The Simple Economics of Cybercrimes
IEEE Security and Privacy
EMBER: a global perspective on extreme malicious behavior
Proceedings of the Seventh International Symposium on Visualization for Cyber Security
Electronic Commerce Research
From Young Hackers to Crackers
International Journal of Technology and Human Interaction
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Introduction The meteoric rise in cybercrime has been an issue of pressing concern to our society. According to Federal Bureau of Investigation (FBI), nine out of 10 U.S. companies experienced computer security incidents in 2005 which led to a loss of $67.2 billion. A survey conducted by IBM found that U.S. businesses worry more about cybercrimes than about physical crimes. Internet-related frauds accounted for 46% of consumer complaints made to the Federal Trade Commission (FTC) in 2005. Total losses of Internet fraud victims reporting to FTC increased from $205 million in 2003 to $336 million in 2005. In a July 2007 interview with USA Today, McAfee CEO reported that his company received 3,000--5,000 threat submissions per day from customers and 10% of them were new. This paper offers an economic analysis to explain cybercrimes' escalation. We define cybercrimes as criminal activities in which computers or computer networks are the principal means of committing an offense. Examples include cyber-theft, cyber-trespass, cyber-obscenity, critical infrastructure attacks and cyber-extortions.6 The most notable features of the cybercrime environment include newness, technology and skill-intensiveness, and a high degree of globalization. Factors such as a wide online availability of hacking tools, information sharing in the cyber-criminal community, availability of experienced hackers' help to less skillful criminals and congestion in law enforcement systems produce externality effects within the cyber-criminal community as well as across society and businesses. We focus on three positive or self-reinforcing feedback systems to examine increasing returns in cybercrime related activities. In this article, we first provide an overview of the positive feedback loops that reinforce cyber-criminals' behavior. Then, we describe mechanisms associated with externality in cybercrime related activities.