TELECOM Digest OnLine - Sorted: Internet Fraud Threatens Economy - Secret Service

Internet Fraud Threatens Economy - Secret Service

Lisa Minter (
17 Feb 2005 22:10:06 -0800

By Spencer Swartz

SAN FRANCISCO (Reuters) - Internet fraudsters, motivated by money and
armed with sophisticated technology, pose an increased economic threat
as they steal private data from companies and individuals, the
director of the U.S. Secret Service said on Thursday.

"There is no longer any doubt about that threat ... With just a few
key strokes, (online fraudsters) can disrupt our nation's economy,"
said Ralph Basham at the RSA Security Conference in San Francisco.

In addition to protecting the U.S. president, the Secret Service also
helps to protect U.S. financial institutions.

Security analysts have warned that Internet hackers, once motivated by
the thrill of shutting down computer systems, are joining forces with
organized crime groups as they seek to profit from hacking into
databases and stealing personal data through a variety of tactics,
like phishing.

Phishing scams fool users into entering sensitive information on Web
pages that look legitimate.

Basham said several law enforcement agencies in the United States and
overseas recently disrupted an online organized crime ring that
spanned eight U.S. states and six countries. Thirty people have been
arrested so far in that case.

Basham said 7 million credit card numbers had been stolen
by the crime ring, costing consumers and credit card companies
around $4.3 million, though the loses could have been up to $1
billion, he added.


Analysts have warned that the scale and speed of online threats has
increased and quickened as hackers exploit technologies like spyware.

Spyware has been one of the fastest-growing of the so-called malicious
code threats. It gathers private data by recording keystrokes and
monitoring e-mail without a person's knowledge.

But increased cooperation and information sharing between
U.S. agencies, foreign governments, technology companies and the
financial community has helped mitigate online fraud, Basham said.

Howard Schmidt, a special advisor for cyberspace security during the
first term of President Bush said companies and individuals are better
protected now than ever before and are also more aware of online fraud

But he cautioned that Internet fraudsters were increasingly targeting
less-protected small businesses rather than large companies that can
spend millions of dollars on security software to protect their
computer systems.

"We're seeing the bad guys moving down the food-chain," hitting small
businesses and credit unions, said Schmidt, whose other posts have
included security chief at Microsoft Corp.

Security analysts and technology executives said in panel discussions
and interviews at the conference this week that Internet crime will
continue, despite efforts by companies and individuals to protect

As evidence, they pointed to news this week that personal data of
thousands of U.S. consumers was stolen from a U.S.-based company.

ChoicePoint Inc. said on Tuesday that tens of thousands of
U.S. consumers faced a greater risk of identity theft after thieves
posing as legitimate businesses got access to a database of Social
Security numbers and credit histories.

ChoicePoint, based in Georgia, gathers and sells information on
millions of U.S. consumers to employers, landlords, marketing
companies and several 35 U.S. government agencies.

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