Cyber-crime surges with deepening recession

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 foreboding, with February to March 2009 showing a 50% increase in reported Internet fraud complaints.

“These numbers are shocking, but given that the vast majority of incidents go unreported, the threat of identification theft is actually much more serious than even these figures would lead us to believe,” says Justin Yurek, President of ID Watchdog, Inc.

Internet fraud includes everything from phony sales on auction and classified sites such as eBay Inc. and craigslist.com to smaller scale version 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.

Identity theft is now the fastest-growing crime in the United States—with nearly ten million Americans victims of some form of identity fraud each year. And, even if consumers make conscious efforts to protect their credit card information, fully 80% of identity theft is unrelated to credit fraud. Phone and utilities fraud, bank and loan fraud, employment and government document fraud, and medical records fraud represent perhaps even more pernicious forms of ID crime.