US: $520 Million Lost to Online Crime in 2012

Published: 20 May 2013


Over 280,000 complaints of online criminal activity were reported by the Internet Crime Complaint Center (IC3) in 2012, according to the US organization’s annual report released on May 14, 2013.The total calculated financial loss due to online criminal activity was estimated to be more than $520 million.

The IC3 reported an average loss of around $4,500 in cases reporting financial losses, which accounted for close to 115,000, or 40% of the complaints. The IC3, which is a partnership between the Federal Bureau of Investigation and the National White Collar Crime Center, also noted some of the most common crimes reported. The single most costly crime reported was auto-fraud, to which victims lost over $64.5 million. In these cases, fraudsters sold cars they did not own to victims, tricked the victims into wiring money for the purchase without an inspection of the fictitious vehicle, and then failed to deliver the car.

Other notable forms of online crime the IC3 highlighted include the Hitman Scam and scareware or ransomware. In the Hitman Scam, fraudsters pose as hit men hired to kill the victim, or as intelligence or protection agencies aware of a threat to the victim’s life. The scammers assure the victim that by paying up, the threat to their life will disappear. Hitman scams accounted for roughly $1.8 million in reported losses. Scareware/ransomware scams involve the use of viruses, often downloaded unknowingly by victims who click on pop-up advertisements. As per a common scheme, once the computer has been infected it freezes, and a fraudulent warning purporting to be from the US Government informs the victim that their IP address has been logged in connection to a federal crime, such as viewing child pornography or hacking. The victims can avoid an embarrassing and costly trial; they just need to pay a fine via debit card.

The IC3 report stresses that fraudsters are often well informed and will use information stolen from their victims, such as social security numbers, names of the victims and their family members, and other seemingly private data to convince victims of their legitimacy. If in doubt, potential victims should contact authorities to make sure that any complaints or alleged charges are real. The report also reminds readers that if a deal seems too good to be true, it likely is.

It should be noted that the IC3 report depends on independent complaints made to the IC3, and so the numbers reported, both of crimes and financial loss, are likely significantly lower than the real values, with many such crimes having gone unreported.