Report: U.S. Online Crime Almost Doubled In 2009

[engine]

Report: U.S. Online Crime Almost Doubled In 2009 [news.bbc.co.uk]

US losses to online crime almost doubled during 2009, reveals a report.

Losses totalled $560m (£371m) in 2009, up from $265m (£176m) in 2008, showed the annual report by the Internet Crime Complaint Center (IC3).

Complaints about online fraud grew 22% during 2009 and the IC3 received more than 336,655 reports of high-tech crime incidents from victims.

The most popular scams involved requests for advanced fees and non-delivery of merchandise.

[bwnbwn]

I don't doubt this but being on the other end of the stick I feel more was lost from us merchants than from stuff not sent. If I buy something and it isn't sent then a chargback is in order and the cc companies take the hit not the consumer.
if i send something and get a chargeback I take the hit plus some. Hmmm thinking about this a little maybe why the banks could care less about helping merchants with verifying a possible fraud order because they recoup money from us to cover the losses they incur from unsent orders.

[JS_Harris]

The most popular scams involved requests for advanced fees and non-delivery of merchandise

Don't blame "online", blame the actual thief. How often does law enforcement not chase a fraudulent chargeback for example?

[piatkow]

"online" crime stories always make me wonder - are these crimes that could not be committed without computers or is it just the same old scams with a different delivery mechanism?

[LifeinAsia]

If I buy something and it isn't sent then a chargback is in order and the cc companies take the hit not the consumer.

Nope- the CC companies pass the hit onto the merchant.

As you have pointed out, they have no incentive to fix things since they aren't taking any hits.

About the only time I can see them taking a hit is if the merchant has closed his bank account and disappeared before the charge back hits. (And in those cases, I wonder if the consumer would get a nice little note saying he couldn't be refunded because the merchant is no longer in business.)

[aleksl]

yes this deserves a bold face:

The Credit Card Companies don't loose a dime. They pass the hit onto the Merchant.

It is extremely rare that a bank or credit card company will take one on the chin in this. That, and also the cashback and rewards points that they give out - no, they aren't theirs to give, it is MERCHANTS who pay these. CC companies are basically parasites getting fees for passing bits and bites around.

Also, on non-delivery of merchandise, it is quite common that merchandise just isn't available - it is easy to create a product listing, but keep it in stock is more difficult. In our line of business we see this all the time, companies come and go, some people look for product that isn't there anymore, but websites may be still there. Or manufacturer moved to China and it is now on a long backlog. So what a customer does? He chargebacks, since banks make it easy to do, sometimes so easy customer prefers to call a bank instead of a merchant to get this resolved.

Also, how much of that "fraud" is attributed to improper integration with third party systems, like PayPal? I guarantee you we get complaints on this one because a customer didn't bother to click "Back to merchant" button to complete the transaction.

[bears5122]

Not a surprise at all. There seems to be little, if any law enforcement of crimes online.

[MLHmptn]

The most popular scams involved requests for advanced fees and non-delivery of merchandise.

Or is that non-delivery meaning a customer stating they never received merchandise when indeed the merchandise had been delivered? For just this reason my company started requiring delivery confirmations for all residential deliveries (unless we are released from responsibility by the customer beforehand). In the year 2008 we had customers committing fraud by saying they never received their orders when FedEx/UPS showed delivery had been made. Since we started requiring signatures we haven't had one single non-delivery fraud attempt by a customer stating non-delivery. All it takes is a customer stating they didn't receive their order and they quietly commit fraud at our expense by filing a chargeback. Delivery made to a doorstep, patio, etc. by FedEx/UPS is not proof of delivery and bit us square in the a$$ to the tune of $5716.89 (cost of goods and S/H) in the year 2008 and that did not include the chargeback fee's.

[incrediBILL]

Losses totalled $560m (£371m) in 2009

Let me debunk the hype.

First, most of the so-called credit card fraud doesn't harm the banks whatsoever, they kick it back to the merchants.

Many of the major banks could afford to eat the losses, writing them off, instead of screwing the poor merchants that the banks authorized those fraud charges for in the first place.

Wells Fargo reported record profits of $3.2 billion, the company said Wednesday, nearly doubling the amount of money it made just a year ago.

[money.cnn.com...]

Not all of the economy is as shaky as it sounds.

Do the math, 1/6 of Wells Fargo earnings for ONE QUARTER would cover all that fraud.

I'm all for stopping the fraud but if legislation were passed that put the blame solely on the credit card company authorizing the fraud purchases, fraud would stop in a New York minute.

They've been tinkering with PIN #s and real-time customer authorization via cell phones yet it's gone nowhere.

Make the government force the bank to eat those charges and you'll be entering PIN #s and pressing "1" to authorize sales in no time at all.

Most common CC fraud will be gone just that fast.

[bwnbwn]

The most popular scams involved requests for advanced fees and non-delivery of merchandise

I take this as a person bought an item and it was never shipped out so that be the case there isn't a merchant to pop here and the cc company takes the hit. Hey don't think I am defending them I am a ecommerce seller myself and have been around the block with these self serving credit card companies.

[trinorthlighting]

Guys,

If you want to stop the consumer to merchant fraud, you have to report it. Yes, the credit card companies will not do anything about it, but you should report it to the Internet Crime Complaint Center because they will follow the lead.

[ic3.gov...]

Basically, what will happen if you report it (And the consumer is in the United States) the Internet Crime Complaint Center will pass the lead down to the local authorities. A police officer will go out and knock on the door and ask questions as part of their investigation. Now, you may not see a penny out of it, but if you think about it, if the police are constantly knocking on the same persons door eventually they will be arrested. Plus, when the police knock on doors it might scare the person into stopping the fraudulent chargeback scheme. Most people who commit this crime do it to multiple merchants, so the more reporting that is done, the greater the chance is that the person who is committing the crime will be caught and their operation will be shut down.

My company reports every single instance (Which is only a handful) and we have seen some arrests made due to higher dollar amounts. (Yes, if the local police department is good they do follow up with the merchant). Once you have information on an arrest, you can ask the local prosecutor to attempt to have the person pay restitution to the merchant. Most smaller villages and towns in the United States have no issue doing that. Also, if a person is arrested and the police seize the property under a warrant, when all is said and done, the property will be returned to the merchant because you can legally claim the property.

The more merchants report to the government, they can use that to pressure credit card companies to fight fraud a bit better and we will see an increase in police action taken. If every merchant started reporting fraud, it will do nothing but help other fellow internet merchants and the online community as a whole.

[aleksl]

Or is that non-delivery meaning a customer stating they never received merchandise when indeed the merchandise had been delivered?

yes, that is the most common fraud of them all, we see it on cheaper orders that sometimes ship without signature guarantee. Happens all the time.

But sometimes we get these fraudulent customers too. And on a rare occasion, we even win a chargeback case. Win some, loose some.

incrediBill: Make the government force the bank to eat those charges and you'll be entering PIN #s and pressing "1" to authorize sales in no time at all.

Most common CC fraud will be gone just that fast.

BINGO