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Guest post by: Dr Don Yates Sr PhD Become an Author

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Chapter 4. Internet Crime Is Big Business

Growing

This chapter will give you some background to the magnitude of the Growing Internet Crime Problem. It will introduce you as to how to get started on your journey to understand and recognize the signs of Internet Crime.

The more you understand about these various scams, the more likely that you will be able to avoid being scammed. Scam Avoidance must rank up there with “How do I turn this thing on? And “OK what’s next?”

The National White Collar Crime Centre has just released its eighth annual internet crime report. “In December 2003, the Internet Fraud Complaint Center (IFCC) was renamed the Internet Crime Complaint Centre (IC3) to better reflect the broad character of such criminal matters having a cyber (Internet) nexus. The 2008 Internet Crime Report is the eighth annual compilation of information on complaints received and referred by the IC3 to law enforcement or regulatory agencies for appropriate action.

From January 1, 2008-December 31, 2008, the IC3 website received 275,284 complaint submissions. This is a (33.1%) increase when compared to 2007 when 206,884 complaints were received. These filings were composed of complaints primarily related to fraudulent and non-fraudulent issues on the Internet.

These complaints were composed of many different fraud types such as auction fraud, non-delivery, and credit/debit card fraud as well as non-fraudulent complaints such as computer intrusions, spam/unsolicited e-mail, and child pornography. All of these complaints are accessible to federal, state, and local law enforcement to support active investigations, trend analysis, and public outreach and awareness efforts.

From the submissions, IC3 referred 72,940 complaints of crime to federal, state, and local law enforcement agencies around the country for further consideration.

The vast majorities of cases were fraudulent in nature and involved a financial loss on the part of the complainant. The total dollar loss from all referred cases of fraud was $264.6 million with a median dollar loss of $931.00 per complaint. This is up from $239.1 million in total reported losses in 2007.” Posted on 2009 April 1 by BBVM

Statistics regarding internet scams and frauds are presented here as snapshots in time January 2009, but below are links to archived statistics from previous years. Web crime statistics are notoriously difficult to obtain, with many sources each calculating them in a different manner and different time frame, using a different source.

To provide the most reliable picture, we use the Internet Crime Complaint Center's (IC3) statistics as a baseline. The IC3 began operation on May 8, 2000, as the Internet Fraud Complaint Center and was established as a partnership between the National White Collar Crime Center (NW3C) and the Federal Bureau of Investigation (FBI) to serve as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cybercrime. These statistics have the advantage of the FBI's expertise, but the weakness of being 1 to 2 years out of date.

To overcome this, we have added our own tracking system statistics to update the FBI / IC3 statistics.

The statistics for the current Top 10 frauds and scams list can be found below. A description of these scams is on this page. The greatest challenge in assembling a list and statistics of the frauds is that most fall into several categories. Consumers may characterize crime problems with an easier “broad” character, which may be misleading.

For instance, a consumer that gets lured to an auction site which appears to be eBay may later find that they were victimized through a cyber-scheme. The scheme may in fact have involved SPAM, unsolicited e-mail inviting them to a site, and a “spoofed” website which only imitated the true legitimate site. The aforementioned crime problem could be characterized as SPAM, phishing, possible identity theft, credit card fraud or auction fraud. In such scenarios, many complainants have depicted schemes such as auction fraud even though that label may be incomplete or misleading.

The Internet Crime Complaint Center, in 2009 released its latest annual report on victims' complaints received and referred to law enforcement.

From January 1, 2008 – December 31, 2008, the IC3 website received 275,284 complaint submissions. This is a (33.1%) increase when compared to 2007 when 206,884 complaints were received. These filings were composed of complaints primarily related to fraudulent and non-fraudulent issues on the Internet.

These complaints were composed of many different fraud types such as auction fraud, non-delivery, and credit/debit card fraud as well as non-fraudulent complaints such as computer intrusions, spam/unsolicited e-mail, and child pornography. All of these complaints are accessible to federal, state, and local law enforcement to support active investigations, trend analysis, and public outreach and awareness efforts.

From the submissions, IC3 referred 72,940 complaints of crime to federal, state, and local law enforcement agencies around the country for further consideration. The vast majorities of cases were fraudulent in nature and involved a financial loss on the part of the complainant. The total dollar loss from all referred cases of fraud was $264.6 million with a median dollar loss of $931.00 per complaint. This is up from $239.1 million in total reported losses in 2007.

• Non-delivered merchandise and/or payment were, by far, the most reported offense, comprising 32.9% of referred complaints.
• Internet auction fraud accounted for 25.5% of referred complaints.
• Credit/debit card fraud made up 9.0% of referred complaints.
• Confidence fraud ("con men"), computer fraud, check fraud, and Nigerian letter fraud (Also called "Advance Fee Fraud" or AFF) round out the top seven categories of complaints referred to law enforcement during the year.

Of those complaints reporting a dollar loss, the highest median losses were found among

• check fraud ($3,000),
• confidence fraud ($2,000),
• Nigerian (west African, 419, Advance Fee) letter fraud ($1,650)

Complaint Type	% of Reported Total Loss	Of those who reported a loss the Average (median) $ Loss per Complaint
Check Fraud	7.8%	$3,000.00
Confidence Fraud	14.4%	$2,000.00
Nigerian Letter Fraud	5.2%	$1,650.00
Computer Fraud	3.8%	$1,000.00
Non-delivery	28.6%	$800.00
Auction Fraud	16.3%	$610.00
Credit/Debit Card Fraud	4.7%	$223.00

Among perpetrators,

• 77.4% were male and
• 50% resided in one of the following states: California, New York, Florida, Texas, District of Columbia, and Washington.
• The majority of reported perpetrators (66.1%) were from the United States; however, a significant number of perpetrators where also located in the United Kingdom, Nigeria, Canada, China, and South Africa.

Among complainants,

• 55.4% were male,
• Nearly half were between the ages of 30 and 50 and one-third resided in one of the four most populated states: California, Florida, Texas, and New York.
• While most were from the United States (92.4%), IC3 received a number of complaints from Canada, United Kingdom, Australia, India, and France.
• Males lost more money than females (ratio of $1.69 dollars lost per male to every $1.00 dollar lost per female). This may be a function of both online purchasing differences by gender and the type of fraudulent schemes by which the individuals were victimized.
• E-mail (74.0%) and webpages (28.9%) were the two primary mechanisms by which the fraudulent contact took place.

For the full report, go to the IC3 webpage on statistics.

In 2008, that ranking has changed considerably - Lottery scams are number followed by Auction scams, non- delivery and check fraud.

1. LOTTERY SCAMS –
2. INTERNET AUCTION FRAUDS -
3. CONFIDENCE - NIGERIAN ADVANCE FEE FRAUDs (AFF) -
4. PHISHING AND PHARMING FOR IDENTITY THEFT -
5. "PASSIVE RESIDUAL INCOME" SCAMS -
6. CHECK (COUNTERFEIT) FRAUDS
7. WORK-AT-HOME SCAMS
8. MATRIX / MULTI-LEVEL MARKETING AND PYRAMID SCHEMES
9. PROPERTY MORTGAGE AND INVESTMENT SCHEMES
10. FINANCIAL INSTITUTIONS SCAMS

Complaint Type	% of Report Dollar Lost	Average cost per compliant
Nigerian Letter Fraud	1.7%	$5,000
Check Fraud	11.1%	$3.744
Investment Fraud	4.0%	$2,695
Confidence Fraud	4.5%	$2,400
Auction Fraud	33.0%	$603
Non-Delivery	28.1%	$585
Credit Card Fraud	3.6%	$428

Mollie Halpern: More than 300,000 people lost a staggering 1.1 billion dollars from online crime in 2010. The Internet Crime Complaint Center, known as IC3, recently released that data in its annual report on online crime. I’m Mollie Halpern of the Bureau, and you’re listening to “FBI, This Week.” Bill Hinerman is the FBI unit chief of IC3.

Bill Hinerman: Anybody and everybody can potentially become a victim of Internet crime. The most heartbreaking aspect is that we practically can never get the victims’ money back.”

Halpern: IC3 is a repository for victim complaints and provides federal and local law enforcement with information to pursue cases. Non-delivery of payment or merchandise, scams impersonating the FBI, and identity theft are the top three complaints. Hinerman says to be vigilant when using the Internet.

Hinerman: If something is too good to be true it probably is.

Halpern: To file an Internet crime complaint, visit www.ic3.gov. FBI Crime Report

Internationally, according to the “Cyber Criminals Most Wanted” web site only half of the 70 countries recorded even have computer crime laws Cyber Criminals Most Wanted

As I see it, One of the BIG differences in offline business at least in the United States, is that we have the lawyers, the courts, the consultants, Federal Trade Commission, Consumer Protection Agency, Federal and State agencies and others almost stepping on each other to protect the consumers, and when in doubt rule in favor of the consumer. Yet we still are scammed.

Some of the same is effort is being applied to Internet Crime; however, other countries from which these crimes are being initiated are not coming onboard. Internet Cyber Laws, but Scams and Spam are a worldwide problem, and we are a long way from getting worldwide attention.

TIP: Complaints: We can file a complaint, and become a member of the Statistics, BUT: You have a better chance of learning how to recognize and avoid such scams in the future; than getting your money back.

In business, I used to say, put it in writing; then I could ask anyone of the experts vet the writing. Online, we do not have the face to face, and more often than not, the names, the legal entities, etc. to locate. . Even if you have their names, it seems impossible to get access to them, and maybe it is a fictitious name or address.

Now I say - do not believe all, if anything, that you read on the internet with regard to doing business and/or making money on line. Any webpage can be fabricated, false testimonials, false payouts. On the web – do not believe everything you read...

As for me, sure, I have been scammed and have invested in excess of $50,000 so that you do not have too. Perhaps you have been scammed too and I suspect that many of the top gurus have also been scammed somewhere in their internet learning curve.

So what to do: join the scammers, or organize ourselves to help our members recognize Scammers and their Programs for what they really are – A Scam preying on those that can least afford to lose their money. Help spread the word.

I am sure all of us, individuals and business alike would like to make a quick buck or two to cure a cash flow problem. However, like most of you, I am not interested in taking money from or ripping of my mother, father, other relatives, or other people. Therefore, I have chosen to use my experiences and resources to help spread the word, educate them and help them reduce their chances of being scammed. Since you are here - you can help me, we can help each other.

In our pursuit of helping the growing numbers of internet users to be wary of the growing number of scammers who will surely to prevail up them, let us beware of the following brief definitions as a basic for further discussions:

Internet	The Internet is a combination of several media technologies and an electronic version of newspapers, magazines, books, catalogs, bulletin boards, and much more. This versatility gives the Internet its power.
Scam	A fraudulent business scheme; a fraud, swindle.
Anonymous	Having an unknown or withheld authorship or agency: an anonymous letter; an anonymous phone call, anonymous group Having no distinctive character or recognition factor: "a very great, almost anonymous center of people who just want peace"
Fraud	A deception deliberately practiced in order to secure unfair or unlawful gain. A piece of trickery; a trick. One that defrauds; a cheat. One who assumes a false pose; an impostor. A Scammer
Rip-off, Ripoff, Rip off	A rip-off (or rip-off) is a bad deal. Usually it refers to an incident in which a person pays too much for something. A rip-off is distinguished from a fraud in that a scam involves wrongdoing such as fraud; a rip-off, on the other hand, is in the eye of the beholder. In one of his standup comedy routines, Dennis Miller jokes about seeing an ad in the National Inquirer: "Learn How to Avoid Rip-offs - Send $ 5."

Note: Both Yahoo and Bing distinguish between rip-off, rip-off, or rip off. Google provided the same result for all combinations

The online money at risk may not be as great as a real estate scam, college degrees, or other big ticket scams; but to a mom and pop, retired, or single parent that are looking to make money online, the scam dollars can add up. I lost $ 1,000 on just one scam plus miscellaneous costs. This is not to say that the big-ticket scams are not being pursued online.

To be fair to the numbers above, we cannot easily identify how many of these pages are actually scamming sites because many of the pages include blogs or articles dealing with the subject. It is safe to say the number of scam sites will still be in the millions. We have a better chance of understanding the various scams than we do of identifying each scam site.

Yes, there are legitimate ways to make money online. However, certainly there are more scams than winners. Further, the numbers of people that are new to the net are growing everyday as you may see from the following:

2000- 2009 Average Growth 40.4% 2011 43.67% InternetWorldStats See New Blog

If my math is correct, that is a current average of nearly 44% growth per year. As we push the internet worldwide into our school systems and our households, the numbers will likely grow at even a faster pace than previously experienced. Yes more New Users and more new Scams and Scammers.

We think not, because, regardless of the number of scammers and sites; as you will see can all be reduced to the basic practice of playing our “Emotions” and using the Art Of Persuasion to Spam Sell us into parting with our money.

As an international traveler, I cannot count the number of people that wanted help to go to the United States. Therein, we have an established a want, a desire, who can help? Look at the Green Card ads on the net promising you a green card (for an application fee, and maybe later regrets, that your application was not accepted)

Thank goodness; the authorities from the world over are aligning and trying to protect the world’s children from one abuse or another, pornography, trafficking etc.; but no one is really protecting us from the scammers except ourselves.

TIP: Scammers are largely unregulated, hard to prosecute and in many cases it is hard to get a true identity or location.

If the Scammers Use their Persuasive Powers to playing to Our Emotions, how do we control our emotions? Earlier Schneier on Security made a case that once scammed we are likely to be scammed again

Let us not condemn the great salesmen and thinkers, Zig Ziegler, Tony Robbins, Napoleon Hill and many others who provide us with content and value. Scammers, like great salesmen, are also Masters of the Power of Persuasion, and Persistence or follow-up (see auto responders) to get us to part with our money. They feed you the hype and lies that you are looking!

You have heard me say it many times: to succeed out there in commercial cyberspace, you have got to speak to the need your customer feels. I do not say it just because I think it sounds clever - I have many good reasons, not to mention all of the history of successful selling to back me up.

In addition, remember, online the customer rules like never before. You go ignoring your customers' needs and feelings and you will not be online for long. It is one of the caveats in convention sales training, in addition - if you want to sell, you have got to think like your customers rather than try to make them think like you. Or in Grok-talk, you got to surf a mile with their mouse. However, underlying that is an even deeper principle:

People Rationalize Buying Decisions Based On Facts,

But People Make Buying Decisions Based On Feelings

Excuse me for shouting, but it is that important. The single biggest motivator in buying is not data, nor is it facts, its emotional response. Humans buy when they feel comfortable, when they feel they can trust you, when the process feels natural and reassuring, and when they come to the feeling that buying will make them feel good. (By the way, Martians are no different.) Fail to address that and most of your prospects will bail out sooner or later in the process. Tap into that correctly and your conversion rate will go up dramatically Buying Decisions

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Referred by: http://kooiii.com

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