FBI Sees Big Rise in Internet Crime Complaints, Losses

Published on May 20, 2019

The FBI received nearly 17% more complaints in 2018 than in 2017, and nearly double the losses.

The Federal Bureau of Investigation’s Internet Crime and Complaint Center received 50,000 more complaints in 2018 (351,936) than in 2017 (301,580), with losses from those complaints amounting to $2.7 billion, a $1.3 billion jump from the $1.4 billion in losses reported in 2017, according to the agency’s recently released crime report.

The report, released Monday, found that California, Texas and Florida rank among the highest states for both the number of victims and the value of losses.

“Those figures are remarkable,” said Peter Baldwin, a partner at Drinker Biddle & Reath in New York, in commenting on the report. “Both the number of victims and the amount of losses are extraordinary — if also predictable, given the rise of Internet crime.”

The number of business email compromise, or BEC, schemes – in which hackers break into email accounts and target wire-transfer payments – is also notable, said Baldwin, who focuses on cyber-security issues, white-collar criminal and internal investigations, and is a former Assistant U.S. Attorney in the U.S. Attorney’s Offices for the Eastern District of New York and Central District of California.

In 2018, there were over 20,000 BEC complaints to the FBI and losses of over $1.2 billion.

The report includes statistics on other cybercrimes, including payroll diversion scams, extortion schemes and tech-support fraud.

In 2018, the report states, “the most prevalent crime types reported by victims were Non-Payment/NonDelivery, Extortion, and Personal Data Breach.”

The top three crime types with the highest reported loss were BEC, Confidence/Romance fraud, and Non-Payment/Non-Delivery.

Baldwin pointed to several “hot topics” that were noted in the 2018 FBI report:

– Payroll Diversion Scams: In 2018, the Internet Crime and Complaint Center, or IC3, received over 100 payroll diversion complaints, resulting in losses of over $100 million. In these scams, criminals target employees through phishing emails designed to capture the employee’s login credentials, and the stolen credentials are then used to access the employee’s payroll account. The criminals then change the employee’s direct deposit information and redirect payroll funds to accounts they control.

– Extortion Schemes: In 2018, IC3 received over 51,000 complaints – a 242% increase over 2017 – about Internet extortion schemes, with losses totaling over $83 million. Extortion schemes occur when a criminal demands something of value from a victim by threatening physical or financial harm or the release of sensitive data, or by causing the victim to be unable to access critical data. These schemes typically take the form of ransomware, DDoS attacks, network intrusions, and sextortion.

– Tech Support Fraud: In 2018, IC3 received over 14,000 complaints related to tech support fraud, resulting in losses of approximately $40 million – an increase of over 160% from 2017. The majority of the victims in these schemes were elderly.

– Creation of IC3 Recovery Asset Team: In February 2018, IC3 created a Recovery Asset Team (“RAT”) to streamline communications with financial institutions and assist the FBI with the recovery of funds for victims. Since its inception, RAT assisted in the recovery of over $192 million for victims of Internet crimes.
(Source: AICPA - CPA Letter Daily - ThinkAdvisor - April 29, 2019)