Cybercrooks Stealing $200 Billion Annually

U.S. Customs agents report that American companies are losing $200 billion (US$) each year to piracy over the Internet, and that the problem is expected to dwarf every other type of crime in the new millennium.

The global software industry alone lost $11 billion to piracy in 1998, according to the Software and Information Industry Association. The group estimates that 38 percent of software applications installed worldwide are stolen.

The group also claims that 97 percent of business software used in Vietnam in 1998 was pirated. Other countries with theft rates exceeding 90 percent include China, Lebanon, Russia, Indonesia and Bulgaria.

Last summer, the group determined that 60 percent of the software auctioned online was illegitimate, including some on Internet giants such as eBay, ZDNet and Excite.

In addition to software, criminals use the Internet to traffic in stolen, counterfeit and contraband goods, including music, videos, designer clothing, shoes and handbags. “I don’t think any of us can define how big the Internet can get, so the crimes that go along with it and the fraud perpetrated by it are infinite,” said D. C. Page, managing director of security firm Kroll Associates.

Criminals Easily Avoid Prosecution

For intellectual property, the Internet is perfect criminal territory because of the huge jurisdictional loopholes for police and prosecutors. “You can see a fraud being perpetrated between the U.S. and Brazil where the actual perpetrators are in Amsterdam,” said Page. “How is that ever going to be prosecuted by any of these three governments?”

“The criminals often set up house in a jurisdiction that is going to be favorable to them,” added Page. “We’ve found people actually put their server in the country where they’re best protected.”

In addition to uploading and downloading stolen property, the Internet can be used to elude authorities. If police are closing in on a factory that is making fake trademarked goods in Korea, the thieves can quickly shut down the factory and ship the digitized trademarks via the Internet to a new clandestine plant in China.

Companies Are Not Prepared to Fight Back

Law enforcement officials believe that intellectual property makers like Microsoft and Sony should build anti-theft devices into their goods. “The issue is how to keep people from downloading over the Internet,” said Tischler. Unfortunately for such companies, however, accessibility is central to their competitive edge in the marketplace.

Customs officials believe that the criminal possibilities will grow as technology improves. Plus, these officials feel that judicial systems lag behind exploding Internet crime because cyberculture is difficult for juries to visualize. Therefore, the risk of jail for these criminals is minimal compared to other types of crimes.

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