Netsafe boss says NZers losing $150m a year to cybersfraud; names the most successful scams

New Zealanders could be losing $150 million a year to cyberscams, NetSafe executive director Martin Cocker tells NBR.

Today, the non-profit - which draws funding from the government, the police and InternetNZ, among others - released figures showing Kiwis have reported losses of $4.4 million to online fraudsters over the past 12 months.

That was nearly four times the $982,000 in losses to cyberscamsters reported to NetSafe in the prior year as the number of reported incidents rose from 1549 to 3317 (including 516 where money was actually handed over - double last year's number).

Mr Cocker's take is that "There appears to be a modest growth in general reporting which probably reflects a growing awareness of [NetSafe's reporting site] theorb.co.nz."

"The primary reason report numbers on the ORB have tripled is that we have taken on responsibility for handling reports for Consumer Affairs," the NetSafe boss says. 

Est $150m total losses
"It seems obvious most cyber crime incidents go unreported," Mr Cocker tells NBR.

"The critical question is 'How many?'"

The 2012 NZ Statistics Household Labour Force Survey found that 4% of New Zealanders (about 113,000 people) have experienced cyber crime, Mr Cocker says.

"If you overlay the reported numbers - and apply an average reported loss to The Orb of $1330 (being the total financial losses divided by the total number of reports) - then the estimated total losses would be just over $150 million."

Inheritance scam takes top honours
Of reported online scams, seven involved losses of more than $100,000.

Last year, the biggest hit was taken by a lonely heart cheated out of $250,000 in anline dating scam.

This year, the most money - $1.5 million - was lost to an inheritance advanced-payment scam.

But despite slipping to second, dating scams still accounted for a record $1.3 million (again, allowing for the fact some reporting is now being shuffled over from Consumer Affairs).

Other popular scams
Investment scams accounted for $370,000.

The largest number of reports though came under the online trading category - more than 350 people reported losing money when purchasing goods online.

Facebook buy-and-sell pages abused
“Lots of buyers have suffered at the hands of scammers operating on popular buy and sell pages established on the Facebook platform,” Mr Cocker says.

“Individuals can easily create a profile on a local Facebook group, list items for sale and give a buyer their bank details. We've had many people report losing money when the cheap iPhone or clothes they've sent payment for has failed to arrive and the seller has disappeared, blocked them from the page or ignored all messages.”

Some online shoppers have also suffered when buying goods from little known ecommerce websites where companies have taken money and not delivered. This includes sites operating with a .co.nz domain name which are actually run from overseas. It pays to spend a few minutes researching any company you are thinking of buying from to see what other customers are saying.

Naked chat sessions recorded
A new scam that has been reported for the first time this year puts a technological spin on blackmail, NetSafe says.

Some internet users have reported taking part in naked video chat sessions only to find their activities have been recorded. The other party then threatens to upload the footage to YouTube or share it on social networking sites unless money is paid.

NetSafe received reports of up to $600 being sent to blackmailers believed to be located as far afield as the Philippines and Morocco. “It’s a very difficult situation to find yourself in – we’ve had users afraid of friends and family seeing the videos or losing their jobs. Once an initial sum has been sent through, the requests for more money keep coming,” said Martin Cocker.

Ransomware and hacked websites
Ransomware – where a security hole in your computer allows a cyber criminal to lock you out of your machine and demand payment – has been a common scourge for both home and small business internet users this year. A fake warning from ‘New Zealand Police’ that you have downloaded copyrighted material or been looking at child pornography is designed to scare you into paying a $100 ‘fine’.

Hacked websites and compromised email accounts were also high on the list of reports - NetSafe has free advice on common threats targeting both consumers and businesses on the Security Central website. Visit www.securitycentral.org.nz and learn about the NZ Phishing Species at www.securitycentral.org.nz/phishing.

Help and advice from NetSafe

You can report your concerns about online incidents in one central location at www.theorb.org.nz. NetSafe will direct your report through to the partner best able to investigate or advise you. For preventative computer security advice visit www.securitycentral.org.nz.

The Consumer Fraud Working Group (MBIE’s Consumer Affairs team, the Department of Internal Affairs’ Electronic Messaging Compliance unit and NetSafe) earlier this year created a new guide to help seniors avoid online scams (www.consumeraffairs.govt.nz/scams/faw2013). The group publishes regular alerts on its Facebook page at www.facebook.com/FraudInfo.

Consumer Affairs' ScamWatch site has advice on what to do after you realise you've been scammed.