IFCC Charges 90 in Internet Fraud Cases

Criminal charges were brought against 90 people and companies Wednesday as
part of a joint operation between the Justice Department and the National
White Collar Crime Center — charged with cutting down on Internet fraud.

Operation Cyber Loss gathered information on more than 56,000 victims of
Internet fraud, ranging from online auction fraud to Ponzi/Pyramid schemes
which fleeced unsuspecting victims of more than $117 million.

Federal Bureau of Investigation offices from around the country
participated in the search and seizure efforts, resulting in 57 arrests and
pleas or convictions on 110 counts. They ranged from mail fraud to
intellectual property theft to interstate transfer of stolen property.

It’s all part of an effort initiated last year with the creation of the
Internet Fraud Complaint Center, which tabulates all the fraud complaints
it gets into a national picture, something local law enforcement agencies
are unable to do. Made up of officials from the FBI and the NW3C, the site
was established on May 8, 2000, to let consumers file fraud complaints that
went right to federal law enforcement officials.

Tracey Silverling, FBI spokesperson, said many times local law enforcement
agencies are overburdened with “real life” situations and put online fraud
at a lower priority.

“Traditionally, if you go to a local law enforcement agency, they’re
overtaxed anyways for resources, so if you process a $50 complaint, a lot
of times its not going to get worked,” Silverling said. “The IFCC is a
clearinghouse to put together these scams, and if they get a slew of
victims with the same scam and realize there’s a common denominator, they
are able to put them together. If you put $50 here and $50 there, and put
it together, it could run to a cumulative dollar loss into the hundreds of

According to U.S. Attorney General John Ashcroft, citizens now have a place
they can go to get their complaints heard.

“Just as neighborhood watch programs keep watch over their neighborhoods
and report suspicious activity to law enforcement, Internet users now have
a ‘cyber community watch’ program,” Ashcroft said. “When individual
citizens, businesses and consumer agencies work with law enforcement at all
levels, we help ensure the safety and security of the Internet.”

Officials say the biggest difficulty in pursuing these criminals is the
fact that many of them are almost impossible to track down.

IFCC figures show 83 percent of Internet auction fraud complaints are
against individuals, not businesses. Of that 83 percent, 25 percent do not
know the physical address of the person who jilted them, while 14 percent of those that do only have a Post Office box. In 2000, online auction
fraud accounted for $4 million in losses; from January to April 2001,
complaints have already totaled $3.2 million

Mark Gage, associate deputy director at NW3C, said it’s hard to say if the
numbers reflect an increase in Internet crime.

“In the past year, we’ve referred little over 11,000 complaints to law
enforcement agencies,” Gage said. “Now, only time will tell over the next
year whether or not crime is increasing. I think the difficult part will
be whether we’re seeing an increase in complaints because people are
becoming accustomed to reporting crime or because that type of crime is
actually increasing.

Another problem with reporting cyber crime numbers is the many reports
filed at the local law enforcement agencies that aren’t earmarked as an
Internet crime.

Officials are encouraging consumers to report incidences of Internet fraud
with its complaint
. Silverling said that while its hard to say if people will get
their money back from a deal gone wrong, its better than chalking the
experience up as a loss.

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