents have already spiked to 40,000 in the first quarter of 2009.

Specifically, cyberfraud that used auction sites such as eBay and other sites such as craigslist.com to scam users contributed to a 32 percent rise in non-delivery of promised merchandise from the previous year.

Other types of fraud included online investment scams similar to the $65 billion Ponzi scheme committed by New York financier Bernard Madoff, which exploited new investors to fund existing investment endeavors.

The report also indicated that cybercrime is increasing as the recession deepens, with a nearly 50 percent uptick in complaints reported to U.S. federal authorities in March alone. While scams originated around the globe, the main hubs appeared to be the U.S., Canada, Nigeria and China, according to the report. Altogether, U.S.-based scammers comprised 66 percent of complaints, followed by 11 percent of scams from Britain, 7.5 percent from Nigeria, 3 percent from Canada and 1.6 percent from China.

In the U.S., the largest portion of online scams (16 percent) originated from California, followed by New York and Florida.

Meanwhile, federal officials said that the report indicated a small sampling of an ongoing problem that was vastly underreported.

"It is our belief that these numbers, both the complaints filed and the dollars, represent just a small tip of the iceberg," Kane said. "Our own research suggests that as few as 15 percent of cases of cyberfraud are being reported to crime control agencies."

The report indicated that cybercriminals were increasingly relying on social networking sites as an attack vector to deliver spam and malicious information-stealing code.

The report also highlighted a development in identity-theft schemes, in which cybercriminals sent e-mail messages that impersonated official FBI sites used to glean credit card numbers and bank information submitted by unsuspecting victims. The e-mail messages enticed users by maintaining federal officials needed bank account information to help with investigations of money that was illegally transferred to Nigeria, while promising they would receive a financial reward for participating.

The report said that almost 80 percent of the known fraudsters were male, and of those, nearly half were between the ages of 30 and 50. The median dollar loss in 2008 was $931 per complaint, compared to a median $3,000 lost due to check fraud and $2,000 lost resulting from investment scams.