Online fraud climbs as economic chips

Online fraud climbs as economic chips

On September 24, 2008, President George W. Bush addressed a concerned nation.

“Our economy is facing a moment of great challenge, but we have overcome difficult challenges before, and we will overcome these challenges,” Bush said.

The country was already facing a major challenge in the form of the Great Recession, which began in December 2007 and lasted until June 2009, the longest economic downturn since World War II.

Real GDP was falling while unemployment was on the rise, peaking at 10% in October 2009.

But something else was climbing alongside unemployment: fraud.

At the height of the recession in 2009, the FBI’s Internet Crime Complaint Center received 336,655 cybercrime complaints, up 22.3% from the previous year.

Total cash losses were about $559.7 million, more than double the 2008 total.

severe financial pressures

After the recession ended, the Association of Certified Fraud Auditors released the results of a survey that concluded that severe financial pressures during the economic crisis led to an increase in fraud, according to SEON, an online fraud prevention platform.

In the years following the economic downturn, there has been a steady decline in the number of cybercrime complaints. In 2013, that number was about 262,813.

From 2014 to 2018, the number of complaints filed with the FBI increased each year, SEON said, with the total number of complaints registered in 2018 reaching 351,938 — about 15,283 more than in 2009, during the recession.

Now the economy faces another challenge.

When the last recession hit the US in 2020, after the coronavirus outbreak, the Bureau of Labor Statistics said unemployment reached its highest level, peaking at 14.7% in April, a staggering 308.3% increase from 2019.

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Fraud complaints on the rise

The number of complaints related to online crime jumped to 791,790 in 2020, up 69.4% from 2019. The total financial losses to online crime were more than $4.2 billion in 2020, up 20% from the estimated losses of $3.5 billion in the year Previous.

Online fraud has not slowed in 2021. The FBI received more than twice as many complaints last year than in the last recession in 2009, with total monetary losses exceeding 7.5 times those in 2009.

On September 12, the US Department of Justice said two Nigerian men had been sentenced to prison terms for stealing more than $2 million in an online fraud scheme.

From 2016 through May 2021, Olumide Obidari, 29, and Stephen Osegel, 29, conspired with each other to use fake and stolen identities to engage in commercial email fraud and pursue fraudulent online romances.

A business email hack is a type of cybercrime email scam where the attacker targets a business to defraud the business.

The two defendants were getting companies to click on fake links to settle email addresses, then pretending that the companies were actually doing business with them.

They obtained false identity, including passports and driver’s licenses, and used it to open accounts in banks across the country and transferred the proceeds of their frauds to these accounts.

Social Catfish, an online dating investigation service, said online scams are becoming “forced to work, shop, and online dating… scammers are getting more and more sophisticated to take advantage of.”

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SEON said that many companies today deal primarily with online correspondence and transactions, which increases their reach but also increases their exposure to online crime during turbulent times.

Any disruption in the economy provides opportunities for fraudsters to infiltrate the business.

More vulnerable to attacks

During times of economic hardship, many companies reduce or even eliminate seemingly nonessential departments in an effort to save money.

SEON said that small or new businesses with low budgets are feeling increasing pressure to save costs, making them more vulnerable to attack.

Some large companies can underestimate the importance of digital security modernization and employee training, reducing the size of these core teams.

As a result, scammers who were previously thwarted by security departments with high budgets are often left with better opportunities to infiltrate vulnerable companies.

SEON said the consequences could include anything from identity theft to account takeovers, data breaches, and beyond.

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