New Fed Center Targets Internet Fraud

The U.S. Department of Justice today announced a new center where the U.S. Federal Bureau of Investigation and other authorities will collect and analyze consumer complaints about suspected fraud on the Internet.

Attorney General Janet Reno said the FBI and the National White Collar Crime Center (NW3C) have created the Internet Fraud Complaint Center (IFCC), along with a secure Web site at http://www.ifccfbi.gov, to assist people who fall victim to con artists, illegal get-rich-quick schemes and other criminals who use the Internet to advance their operations.

The goal of the center is to provide a "one-stop shopping approach" to identifying Internet fraud, including such things as online auctions of bogus items and undelivered computer hardware and software that's ordered at a Web site, and referring them to the proper agency for prosecution, Reno said at a news conference at the Justice Department.

"Law enforcement authorities have told us they need a nationwide method to gather and review these types of Internet-related complaints," Reno said. "The center is that stop on the information superhighway where law enforcement and consumers can meet and can make the roads safer for us all."

The number of schemes is growing, according to Reno. Last year, Americans filed nearly 18,000 complaints with the Federal Trade Commission (FTC) about various types of Internet consumer fraud, and on a daily basis they file 200 to 300 complaints about possible securities fraud schemes on the Internet with the U.S. Securities and Exchange Commission (SEC), Reno said.

The IFCC's role will be to pursue crimes in which a computer is used as a tool to facilitate an illegal activity taking place at a Web site, in an Internet chat room or through e-mail, said Ruben Garcia, the FBI's assistant director in charge of the criminal division.

That will differentiate its work from the National Infrastructure Protection Center (NIPC), another federal operation whose task is more security-related.

For example, the NIPC, which is part of the FBI, tracks the activity of hackers, including denial of service attacks, which can cripple Web sites by overloading them with e-mail messages.

Authorities need a nontraditional approach to get control of fraud perpetrated on the Internet because it is easy for scammers to remain anonymous and because of the difficulty of determining the origin of a fraudulent Web site, Garcia said. Garcia admitted that other agencies, including the SEC and the FTC, have ongoing efforts to identify fraud, but he said they are doing a limited amount to log complaints.

"The development of the IFCC as a central repository for the Internet fraud complaints is essential in order to gain a complete understanding of this crime problem," Garcia said. "The IFCC will identify, track and assist in the prosecution of fraudulent schemes being perpetrated on the Internet on a national and an international level."

Though the FTC also has a project aimed at tracking down fraudulent schemes on the Internet [See "FTC Announces Results of Internet Fraud Sweep," March 23], the IFCC will encourage more cooperation between federal, state and local law enforcement agencies and help the FBI play a more pivotal role, Reno said.

The fight against cyber fraud will also require efforts from other countries, including the development of common legislation, Reno added.

"It is import to recognize that we can't solve the problem just from the United States," she said. Justice ministers of the eight largest industrialized nations already have met to discuss common legislation and processes to bring criminals to justice, she added.

The IFCC's office is in a federal facility in Morgantown, West Virginia. A total of 12 FBI officials eventually will be employed there, as well as 25 NW3C employees. It will receive between $5 million and $6 million from the $12 million annual budget of the NW3C.

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More about Department of JusticeFBIFederal Bureau of InvestigationFederal Trade CommissionFTCInternet Fraud Complaint CenterNIPCSECSecurities and Exchange Commission

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