Phishing Sites Threaten Online Commerce

Many of us older citizens remember when ATMs were first introduced. We were glad to take money out of the machine but reluctant to make a deposit to anything other than flesh and blood. Similarly, pioneers of online commerce had to overcome fears by many consumers about sending credit card or bank info over the Internet.

In both cases, we came to learn through experience and trust that this stuff actually works with minimal risk.

Today that trust is again under attack by the growing number of sophisticated phishing schemes, warns Tyler Moore, a postdoctoral fellow doing research on Internet crime at Harvard's Center for Research on Computation and Society.

"I think if we don't have trust and are second-guessing every transaction we do, this is definitely going to inhibit online commerce; it is going to inhibit the productive use of the Internet by society," Moore tells Harvard Magazine. "From both an economic and policy perspective, I think it is quite important that we get a grip on Internet security."
In a phishing scheme, a criminal sets up a seemingly legitimate Web site to lure unsuspecting victims into turning over private financial info such as bank account and credit card numbers. Unfortunately, security companies are taking the wrong approach to combating these crimes by refusing to share data about these sites with each other, Moore says. Meanwhile, each active phishing site claims 20 victims per day.

Coordinating security efforts could reduce phishing crimes by half, Moore estimates.

Crime By The Numbers
How prevalent is phishing?

According to a report by the Internet Crime Complaint Center (IC3) complaints of online crime including phishing attacks hit a record high in 2008.

  • IC3 received 275,284 complaints, up 33% over 2007.
  • Online fraud resulted in a $265 million dollar loss, about $25 million more than the previous year.
  • The average individual loss amounted to $931.
The numbers don't sound overwhelming, but the trend lines suggest this type of crime will become increasingly prevalent and make more headlines in the years to come, causing new worries about online transactions in the populace.

Don Brackman, director of the National White Collar Crime Center, sums up the problem this way:

''The report demonstrates that in a technology driven global market, the inability of consumers to distinguish between legitimate and fraudulent activities poses a serious threat to our economy. The financial losses that result have an impact on each and every one of us.''
Related reading: How to Instill Consumer Trust and Confidence in Your Web Site (BNET)