shaw capital management: Internet swindlers grow more sophisticated

By Claudia Buck
McClatchy Newspapers
SACRAMENTO, Calif. — For Sacramento grandmother Pat Blucher, it was a financial plea she couldn’t resist. A few weeks ago, her distraught granddaughter called from Canada, saying she’d been arrested on drug charges and needed bail money. Immediately.
Only it wasn’t her granddaughter, but someone setting a financial trap. It’s an old scam but with a newer twist: Facebook.
Using details apparently pulled from Facebook pages, the scam artist peppered the conversation with enough family facts — husband’s and baby’s names, a girlfriend’s wedding — to persuade Blucher to wire $4,600 to Canada.
“They’re so clever. They had all the information to fool me,” said Blucher, a retired teacher who’s convinced the Facebook page gave the caller access to too many personal details about her family.
The incident is yet another example of a classic cybercrime — using the Internet to foist financial fraud on unwitting victims.
From the “I Love You” computer worm in 2000 to last year’s “stranded traveler” swindles, online scams have been around since the Internet’s dawn. But they have become increasingly sophisticated and lucrative.
Last year, the Internet Crime Complaint Center, which is affiliated with the FBI, logged its 2 millionth consumer complaint, a number that’s doubled in about three years.
From 2000 through 2009, total financial losses due to Internet crimes were roughly $1.7 billion, according to the IC3, with a median dollar loss of more than $500 per complaint.
A new study, “A Good Decade for Cybercrime,” released in January by security-software company McAfee Labs, details how Internet crime has morphed from merely malicious to financially devastating.
Back in 2000, Internet fraud was relatively benign. Hackers sought bragging rights by cracking codes and worming their way into government and business-computer networks in order to cause mischief. But by 2003, the motive had turned to money.
“Since then it’s almost exclusively about finances,” such as stealing bank account information or conning people into wiring funds, said Dave Marcus, security research director for McAfee Labs.
And the millions of users hanging out online via social- networking accounts are increasingly vulnerable, he said. “Because of the sheer volume of people on Twitter and Facebook, it’s a very fertile target group.”
Among the more recent scams: fake requests for password resets or logins. Fraudsters also comb social-networking sites looking for popular topics or seasonal subjects to set their traps.
“You’ll see Twitter bombarded with IRS stuff when it’s tax season or fake romance scams around Valentine’s Day,” Marcus said.
Last July, midway through the summer travel season, the Internet Crime Complaint Center, or IC3, warned of “stranded traveler” scams, where fake e-mails or Facebook messages go out, supposedly from friends saying they’ve been robbed and need cash in a hurry to pay a hotel bill or return to the United States.
Vulnerability to cybercrime comes partly from our eagerness to share so much of ourselves and increasingly conduct more of our financial transactions — from banking to shopping — online, say Marcus and other security experts.
“Cyber criminals will use any publicly available information, including from social-networking sites, to extort victims … to steal your money or cause financial harm to your business,” said FBI special agent Tom Osborne.
His advice for Facebook and Twitter users: “Avoid accepting unknown friend requests and only post information you would want your Mom or Dad to read.” Likewise, avoid opening e-mails from unknown individuals and never click on photos or hyperlinks in those e-mails.
The California Office of Privacy Protection also urges vigilance online.
Among Marcus’ recommendations: Be familiar with your mobile devices. Keep your privacy settings high on social-networking sites.
If you’re using a cellphone, turn off the GPS when it’s not in use “so you’re not broadcasting where your device — and you — are located.” If doing online banking from a cellphone, be sure your access is password-protected.
And if you do get snagged, report the crime.
Blucher, who contacted the local Better Business Bureau, the California Attorney General’s Office and local police after her Canadian scam, said getting snared by fraudsters alerted her to the prevalence of online crime.
“If something good can come of this, it’s that more people can be aware … so they don’t get scammed and lose their hard-earned money like I did.”