The FBI and the National White Collar Crime Center (partners in the Internet Crime Complaint Center, or IC3) released their Internet fraud stats for 2009 this week. The news is grim -- scam damages more than doubled in the past year, from $265M to $559.7M. But as bad as these numbers are, they almost certainly understate the reality.
Chris and I know from our own scam investigations that most victims, understandably -- out of embarrassment, humiliation, or a desire to forget the painful episode -- don't want to go on the record about their experience. Indeed, official sources estimate that fewer than 1 in 10 victims reports the scam to the authorities.
If fewer than 10% of victims report the scam, a rough estimate of actual damages -- based on the IC3 numbers -- might well exceed $5B. Using recent FTC stats (as quoted recently in the NY Daily News), the number might surpass $17B.
What's Going On?
In a nutshell, the Net is the Wild West "Tombstone" gone global. Yes, the FBI and the FTC and the state attorneys general can ride in and police a street here and there, but where the Net is concerned (and through no fault of their own) their budgets and manpower were overwhelmed years ago.
Think John Dillinger. Bank robber. Needed a car, a gun, a hideout within driving distance. He needed clothes to wear, and usable roads for his car. He needed a gas station here and there. Maybe he did or didn't need to speak basic English, but you see where I'm going. Today, a naked man with a laptop, sitting in a muddy field in an ex-Soviet republic, can rob any bank in the US if he knows how to hack.
Meantime, the Net itself is growing and changing so fast that entire industries are being smashed and reformed before our eyes (can anyone say "newspapers"?). Fast-footed companies, let alone institutions, are routinely left in the dust (or mud) by online developments. Think Yelp.com, whose customer feedback can kill a business overnight. Or Facebook, and its impact on brands and sales. A few years ago, it didn't exist. Today, it reportedly receives more traffic than Google.
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