Internet Fraud Threatens Economy - Secret Service

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 risks.

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 themselves.

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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