Recession, Swine Flu Usher in More Internet Scams

May 08, 2009 08:00 AM
by Anne Szustek
Cash-strapped scammers are increasingly turning to the Internet to take advantage of fears about the recession and panic over swine flu.

Social Networking + Recession + Panic = Scammers’ Paradise

When legitimate sources of cash, namely formal work, dry up, some have turned to less wholesome means of making ends meet. During 2008, scam complaints to the Internet Crime Complaint Center, a joint project of the FBI and the White Collar Crime Center, went up 33 percent from 2007, reaching an all-time high of 275,285 reports. This roughly parallels the National Bureau of Economic Research’s designation of December 2007 as the onset of the current recession in the United States.

“When you have what we've been seeing for the past few years, which is the rise of various types of increasingly sophisticated technology, combined with the bad economic climate, it really creates a very difficult situation,” John Kane, the author of the Internet Crime Complaint Center’s annual report on computer-based crime, told The Dallas Morning News.

Online scams have been aided by the flowering of social networking sites like Facebook, which in addition to listing sensitive information such as birth dates, also provides access to ready-made networks. A scam e-mail is more likely to be taken as a serious offer or plea for help if it appears to come from an acquaintance, Kane points out.
The 275,285 complaints were behind some $246.6 million in consumer losses, reports eWeek. Check fraud cases were responsible for the highest-median thefts—some $3,000 per case.

In addition to personalizing their approach, scammers are also trying to capitalize on public worries over two major news stories: the recession and swine flu. Unsuspecting recipients who are strapped for cash may be more likely to respond to scam e-mails of the infamous Nigerian 419 type, which ask would-be victims for financial help in exchange for sharing a nonexistent fortune. Meanwhile, the FDA and the Federal Trade Commission are clamping down on Internet sites and e-mail ploys to sell “swine flu protection” kits that claim to cure or stave off the H1N1 virus.

Related Topic: “Gray economy” thrives in recession

Meanwhile, the recession has spurred activity in the “gray” or “informal,” economy. According to a study conducted by a retired University of Wisconsin professor, “off-the-books” business dealings account for some $2.25 trillion in the United States, meaning some $600 billion in potential taxes is staying out of the revenue system.

The current recession may also further entrench gray economic cycles in emerging market economies such as Turkey or South Africa, which already struggle from non-gray economic conditions induced by the recession.

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