IC3’s Internet Crime Report

The Internet Crime Complaint Center (IC3) recently published its seventh annual Internet Crime Report. The organization works in partnership with the White Collar Crime Complaint Center and the Federal Bureau of Investigation and serves, “as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cyber crime.”

Between January 1st and December 31st 2007 the IC3 processed 219,553 complaints: 206,884 complaints were received via their website (a drop of 0.3 percent from the previous year), the remaining 12,669 were referrals from other agencies. Though the IC3 tracks numerous types of complaints, those which come via the website typically, “do not represent dollar loss but provide a picture of the types of scams that are emerging via the Internet. These complaints in large part are comprised of fraud involving reshipping, counterfeit checks, phishing, etc.” 2007 was the second year in a row that the number of complaints to the IC3 website dropped; 231,493 complaints were received in 2005 and 207,492 in 2006.

On the other hand, the “vast majority” of referred complaints, “alleged fraud and involved a financial loss on the part of the complainant.” Last year the total dollar loss due to fraud from referred complaints reached $239.09 million; $198.44 million was reported in 2006 and $183.12 million in 2005. The number of referred complaints was up again last year to 90,008 but was still well below the spike it saw in 2004 when 103,959 cases were referred. It could be interesting to note that the “Yearly Dollar Loss” has risen steadily over the same period in which complaints to the website shrank. In fact, if 2004 is overlooked, the dollar loss has increased every year since the IC3 began its tracking. Total dollar losses are relatively easy to report, but the IC3 is cautious, providing both mean and median numbers when reporting the average monetary loss incurred by individual complainants: “Of those complaints with a reported monetary loss, the mean dollar loss was $2,529.90 and the median was $680.00.” More than half of reported losses were under $1,000 and almost a third were between $1,000 and $5,000. Small percentages reported losses between $5,000 and $10,000 and between $10,000 and $100,000, 6.5% and 5.3% respectively.

Though the IC3 does categorize complaints and offer statistics, it also urges caution here, suggesting that the numbers may be skewed. The, “the perception of consumers and how they characterize their particular victimization within a broad range of complaint categories,” as well as the fact that many key Internet stake holders have provided their customers with links to the IC3 website may produce a misleading picture. That being said, as far as what was complained about in 2007, via both the IC3 website and referrals, over 60 percent falls into two categories: Auction Fraud (35.7 percent) and Non-Delivery (24.9 percent). (Interestingly Auction Fraud fell by 20.5 percent from 2006 while Non-Delivery Fraud rose by 31.1 percent.) After those two there is a significant drop: Confidence Fraud, the number three category, garnered a mere 6.7 percent of the total complaints and pulling up the rear was the Nigerian Letter Fraud with 1.1 percent. A slightly different picture emerges if this data is looked at in another way: according to how much financial loss is generated.

Auction Fraud and Non-Delivery Fraud were again at the top of a list, with 22.4 percent and 17.8 percent respectively; they were numbers one and two in regards to the percent of total loss reported. However, they only ranked fifth and sixth in terms of median average loss per complaint: $483.95 and $466. In this list both fell behind the Nigerian Letter Fraud, which at number three, claimed a median average of $1,922.99. The top culprits were Investment Fraud, $3,547.94, and Check Fraud, $3,000.

In addition to reporting the types of complaints and their financial impact, the IC3 also provides insights into the demographic of fraud perpetrators. The United States was home to the most perpetrators and a few states in particular were particularly bad. Half of the perpetrators lived in one of seven states which are among the most populous, but controlling for population generates another list: only Florida and New York made both. Outside of the U.S., the next five homes for perpetrators were United Kingdom, Nigeria, Canada, Romania, and Italy. Over 75 percent of perpetrators were male.

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