Auctions Dominate Internet Fraud Complaints

Nearly 43 percent of all reported Internet fraud comes from auction fraud, according to the Internet Fraud Complaint Center’s (IFCC) annual data trends report. A partnership between the FBI and the National White Collar Crime Center (NW3C), the report is a compilation of information on complaints received from victims and referred to law enforcement during the IFCC’s first full year of operation.

Non-deliverable merchandise and non-payment accounted for 20.3 percent of complaints and Nigerian letter fraud made up nearly 15.5 percent of complaints. Credit/debit card fraud and confidence fraud round out the top five categories of complaints referred to law enforcement during the year. Nigerian letter fraud ($5,575), identity theft ($3,000), and investment fraud ($1,000) complainants filed the highest median dollar losses.

During the report period that spans from January to December 2001, complaints filed with the IFCC totaled 49,711, with unique Web hits to the site totaling nearly 17.1 million. Many of the complaints the IFCC has taken involve incidents like computer intrusion, hacking, and child pornography and were not Internet-fraud specific.

All complaints received by the IFCC are reviewed and referred on behalf of the person filing the complaint. Of the on-line filings, the IFCC referred 16,775 Internet fraud complaints to law enforcement or regulatory agencies across the nation. Efforts from the IFCC-sponsored initiative called “Operation Cyber Loss,” resulted in criminal charges being brought against approximately 90 individuals.

The fraud schemes exposed by the May 2001 initiative represented over 56,000 victims who suffered cumulative losses in excess of $117 million. Additional scheme take down initiatives are pending.

“Fraud committed via the Internet makes investigation and prosecution difficult because the offender and victim may be located thousands of miles apart. This borderless phenomena is a unique characteristic of Internet crime and is not found with many other types of traditional crime,” said Thomas Richardson, deputy assistant director of the Criminal Investigative Division at the FBI. “Jurisdictional issues often require the cooperation of multiple agencies to resolve a case. This is a hallmark of the IFCC. It streamlines the case initiation effort and saves victims and enforcement agencies a great deal of time.”

With the IFCC’s recent role in collecting terrorist tips for the FBI, the activity to its Web site has soared and fraud complaints are expected to show a dramatic increase.

“We anticipate the number of complaints to rise from 1,000 a week to 1,000 a day,” said Richard L. Johnston, director of the NW3C. “We know more Internet crime is out there, it’s just a matter of victims knowing where to go to report it and then actually reporting it.”

Funded by a grant from the Department of Justice, Office of Justice Programs, Bureau of Justice Assistance, the NW3C is a non-profit organization that provides a national support network for state and local law enforcement agencies involved in the prevention, investigation, and prosecution of economic and high-tech crime.

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