Economic Recession may lead to Cybercrime Boom!

by Derrick Bryan and Mark Davis

The global recession has led to a rise in cybercrime worldwide, as governments' attention to cybercrime is deflected toward more pressing economic problems. The dismal economy has opened the door for consumers to be scammed in a variety of ways. For example, people are receiving phishing emails asking them to provide bank account information so as to avoid having their bank account closed down in a merger. Once the person provides their information, their account gets raided and/or depleted.

According to a report issued in late March by the FBI’s Internet Fraud Complaint Center, Internet fraud in the U.S. increased by 33% in 2008, rising for the first time in three years. As the country suffers through a deepening recession, early indicators for 2009 are equally menacing, with February to March 2009 showing a 50% increase in reported Internet fraud complaints. These numbers may be shocking, but given that the vast majority of incidents go unreported, the threat of identification theft may actually be much more serious than these figures would lead us to believe.

Internet fraud includes everything from phony sales on auction and classified sites such as eBay Inc. and craigslist.com to smaller scale versions of the Ponzi scheme perpetrated by disgraced New York financier Bernard Madoff. One new Internet identity theft scam involves e-mails that have the appearance of originating from the FBI or other federal agencies seeking the recipient’s bank account information in order to help with illegal wire transfer investigations.

People are also being sucked into cyber money laundering by fake work from home jobs. They are offered the chance to be an “international sales rep.” They open a bank account, and receive money. They then wire the money to a third party. In reality the transaction is money laundering, pure and simple. The victim of the scam is known as a cyber mule, named after the ‘mules’ that carry drugs across borders.

Three big developments have influenced the increase in cybercrime over the past year. First, as more IT professionals get laid off, some will shift into illegal activity to make money. Second, cybercriminals have become the main beneficiaries of the increased availability and use of broadband Internet access by every American family. Lastly, cybercriminals have continued to exploit the best web and online-banking based technologies, such as Trojan technologies, to maximize their illegal gains.

Given the state of the global economy, we think we can expect the incidence of cybercrime to increase as more technically savvy (and ethically challenged) techies find themselves out of work. Hopefully, the same economic forces that will drive more people to perpetrate phishing, identity theft, and other types of cyber-fraud schemes will also motivate collaboration between the public and private sectors that is so hard to achieve when times are good.