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Internet Scams - 2005-02-22

Tuesday, February 22, 2005

Forget 'kid' stuff -- organized crime's moving online Billions of dollars up for grabs through identity theft, scams

By BOB KEEFE COX NEWS SERVICE

Now that retailers, banks and just about every other sort of business have set up virtual shop on the Internet, a more nefarious industry is joining them in increasing numbers: organized crime. Not long ago, Internet crime meant teenage "script kiddies" defacing Web sites or shutting down computer servers with e-mail viruses, just to prove they could. Today, Internet crime is a multibillion-dollar business of extortion, identity theft and other sorts of fraud, run by gangs in Russia or Africa -- or potentially, from your neighbor's home office. Last week, six men with ties to the Gambino crime family pleaded guilty in New York to one of the biggest consumer-fraud cases in history. Among their crimes was a scam that siphoned $230 million from the credit cards of unsuspecting visitors to online pornography sites promising "free" peeks if visitors entered their credit card numbers, supposedly for age verification. In October, nearly 30 people in seven countries were busted as part of a global crime ring that allegedly bought and sold nearly 2 million stolen credit card numbers on illicit Web sites like other people hawk collectibles on eBay. As many as 4,000 crooks used the sites, which apparently had ties to organized-crime groups in Eastern Europe, Argentina and Sweden. Almost undoubtedly, some of the personal information stolen in the massive identity theft involving Alpharetta, Ga.-based ChoicePoint Inc. last week could make its way onto similar sites still on the Web. More than 100,000 people may have had their credit card and Social Security numbers and other information stolen from ChoicePoint, which collects consumer data and sells it to government agencies and businesses. "For computer hackers, it used to just be an intellectual challenge to hack into some businesses computer and show off what they'd done," said Brian Nagel, an assistant director at the Secret Service, which protects federal financial institutions. "But now it's about profit. They're doing it for money and nothing else." Kaspersky Lab, an anti-virus company in Moscow, estimates that as much as 90 percent of malicious code on the Internet today is written by criminals trying to steal something, not by mischievous hackers looking for virtual thrills. "I'm afraid the time of organized crime on the Internet is coming," said company founder Eugene Kaspersky. Legitimate businesses on the Internet are growing increasingly worried -- and for good reason. In a survey released last week by RSA Security Inc., about 25 percent of online shoppers said they reduced their Internet purchases last year because of security fears. Two weeks ago, in an indication of just how bad Internet crime is becoming, representatives from companies such as Dell Inc. and Microsoft Corp. traveled to Washington, D.C., on behalf of the Business Software Alliance trade group to ask the Bush administration to convene a special commission to study just what can be done to stop the organized crime wave on the Web. "If consumer confidence begins to wane -- and some studies show it may be beginning to wane -- it's going to drive consumers off the Internet," said Chris Voice, vice president of Entrust Inc., a computer security company based in Addison, Texas. Voice was among those who lobbied at the White House. If consumers start leaving the Web because of fraud fears, it could hurt the entire Internet-dependent U.S. economy, Voice said. Exactly how widespread organized crime is on the Internet is hard to measure, of course. But some say it's rampant. And while traditional crime families clearly have their hooks in the Web, other more loosely organized groups of criminals exist only because the Internet is designed to let people with common interests connect virtually -- even if their common interest is crime. "The nature of the problem is growing; it's changing," said Robert Holleyman, president of the Business Software Alliance. Last week, Holleyman's group hosted a panel discussion on organized crime at a security conference in San Francisco hosted by RSA. "This is no longer simply kids sitting in the basement trying to hack into systems," he said. "These are (criminals) whose activities pose significant economic consequences." "With just a few keystrokes, they can disrupt our nation's economy," Secret Service Director Ralph Basham said Thursday at the conference. The growth of organized crime on the Internet is simply a natural evolution that will likely get worse, said Patrick Gray, a longtime FBI agent who now is an executive with Internet Security Systems Inc. of Atlanta. New Internet-enabled devices, such as cell phones and wireless handheld computers, will open more doors for crooks to anonymously enter the Internet, Gray said. And the increasing reach of the Web will make it even harder to catch criminals in the future, he said. "Here in the States, there are resources we can use, such as issuing subpoenas for (Internet company) logs" to track suspected online crooks, Gray said. "But if you've got a hacker coming in from someplace in Kazakhstan, who do you send a subpoena to?" Gray, who spent 20 years at the FBI, said it's not surprising that many Internet criminals have links to organized crime groups in Eastern Europe, Africa and other places not typically associated with high technology. "You've got a lot of very smart people in places like Eastern Europe," he said. "But if you're an (information technology) guy in the Balkans, where else are you going to find work?" Kaspersky, who founded the antivirus company that bears his name, foresees an Internet world where criminal gangs run rampant. It may be worse that real-world crime in some ways, Kaspersky added, because Internet thieves are invisible and can virtually change locations or names or schemes anytime they like. "Just like in (real) life, some of the criminals are stupid and sooner or later they'll go to jail," he said. "But the clever guys, they will stay undetected."

EXAMPLES OF ORGANIZED CRIME ON THE INTERNET

Feb. 14

Six men with ties to the Gambino crime family plead guilty in New York to charges they bilked visitors to Internet porn sites and callers to sex, horoscope and psychic reading phone lines out of $650 million in one of the biggest consumer fraud cases in history. Prosecutors say more than $230 million was billed to credit cards of customers who visited what were billed as "free" online porn sites.

January

An illegal Web site that falsely advertised electronic copies of the latest "Harry Potter" book was shut down after it was deemed a "phishing" scam designed to trick consumers into giving up their credit card numbers. Police suspect that Eastern European organized crime gangs ran the site. In Australia, investigators infiltrated an international Internet crime ring that allegedly hired unwitting teenagers to electronically launder money stolen from online bank accounts. The ring is suspected to have connections to Russian and Malaysian crime syndicates.

December

A Massachusetts man was sentenced to 14 months in prison for allegedly running a crime ring that used eBay to sell ill-gotten store credits on the Internet. The store credits were obtained when the group returned merchandise that they had previously shoplifted from high-end retailers.

October

Twenty-eight people from eight states and seven countries were arrested for their involvement in a global Internet crime ring with ties to organized crime in Russia, Argentina and Sweden. The criminals allegedly used Web sites to traffic in credit card numbers and other personal identification stolen over the Internet, defrauding credit companies and individuals out of more than $4.3 million.

Cox News Service