Internet Fraud Complaint Center

(IFCC)

Six-Month Data Trends Report

May—November 2000

Prepared by the

National White Collar Crime Center

and the Federal Bureau of Investigation
2

Contents

Overview....................................................................................................................3

Information About the Data .......................................................................................3

Complaint Characteristics..........................................................................................3

Perpetrator Characteristics.........................................................................................5

Complainant Characteristics......................................................................................7

Complainant-Perpetrator Dynamics...........................................................................9

Contact Method........................................................................................................10

Conclusion................................................................................................................12

Appendix..................................................................................................................13
3

The Internet Fraud Complaint Center

Six-Month Data Trends Report:

May 8-November 8, 2000

Overview

The Internet Fraud Complaint Center (IFCC) is a partnership between the National White Collar

Crime Center (NW3C) and the Federal Bureau of Investigation (FBI). IFCC’s primary mission is

to address fraud committed over the Internet. This is done by facilitating the flow of information

between law enforcement agencies and the victims of fraud, information that might otherwise go

unreported.

The 2000 IFCC Six-Month Data Trends Report is the first compilation of information on

complaints received and referred by IFCC to law enforcement or regulatory agencies for

appropriate action. The results provide an examination of key characteristics of 1) complaints, 2)

perpetrators, 3) complainants, and 4) the interaction between perpetrators and complainants.

Overall, the results are intended to enhance our general knowledge about the scope and

prevalence of Internet fraud in the United States.

Information About the Data

The IFCC began operating on May 8, 2000. Between the inception date and November 8, 2000

the IFCC web site had received more than 37.5 million visits, and 20,014 filings were made. As

of November 8, 2000, 6,087 complaints of fraud were referred to law enforcement and regulatory

agencies around the world. On average, each of these complaints was referred to four agencies for

further action (24,348 referrals). Of these referred complaints, 5,273 involved the perpetrator

utilizing the Internet. Even though the IFCC mission is to address fraud committed over the

Internet, 814 of the complaints involving only the more traditional methods of contact (e.g.

telephone & in-person visits) were also referred on behalf of the individual filing a report.

Although the information in this report does give the public a unique insight into growing

concerns over fraud, the results do have some limitations. The data presented here is derived from

referred complaints only, and may not reflect certain groups that have not reported their

victimization to any agency. IFCC analysts evaluate complaints for validity. However each

referral agency makes its own investigative determination. Additionally, complaints are received

exclusively through the Internet and, thus, results may be more representative of Internet users

than all fraud victims in general. Despite these qualifications, the report serves as both an

awareness tool for the general public and a potential information tool for groups responsible for

controlling Internet-related fraud.

Complaint Characteristics

As has been the case since the inception of IFCC, auction fraud is by far the most reported

Internet fraud, comprising nearly two-thirds of all referred complaints. Non-deliverable

merchandise and payment accounts for another 22% of complaints, and credit and debit card

fraud make up almost 5% of complaints. Other types of confidence fraud, such as home

improvement scams and multi-level marketing, as well as investment fraud, are also among the

most reported offenses. For a more detailed explanation on complaint categories used by the

IFCC, please refer to the appendix at the end of this report.
4

A key area of interest regarding Internet fraud is the average monetary loss incurred by

complainants contacting IFCC. Such information is valuable because it provides a foundation for

estimating average Internet fraud losses in the general population. To present information on

average losses, two forms of average are offered, the mean and the median. The mean represents

a form of averaging familiar to the general public; the total dollar amount of Internet fraud

complaints referred divided by the total number of Internet fraud complaints referred. Because the

mean can be sensitive to a relatively small number of extremely high or extremely low loss

complaints, the median is also provided. The median is simply the 50th percentile, or midpoint, of

all loss amounts for all referral complaints of Internet fraud. The median is less susceptible to

extreme cases, whether high or low cost.

When including non-Internet fraud complaints and complaints still awaiting referral, the mean

dollar loss was $1,259, with the total loss exceeding $12.3 million. The highest single dollar loss

reported to IFCC during this period was $366,248. The total dollar loss from all Internet-related

referred IFCC cases was $4.6 million. The mean dollar loss from Internet-related referred IFCC

cases was $894 and the median was $255. Over 17% of referred complaints involved losses of

$1000 or more with 83% representing cases of less than $1,000. Nearly one-third of all cases had

a total loss value of less than $100, and two-thirds lost under $500. For Internet fraud, the highest

dollar loss per incident is found among investment fraud victims (median loss of $500), where

larger amounts of cash are usually required up-front from the complainant. The lowest dollar loss

was found among auction fraud offenses (median loss of $233). Dollar loss amounts were not

required on the original web-based complaint form. The IFCC now requires this information on

its new complaint form, which went online January 11, 2001.

IFCC Complaint Categories-2000

64.1%

22.3%

4.8%

4.6%

1.2%

3.0%

Auction Fraud

Non-deliverable

Credit/debit card

fraud

Other types of

confidence fraud

Investment Fraud

Other 
5

Perpetrator Characteristics

The data from the IFCC also provides insight into the demographics of fraud perpetrators. Those

involved in these types of offenses tend to be individuals (as opposed to businesses), male, and

residing in some of the larger states in the country. They come from a varied international

background, with a significant representation in the U.S., Canada, and Eastern Europe. Although

the top ten states for perpetrators very closely mirrors that of complainants, there are variations.

Arizona and North Carolina have high numbers of Internet fraud offenders, the latter state having

the highest rate of overall fraud arrests according to recent UCR data. This lends some support to

the notion that the IFCC trends, while still new, are beginning to resemble those of other official

crime statistics on fraud.

Type of Perpetrator

22.1% 60.1%

17.8%

Individual Only

Individual and

Business

Business Only

Gender of Perpetrator

81.7%

18.3%

Male

Female

Percentage of Referrals by $ Loss

30.3%

35.6%

16.8%

12.4%

2.8%

1.2%

0.8%

Below $100

$100 to $499

$500 to $999

$1,000 to $2,499

$2,500 to $4,999

$5,000 to $10,000

Over $10,000
6

Top Ten States:Individual Perpetrator

2.6%

3.0%

3.2%

3.6%

4.1%

5.1%

7.1%

7.7%

8.1%

17.3%

Arizona

North Carolina

Michigan

Illinois

New Jersey

Pennsylvania

Texas

New York

Florida

California

Top Ten States:Business Perpetrator

3.0%

3.4%

3.5%

3.6%

3.7%

4.4%

6.7%

8.2%

11.9%

19.8%

Arizona

Nevada

Illinois

New Jersey

Colorado

Texas

New York

Florida

Pennsylvania

California

Top Ten Countries:Perpetrators

0.2%

0.2%

0.2%

0.3%

0.3%

0.5%

1.1%

1.3%

1.8%

92.2%

Netherlands

Germany

Indonesia

Australia

Hong Kong

United Kingdom

Romania

Ukraine

Canada

United States
7

Complainant Characteristics

The following graphs offer a detailed description of the typical Internet fraud complainant who

reports the offense through IFCC. Overall, complainants tend to be individuals (as opposed to

businesses), male, between 30 and 50 (the average age is 38.6), and reside in one of the four most

populated states: California, Texas, Florida and New York. States such as Washington and

Virginia, which are not as populated but tend to have higher proportions of technology companies

(and Internet users), round out the states in which most complainants reside. Though the majority

of complainants are individuals, it may be misleading to draw conclusions that only 1 in 10

victims reporting Internet fraud are businesses. IFCC is not yet fully set up to handle business

complaints, and therefore this group is underrepresented in the current analysis. As the IFCC

evolves to meet the needs of all victims, it is anticipated that businesses will make up a larger

proportion of Internet fraud complainants.

Type of Complainant

Individual

92.1%

Business

7.9%

Gender of Complainant

Male

71.3%

Female

28.7%

Age

3.8%

23.1%

26.6% 25.1%

16.0%

4.3% 0.9% 0.2%

Under

20

20-29 30-39 40-49 50-59 60-69 70-79 80 and

older

Top Ten States: Business Complainants

2.8%

2.8%

3.0%

3.0%

3.5%

5.1%

5.6%

8.1%

14.2%

15.8%

Colorado

Arizona

Maryland

Pennsylvania

Texas

Georgia

New York

Florida

Washington

California
8

Table 1 looks at differences between the amounts lost per incident and the various complainant

demographics. Because the overwhelming majority of referrals only consist of a handful of

offense types, there is little variance between victims and fraud type. However, the amount loss

seems, at least in part, to be influenced by a number of factors. First, businesses lose considerably

more per Internet fraud than do individuals. Males tend to lose more than females, and older

individuals tend to have a higher dollar loss than younger individuals. While there isn’t enough

information to fully understand the differences presented here, what does stand out is that Internet

fraud is costly for people from all backgrounds.

Top Ten Countries:Complainants

0.2%

0.2%

0.2%

0.2%

0.2%

0.3%

0.5%

0.5%

2.3%

94.1%

Germany

Uganda

Hong Kong

Korea

Singapore

Japan

Australia

United Kingdom

Canada

United States

Top Ten States: Individual Complainants

3.1%

3.2%

3.2%

3.9%

3.9%

4.3%

5.3%

5.6%

8.0%

15.4%

Georgia

Pennsylvania

Michigan

Washington

Virginia

Illinois

Texas

New York

Florida

California
9

Table 1

 Complainant Demographics Average (median) $ Loss per Typical Complaint

Type

Individual

Business

$255

$616

Gender

Male

Female

$330

$140

Age

Under 20

20-29

30-39

40-49

50-59

60-69

70-79

80 and older

$200

$288

$255

$235

$324

$281

$285

$610

Only one in four complainants were found to have previously sought assistance from a

government agency, and that was due in part to a higher dollar-loss incident. Interestingly

enough, the victim is much more likely to contact the perpetrator, although in the majority of

instances the perpetrator does not offer a resolution to the problem.

Have you contacted law enforcement or any other government agency

regarding this matter?

Yes: 23.4% (average dollar loss was $425)

No: 76.6% (average dollar loss was $210)

Did the victim talk to the perpetrator?

Yes: 58.1%

No: 41.9%

Did the perpetrator offer a solution to the victim?

Yes: 9.9%

No: 90.1%

Complainant-Perpetrator Dynamics

One of the components of fraud committed via the Internet that makes investigation and

prosecution difficult is that the offender and victim may be located thousands of miles apart. This

is a unique characteristic not found with many other types of ‘traditional’ crime. These

jurisdictional issues often require the cooperation of multiple agencies to resolve a given case.

Table 2 highlights this truly ‘borderless’ phenomenon. Even in California, where most fraud

seems to originate, only 22% of referred cases involve both a complainant and perpetrator

residing in the same state. Other states have an even smaller percentage of complainantperpetrator similarities in residence. These patterns seem to not only indicate ‘hot spots’ of

perpetrators (California for example) that can target potential victims from around the world, but

it appears that most complaints probably involve complainants and perpetrators that did not have

a relationship prior to the incident.
10

Table 2:

Complainant’s

State

% of Perpetrator’s From Same State (Other top perpetrator locations in parenthesis)

California

Florida

New York

Texas

Washington

Illinois

Virginia

Michigan

Pennsylvania

Georgia

 22.2 (8.0 from Texas, 7.7 from New York, 6.2 from Florida, 6.1 from Pennsylvania)

 13.3 (18.8 from California, 9.0 from Pennsylvania, 7.1 from New York, 3.8 from Texas)

 11.1 (23.8 from California, 8.7 from Florida, 6.3 from Pennsylvania, 6.3 from Texas)

 9.2 (18.7 from California, 8.4 from Florida, 8.0 from Pennsylvania, 4.0 from Arizona)

 5.8 (17.3 from California, 12.8 from New York, 5.8 from Pennsylvania, 5.8 from Texas)

 6.3 (15.1 from California, 7.8 from New York, 7.3 from Florida, 6.3 from Texas)

 4.3 (20.9 from California, 11.0 from New York, 11.0 from Florida, 8.0 from Pennsylvania)

 5.8 (13.7 from California, 9.4 from Florida, 7.9 from New York, 7.9 from Texas)

 16.0 (14.6 from California, 9.7 from Florida, 9.7 from New York, 6.3 from Texas)

 7.1 (18.1 from California, 11.0 from Florida, 7.7 from Pennsylvania, 4.5 from Delaware)

The following data provides further information on complainant-perpetrator dynamics. Email

and web pages are the two primary mechanisms by which the alleged fraudulent transactions took

place. Of particular interest is the high rate of email contact; the lucrative business of selling

personal data, including email addresses, coupled with the explosive growth of individuals with

email accounts may be contributing to this phenomenon.

Another interesting trend that has emerged is the dynamics between different contact methods.

Almost one in five complainants indicated that they had two or more different contact methods

with the perpetrator. For example, this may have involved an email followed up with physical

mail or the complainant visiting a web page. The amount lost also increased when the number of

different contact types increased. This could be due to more complex schemes, involving multiple

contacts, or situations in which complainants were asked for money on more than one occasion.

Contact Method

0.4%

0.7%

0.6%

1.1%

4.4%

19.5%

38.1%

52.9%

Fax 

In Person 

Chat Room

Printed Material 

Phone 

Physical Mail 

Web Page 

Email 
11

The next chart describes the various payment methods used by complainants. Money orders were

the most common method employed, while credit card and check payments were also common.

Debit cards, cashier’s checks, and cash make up a smaller portion of the payment methods.

Number of Contact Methods Per Complaint (Median Dollar Loss 

in Parenthesis)

81.1%

15.6%

2.7%

0.5%

1 ($250)

2 ($307)

3 ($492)

4 ($711)

Payment Method

1.4%

1.4%

5.7%

6.6%

8.3%

8.4%

17.4%

22.9%

27.9%

Cash

Bank Debit

Cashier's Check

Debit Card

Other Payment Type

Wire Transfer

Check

Credit Card

Money Order
12

Conclusion

The data suggests that the typical victim reporting to IFCC tends to be a male, in his mid 30’s,

residing in one of the more populated U.S. states, and was involved in a fraudulent online auction

transaction that resulted in the loss of over $200. While this typology might depict the ‘average’

complainant, it is important to note that anyone is susceptible to falling prey to an Internet fraud.

The IFCC has received complaints from both males and females ranging in age from ten to one

hundred years old. Complainants can be found in all fifty states, in dozens of countries

worldwide, and have been victimized by everything from work-at-home schemes to identity theft.

As online usage continues to climb, particularly among groups who are currently

underrepresented, the face of the typical victim might certainly change in the upcoming years.

With the widespread adoption of technology in the everyday activities of consumers come new

opportunities to commit fraud and other forms of computer-related criminal activity. The move to

action has been slow, due in part to the public’s lack of information regarding the prevalence and

threat of Internet crime. Exponential changes in technology, and the growth of online usage itself,

make it difficult to accurately portray the problem. The IFCC is in the unique position to meet

these needs. Through the online complaint and referral process, victims of Internet fraud are

provided with an easy way to alert authorities, at many different jurisdictional levels, of a

suspected criminal or civil violation. The IFCC Six Month Data Trends Report also serves the

public through the identification of current fraud patterns and trends. By understanding the risks,

Internet users can better protect themselves from becoming the victims of online crime.

* * *
13

Appendix: Types of Internet Fraud

Analysts at the IFCC determine a fraud type for each Internet fraud complaint received. IFCC

analysts sort complaints into one of nine fraud categories.

• Financial Institution Fraud- Knowing misrepresentation of the truth or concealment of a

material fact by a person to induce a business, organization, or other entity that manages

money, credit, or capital to perform a fraudulent activity. 1 Credit/debit card fraud is an

example of financial institution fraud that ranks among the most commonly reported offenses

to the IFCC.

• Gaming Fraud- To risk something of value, especially money, for a chance to win a prize

when there is a misrepresentation of the odds or events.2 Sports tampering and claiming false

bets are two examples of gaming fraud.

• Communications Fraud- A fraudulent act or process in which information is exchanged using

different forms of media. Thefts of wireless, satellite, or landline services are examples of

communications fraud.

• Utility Fraud- When an individual or company misrepresents or knowingly intends to harm

by defrauding a government regulated entity that performs an essential public service, such as

the supply of water or electrical services.3

• Insurance Fraud- A misrepresentation by the provider or the insured in the indemnity against

loss. Insurance fraud includes the “padding” or inflating of actual claims, misrepresenting

facts on an insurance application, submitting claims for injuries or damage that never

occurred, and “staging” accidents.4

• Government Fraud- A knowing misrepresentation of the truth, or concealment of a material

fact to induce the government to act to its own detriment.5 Examples of government fraud

include tax evasion, welfare fraud, and counterfeit currency.

• Investment Fraud- Deceptive practices involving the use of capital to create more money,

either through income-producing vehicles or through more risk-oriented ventures designed to

result in capital gains.6Ponzi/Pyramid schemes and market manipulation are two types of

investment fraud.

• Business Fraud- When a corporation, or business knowingly misrepresents the truth or

conceals a material fact.7 Examples of business fraud include bankruptcy fraud and copyright

infringement.

 

1

 Black’s Law Dictionary, Seventh Ed., 1999.

2

 Ibid.

3

 Ibid.

4

 Fraud Examiners Manual, Third Ed., Volume 1, 1998.

5

Black’s Law Dictionary, Seventh Ed., 1999. The Merriam Webster Dictionary, Home and Office Ed.,

1995.

6

 Barron’s Dictionary of Finance and Investment Terms, Fifth Ed., 1998.

7

 Black’s Law Dictionary, Seventh Ed., 1999.
14

• Confidence Fraud- The reliance on another’s discretion and/or a breach in a relationship of

trust resulting in financial loss. A knowing misrepresentation of the truth or concealment of a

material fact to induce another to act to his or her detriment.8 Auction fraud and non-delivery

of payment or merchandise are both types of confidence fraud and are the most reported

offenses to the IFCC.

 

8

 Ibid.