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Cybercrime cost about $400 billion

Date: July 06, 2005
Source: Maiami Herald
By: complied by CCRC staff

SANTA CLARA, Calif., July 5 /PRNewswire-FirstCall/ -- McAfee, Inc. (NYSE: MFE - News), the leader in Intrusion Prevention and Security Risk Management solutions, today announced the results and availability of the McAfeeŽ Virtual Criminology Report, which examines how a new class of criminals are using the Internet in new, systematic and professional ways to commit illegal acts. According to the findings, information theft is the most damaging category of Internet crime, while viruses have been the most costly for businesses.
The report, commissioned by McAfee, discusses how organized crime and cybercrime are developing, and looks at the future threat this activity could pose to home computers, government computer networks, and to computer systems in the business sector. The report reveals a hierarchy of cybercriminals, discussing the recent evolution of the amateur cyber delinquent to the professional cyber gang.
"As companies and consumers continue to move towards a networked and information economy, more opportunity exists for cybercriminals to take advantage of vulnerabilities on networks and computers," said Chris
Christiansen, program vice president, IDC. "Understanding who these criminals are and how they attack provide great insight into implementing and practicing good security hygiene."

Prior to 2000, cybercriminals acting alone committed the majority of cybercrimes, usually in an attempt to attain notoriety within the cyber world. However, in recent years, a shift has occurred as criminals and not just amateurs are committing cybercrimes. This is due in large part to the potentially huge financial gains that can be made from the Internet with relatively little risk. The report goes on to examine the different tactics and tools used by these cybercriminals, and future areas of attack.

Some of the report's most compelling highlights include:

-- The FBI estimates that cybercrime cost about $400 billion in 2004.

-- In an investigation, codenamed "Operation Firewall," U.S. and Canadian authorities announced the arrest of 28 people from six countries involved in a global organized cybercrime ring. They operated Websites to buy and sell credit card information and false identities. They bought and sold almost 1.7 million stolen credit card numbers. Of these stolen credit cards, financial institutions have estimated their losses to be $4.3 million.
-- The use of pseudonyms or online identities provides an anonymity that is attractive to criminals. Sources estimate that perhaps only 5% of cybercriminals are ever caught or convicted.

"The McAfee Virtual Criminology Report paints a clear picture of the growing threats and criminal actions taking place via the Internet," said Jimmy Kuo, research fellow with McAfee AVERT. "It is imperative that companies, government agencies and consumers alike take notice of this expanding class of criminals and take the appropriate actions to secure their networks and personal computers."

Cybercriminals are stealing identities by extracting personal identification information or credit information from a company's database and affecting thousands of consumers. They can also extract a company's own financial information or steal valuable intellectual property. While viruses began as a means for hackers to demonstrate their prowess, they have become the leading delivery vehicle for attack by cybercriminals. The goal of many сybercriminals is to infect thousands of computers and turn them into a network of devices that have been compromised by worms or viruses and attack in unison on command. Those who succeed in creating such a
"bot-network" or "bot-net," now have access to a very powerful tool for crime. Such access has become easier, as spammers, hackers, and other cybercriminals are able to acquire or rent "bot-nets" -- some "bot-net" owners will rent
their networks for $200-$300 an hour. "Bot-nets" are crucial to executing distributed denial of service attacks, spam and phishing scams, which makes them the growing weapon of choice for fraud and extortion.

In its early stages, the Internet was designed mainly for a finite group of users who used it as a way to exchange ideas and information among a relatively small community. The value and impact of Internet activities has escalated dramatically with its continued commercialism and expansion. In 2004, e-commerce reached $70 billion in the U.S, an increase of 24% over 2003.

The report credits the growth of online banking and commerce as part of the draw for cybercriminals. It discusses the many ways that criminals take advantage of vulnerabilities in networks and computers to gain access to valuable information, such as personal identification information, financial data and intellectual property.

Growth in cybercrime is also attributed to the anonymity and global connectivity, which enables cybercriminals from all over the world to engage in traditional crimes such as extortion, drug-running or pornography on a
global stage. Simultaneously, the study reports that while cybercriminals become more advanced, today's law enforcement agencies are struggling to keep pace, as many lack the necessary tools to operate effectively in cyberspace.
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