Internet Law News

Internet fraud trends and statistics

"E-business is no longer just a buzzword. It's here to stay and we must find ways to help consumers and businesses have confidence in the transaction technology they choose," said Texas State Securities Commissioner Denise Voigt Crawford, board member of the National White Collar Crime Center (NW3C). "Part of the commitment to our electronic commerce community rests in law enforcement's ability to respond quickly to crime problems as they arise. To do that, enforcement professionals at all levels must have training and programs in place to prepare them to meet new challenges."

In its first six months of operation, the IFCC received 20,014 complaints. Of these complaint filings, 6,087 were referred to enforcement agencies around the country. Of those referred complaints, 5,273 involved Internet fraud and serve as the primary analysis of the report. The remainder of the complaints involve filings that are incomplete, awaiting review for referral, or were not Internet fraud specific.

The report shows that auction fraud was the most reported Internet fraud, comprising 64.1 percent of all referred complaints. Non-deliverable merchandise and payment accounted for another 22 percent of complaints. and credit and debit card fraud made up nearly 5 percent of complaints. Demographic data reveals that California ranks #1 for both Internet criminals and victims. Other national leaders in these categories are Florida, Texas, Pennsylvania, and New York. From an international perspective, the United States leads receiving 94.1 percent of the complaints.

"The report clearly demonstrates the need for establishing an electronic clearinghouse for the prompt receipt, validation, and referral of Internet fraud cases to the appropriate law enforcement and regulatory agencies," said FBI Director Louis J. Freeh. "Additionally it has shown that victims of crime, whether it be Internet fraud or other crimes, are using the Internet as a reporting tool. Now critical investigative information can be shared with our law enforcement colleagues around the country in a readily retrievable way."

"IFCC was developed as an innovative and progressive approach to a real crime problem," said Colonel Donald J. Brackman, of the Indiana State Police and board member of the NW3C. "By facilitating the flow of information between law enforcement and victims of fraud, it streamlines the case initiation effort on behalf of both the citizen and the enforcement agencies. Not only will its efforts reduce the amount of economic loss by Internet fraud throughout the United States, it will also give state and local enforcement professionals a venue to develop and successfully prosecute criminal Internet fraud cases."

Already the IFCC has offered help to America's fraud victims by referring large and small complaints to enforcement agencies nationwide. Several of the complaints involved monetary losses of $100,000 or more, including one complaint involving more than $366,000. That case resulted in a prosecution in the Western District of Louisiana. Other matters are referred to federal, state and local prosecutors nation wide.

"This report enhances our general knowledge about the scope and prevalence of Internet fraud in the United States," Brackman said. "It is our hope that the information will also serve as fuel to help us sustain organizational and financial support for existing white collar crime enforcement, prosecution, and prevention programs, as well as help enforcement agencies secure critically needed resources to address this threat to our citizens."

This six-month report is the first in a series of regular research initiatives that are scheduled and will be provided by the NW3C and the FBI on IFCC complaint data. An annual report will be presented in the third quarter of 2001. A copy of the IFCC report is also available by contacting the NW3C's Research Director, Dr. Don Rebovich, at (304) 291-2080, extension 249, or by e-mail at drebovich@nw3c.org.

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