FBI: Auctions Spur Lion’s Share of Net Fraud Complaints

More than 40 percent of all reported Internet fraud complaints stemmed from online auctions in 2001, the U.S. Federal Bureau of Investigation (FBI) said in a report covering complaints received during the year.

The FBI said 43 percent of the 49,711 complaints filed with the Internet Fraud Complaint Center, a partnership between the FBI and the National White Collar Crime Center (NW3C), were related to incomplete or fraudulent Internet auctions.

Undelivered merchandise and non-payment generated the second-largest number of complaints, making up about 20 percent of the total. A scam in which an e-mail from Nigeria seeks bank account information made up 15.5 percent of complaints. Credit card fraud and “confidence” schemes also ranked in the top five.

The center also received many non-fraud-related complaints, including child pornography, hacking of private computers and spam. In all, the center referred more than 16,000 Internet fraud cases to local law enforcement agencies last year.

Prosecution Tough

The FBI said it is starting to get a handle on how best to approach Internet fraud cases, which often cross state or even international lines.

“Fraud committed via the Internet makes investigation and prosecution difficult because the offender and victim may be located thousands of miles apart,” said Thomas Richardson, deputy assistant director of the bureau’s Criminal Investigative Division.

“Jurisdictional issues often require the cooperation of multiple agencies to resolve a case.”

New Attention

The fraud complaint Web site drew 17.1 million unique hits during 2001, its first full year in operation. But many of those visits came in the wake of the September 11th terrorist attacks, when the FBI used the site to collect tips for its investigation.

Still, authorities said they believe the number of online fraud complaints will grow, perhaps rapidly.

“We anticipate the number of complaints to rise from 1,000 a week to 1,000 a day,” said Richard L. Johnston, director of the NW3C. “We know more Internet crime is out there; it’s just a matter of victims knowing where to go to report it and then actually reporting it.”

Add It Up

Consumers who reported monetary losses said they lost an average of more than $5,000 as a result of the Nigerian letter scam, $3,000 on average through identity theft, and an average of $1,000 because of investment schemes.

Auction fraud cost an average of about $400, while non-delivery complaints averaged $325 each.

More than 70 percent of complaints were made by male Web users. Men also made up the vast majority of the accused, accounting for 81 percent of reported fraud.

Old Hat

News that auction sites generate the most complaints is nothing new, and actually may represent an improvement.

A year ago, shortly after the fraud tip Web site was created, the FBI said auctions were generating nearly 65 percent of all online fraud complaints.

In its recent annual report, online auction giant eBay acknowledged fraud as one of its main risk factors, citing potential litigation as well as government action if fraud complaints continue.

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