The battle against White-Collar Crime: "The exponential growth of technology and the use of computers have triggered a purposeful rethinking of the tools needed by law enforcement organizations to address internet-related crime." - Law & Justice

ONE IN THREE American households are victims of white-collar crime, yet just 41% actually report it. Of those reported, a mere 21% made it into the hands of a law enforcement or consumer protection agency. This means that less than eight percent of white-collar crimes reached the proper authorities, according to the National Public Survey on White Collar Crime, a groundbreaking survey conducted by the National White Collar Crime Center (NW3C), a nonprofit, Federally funded organization that supports state and local police in their efforts to prevent, investigate, and prosecute economic and high-tech crime. For consumers and businesses alike, these statistics are unsettling as the threat of white-collar crimes invades our new, high-tech society.

Why do Americans fail to report these crimes that are costing the nation hundreds of billions of dollars every year? Our statistics show that there is a wide disparity between how people believe they will react when they are victimized and how they do so when they actually are. One reason may be that they may not have initially considered the offenses to them as crimes; they may have been uncertain about which agency to contact; or they may have a lack of faith that the offenders would be apprehended.

White-collar crimes come in many different forms, including money laundering; credit card, health care, insurance, securities, and/or telecommunications fraud; intellectual property and computer crimes; and identity theft. The growth of the information age and the globalization of Internet communication and commerce have impacted significantly upon the manner in which economic crimes are committed, their frequency, and the difficulty in apprehending the perpetrators.

According to the National Fraud Center statistics, economic crime cost the nation $5,000,000,000 in 1970, $20,000,000,000 in 1980, and $100,000,000,000 in 1990. As businesses and financial transactions become more and more computer and Internet dependent, the reality of increased economic crime grows exponentially, fueled by the rapid growth of technology.

The Federal Bureau of Investigation's Uniform Crime Reports national arrest statistics for the period 1988-97 show that, while arrests for most index crimes of violence (e.g., murder, nonnegligent manslaughter, rape) and property crimes (robbery, burglary, motor vehicle theft) have declined, those for fraud and embezzlement have risen significantly.

Considering the amount of government funding allocated to the control of "street crime" there has been relatively little money set aside for dealing with white-collar crime. This is due in part to a long-standing belief that the public is apathetic towards white-collar offenses and offenders.

The aim of the NW3C in administering the National Public Survey on White Collar Crime was to add broader and more-current information to the insights furnished by prior surveys. Rather than limiting our focus to any one aspect, we touched upon several perception dimensions to present a comprehensive picture of what the average American thinks about white-collar crime. We were interested in obtaining answers to questions such as: How serious do you believe white-collar crime is? How safe do you feel from white-collar crime? Have you or someone in your household been victimized by white-collar crime? If so, did you report the victimization? What type of person do you believe the average white-collar crime victim is? We also asked about participation in risk behaviors associated with white-collar crime victimization, perceptions of the control of white-collar crime; and opinions on workplace theft.

The results proved informative to the law enforcement community, consumer protection organizations, and victim advocacy groups, as well as to criminologists. Statistics to the contrary, the results uncovered a deep concern with white-collar crime and how effectively the criminal justice system deals with such offenses.

Upon assessing the survey results, a multi-layered picture materialized. We found the public is becoming well acquainted with theft by deception (as its victims) and tends to view the commission of such crime with an increasingly jaundiced eye. We were able to conclude that the level of victimization is high when compared to earlier studies. Relying on the survey results alone, it is difficult to explain the underlying reasons for the high incidence of victimization. The FBI's Uniform Crime Reports indicate that arrests for fraud, embezzlement, and forgery have risen nationally over the last several years. The incidence of white-collar crime victimizations culled from our survey may simply be a reflection of a rise in activity in this area. On the other hand, the number of victimizations might be a sign that the people may not be sufficiently aware of their vulnerability to being victimized.

Combating white-collar crime

Several channels have contributed to combating economic and high-tech crime:

Independent corporations and private-sector industry coalitions. As a result of limited law enforcement resources, corporations on their own or in cooperation with industry coalitions, such as BITS, the technology group for the Financial Services Roundtable, have had to initiate strategic economic crime-management plans and investigative groups. There is a growing level of frustration among these corporations, because the monetary thresholds for law enforcement even to investigate a case, let alone prosecute, can be very high, depending on the jurisdiction. Coupled with this is increased legislation requiting corporations to institute anti-fraud programs and compliance departments. While protection of corporate assets and their consumers should be their responsibility, there are several consequences to this arrangement. Many economic crimes go unreported; fewer prosecutions of these offenses occur; and perpetrators tend to be fired rather than prosecuted, leaving them free to move on to another organization and continue their victimizing.

Law enforcement. On the Federal level, numerous regulatory and law enforcement agencies are authorized to combat specific economic crimes, including the Federal Bureau of Investigation, Secret Service, Postal Inspection Service, Securities and Exchange Commission, and Customs. Local law enforcement capabilities for combating economic crime vary, depending on the size and location of the department and the allocation of resources. Some larger municipalities and state law enforcement agencies have formed economic and computer crime units. As resources, training, and awareness of the intensity of the problem increase, it is likely and necessary that more of these units will be formed.

National White Collar Crime Center. The NW3C provides programs geared to meet the specific investigative support needs of state and local law enforcement agencies in their fight against economic and high-tech criminal activity. In addition, new projects include the development of the National Fraud Complaint Management Center to leverage technology in the management of economic crime complaints. A significant part of this project is the establishment of the Internet Fraud Complaint Center in partnership with the FBI. (Learn more at www.nw3c.org.)

Internet Fraud Complaint Center. The IFCC is a resource established for law enforcement by law enforcement. For victims of Internet fraud, it provides a convenient and easy way to alert authorities of a suspected violation. For law enforcement and regulatory agencies, the IFCC offers a central repository for complaints related to Internet fraud, uses the information to quantify patterns, and provides timely statistical data of current fraud trends. The key to its success lies in its ability to relay timely and complete information to the appropriate local, state, and/or Federal law enforcement agencies. By facilitating the flow of information between law enforcement and victims of fraud, the IFCC streamlines the case initiation effort on behalf of both the victim and law enforcement agencies.

National Cybercrime Training Partnership. Developed by the Department of Justice and managed by the NW3C, the NCTP provides guidance and assistance to local, state, and Federal law enforcement agencies in an effort to ensure that the law enforcement comproperly is properly trained to address electronic and high-technology crime.

Coalition for the Prevention of Economic Crime. A nonprofit organization established in 1996, CPEC provides support services to businesses in their fight against economic crime. Its mission is to raise awareness of such offences and their impact on businesses. CPEC works closely with law enforcement through a partnership with the NW3C. Current training programs include instruction on fraud management; operational and strategic fraud management techniques; financial investigations practical skills, examination, and analysis; basic data recovery and analysis; and instruction on how to use the Internet for investigations and research.

Needs and challenges

As a nation, we are faced with an irrefutable challenge to find solutions to the growing threat of white-collar crime. Law enforcement training is key. Preventing, detecting, investigating, and prosecuting economic crimes must become a priority in order to lessen their impact on the economy and the public's confidence. Law enforcement, as it stands now, is in danger of slipping further behind highly sophisticated criminals.

Specialized training in the areas of economic and computer crime, as well as computer forensics, needs to be continued for law enforcement personnel at the Federal, state, and local levels. This is especially important as nearly all white-collar crime now involves computers.

Laws, regulations, and reporting systems are crucial solutions. In the U.S., all levels of government have allowed self-regulation of the Internet. Government regulation, for the most part, has focused on cybercrimes that are not economic ones, such as child pornography and cyberstalking. That attitude appears to be changing. There are numerous bills pending in Congress that address criminal frauds committed on the Internet, identity theft, and issues involving Internet security and attacks upon websites.

Public-private partnerships are essential in this battle. Since no one group will be able to solve the complex problems, coalitions of private and public groups must work together to combat economic and cybercrime. As more of these alliances develop, there will be added resources available to reverse the trend of economic crime. Colleges and universities need to revamp their existing programs to create new ones to meet the changing needs of society in this area.

What makes the solutions a challenge is based on several factors. First, classifying white-collar crimes is difficult. Lack of clear definitions make it hard for categories to be formed and accurate statistics kept. For example, many individuals use the term white-collar crime, financial crime, and computer crime interchangeably, thus complicating the recording methods of each crime.

Another challenge is getting law enforcement and private security professionals to take advantage of the training resources available to them. The reasons this may be occurring include insufficient funding, lack of awareness of the opportunities for training, and a shortage of appropriate staff.

Finally, a big block in the road to solving the white-collar crime threat is the fact that the public perception of fraud and its seriousness has not yet been heightened to an appropriate level of concern. Consumers, businesses, and the nation's lawmakers must be persuaded of the importance in recognizing how high-tech and economic crime affects and impacts on society.

The NCTP has conducted several focus group meetings revealing that electronic crime is having a profound effect on law enforcement and that no agency is escaping it. At the meetings, a nationwide survey of 31 state and local law enforcement representatives who impact a training base of more than 84,000 persons concluded that program coordination, fast-track initiatives implementation, and skills training are the keys to fighting this growing concern.

With a purposeful concentration on the state and local police experience, the following issues were raised during the sessions as a needs list for combating cybercrime:

* Public awareness, to educate individuals, elected officials, and businesses about the impact of electronic crime

* Data and reporting, to understand the extent and impact of electronic crime

* Uniform training and certification courses, to train the police to do their jobs

* On-site management assistance for electronic crime units and task forces, to give help in developing properly equipped computer investigation units

* Updated laws applied at the Federal and state levels, in order to keep pace with electronic crime

* Cooperation with the high-tech industry, to control electronic crime and to protect the nation's critical infrastructure

* Special research and publications, to give investigators a comprehensive directory of training and expert resources to aid them in combating electronic crime

* Management awareness and support, to help senior staffers to understand the impact of electronic crime and to support the expertise and tools needed to investigate and prosecute electronic crime cases

* Investigative and forensic tools, to provide the police with up-to-date technology and the tools necessary to conduct electronic crime investigations

* Structuring of a computer crime unit, to establish best practices on how to create a police unit that can investigate and analyze electronic evidence.

The NCTP has already begun training programs to address many of these concerns and is giving law enforcement professionals across the nation a place to turn to help consumers with the cybercrime problem. Current initiatives include the development and delivery of electronic and high-technology crime training. The NW3C has developed and deployed computer crime training in the last year alone that has benefited more than 1,400 agencies throughout the U.S. That number continues to grow.

Specialized law enforcement training has had an impact. NCTP training efforts have reached officers on the front lines, forensic specialists, detectives, prosecutors, and others in need of formal relining at either an entry or advanced level, depending on their case involvement.

The Internet Fraud Complaint Center has proven its worth to America's fraud victims, referring large and small complaints to law enforcement agencies nationwide. The IFCC conducted a takedown initiative, code named Operation Cyber Loss, which included efforts by the FBI and numerous state and local police departments. They brought charges against 90 individuals and companies, who face a variety of Federal and state criminal charges, which include fraud by wire, mail fraud, bank fraud, money laundering, and intellectual property rights violations. The schemes exposed as part of this operation represent over 56,000 victims who suffered cumulative losses in excess of $117,000,000.

The IFCC is in a unique position to identify training needs for law enforcement. The NW3C is responding to state and local law enforcement's training requests through its role as Operations Center for the NCTP. The IFCC also continues to expand its capabilities to accommodate the needs of businesses better, as it has begun the work of creating the appropriate channels that will enable regular communication with representatives from private industry across the nation. We continue to invite input from companies to refine the process of how data at the IFCC is collected and quantified.

The exponential growth of technology and the use of computers have triggered a purposeful rethinking of the tools needed by law enforcement organizations to address Internet-related crime. Law enforcement professionals have voiced their concern regarding adequate training in order to be effective in apprehending and prosecuting criminals who use the Internet to facilitate their crimes. State and local police, through their affiliation with the National White Collar Crime Center, have tasked us to help them meet this challenge.

Most individuals are unaware of the extent to which their lives, financial status, businesses, families, or privacy might be affected by electronic crime. Unless individuals, companies, and government officials are informed of the increase in crimes committed using the Internet, cybercriminals will continue to steal people's money, identities, and property.

Richard Johnston is director of the National White Collar Crime Center, Richmond, Va.

COPYRIGHT 2002 Society for the Advancement of Education
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