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Hackers & Scams: A Growth Industry

Updated on June 26, 2013

Cyber Crimes Cost Americans Over Half Billion Dollars in 2012


How to Avoid Online Scams

Over a half billion dollars was stolen by hackers, scammers and other Internet criminals last year. The Internet Crime Complaint Center (IC3) reports an 8.3 percent increase in fraudulent activity using the Web in 2012 compared to 2011.

“In 2012, the IC3 received 289,874 consumer complaints with an adjusted dollar loss of $525,441,110,” according to an IC3 report.

The center receives more than 24,000 complaints each month. The IC3 refers these complaints to state, local, federal, and international law enforcement agencies. They in turn investigate the crime and in many instances make arrests, seizures, convictions and restitution. The 44-page report does not provide data on the number of arrests and convictions.

IC3 is a multi-agency task force comprised of the Federal Bureau of Investigation, the U.S. Department of Justice and the National White Collar Crime Center.

The task force regularly issues Hacking and Scam Alerts to the media and on their website: These announcements inform citizens to be wary about the latest cyber crimes and they list safe practices people should follow while on the Internet.

The IC3 report describes several scams used by these cyber crooks. The thieves known that a scam is all about THE STORY. To be effective it must be convincing and it must be new. Rip-off artists frequently change their methods to respond to consumer awareness. Here are some of the top Internet scams reported by IC3:

Avoid the Romance Scam- its Bad


► The Romance Scam and the “Sextortion” Scam

Criminals used a new rip-off in 2012 where they bait computer users into intimate online con­ver­sations and then extort money from them. In this scam, victims meet someone on an online dating site and asked them to move an online site estab­lished by the crooks. “Shortly after, the con­versations became sexual in nature,” says the report.

Later, victims received text messages inform­ing them that their names and their conver­sations “were posted on a website claiming they were cheaters. Photos of the victims and their telephone numbers were also posted.” The cyber crime victims were asked for $99 to have their names and conversations removed.

This scam was recently updated, according to a May 2013 IC3 Scam Alert. In this latest swindle, intimate online conversations are replaced with video chats. The crooks eventually enticed their victims to “expose themselves in sexually compromising situations, while their images are secretly recorded,” according to IC3. The criminals then threatened to send the videos to all the victims’ contacts and social networking friends, unless they wire as much as $300 to an overseas location.

Top 5 States and Their Internet Crime Losses During 2012

1. California............. $68,160,064.06

2. Florida.................. $34,419,348.21

3. Texas.................... $30,445,492.21

4. New York.............. $28,108,596.87

5. Illinois................... $14,316,107.72

Source: Internet Crime Complaint Center

►Auto Fraud:

Fraudulent vehicle sales continue to be a big crime on the Web. Criminals use the Internet to sell vehicles they do not own.

“An attractive deal is created by ad- vertising vehicles for sale on various online platforms at prices below market value. Often the fraudsters claim they must sell the vehicles quickly because they are relocating for work, being deployed by the military, or have a tragic family circumstance and are in need of money,” according to the report.

Because of the difficult circumstances, criminals refuse to meet in person or allow inspection of the vehicles prior to the sale. To make the deal appear legitimate, the crook instructs the victim to wire full or partial payment to a third-party.

Hackers' Emails Could Take Your Money Right Out of Your Hands


► FBI Impersonation Email Scam

Spam emails complaints purportedly sent from the FBI continued to be reported with high frequency. This scam was reported to the IC3 about 47 times a day in 2012. These type of cyber crimes resulted in a daily loss of more than $6,604.

These spam attacks used the names of various government agencies and such high-ranking officials, such as FBI Director Robert Mueller, in an attempt to defraud computer users. This scam includes elements of bogus the lottery winning scam and the infamous Nigerian scam emails. (This scam has been bilking victims for decades — first via snail mail, then faxes and now through e-mails.)

NOTE: “Government agencies do not send unsolicited emails,” the report says.

Who are These Cyber Criminals?

► Citadel Malware

Crooks running the Citadel Malware scam attempt to extort money from people using the Web. The malware is covertly delivered and installed on the victim's computer.

Once this malicious software is installed, “the user’s computer freezes and warning about a violation is displays on the screen. To intimidate the user further, the message declares the user’s IP address was identified as visiting child pornography and other illegal content,” according to the report. “The user is instructed to pay a fine to the U.S. Department of Justice using prepaid money card services in order to unlock the computer.”

The cyber attackers might also use the compromised computer to steal online banking and credit card information.


► IC3 Malware

Crooks also run a similar version of the previous scam in which they use “the name of the Internet Crime Complaint Center in an attempt to extort money from Internet users.

As in the Citadel malware swindle, the victims’ computers are hijacked, and a screen displays a warning of federal law violations. The victims are instructed to pay a fine to unlock their computers using prepaid money card services,” the report explains. The individuals are informed that they must comply in a specified time frame or they will face prosecution.


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