The Economics of Online Crime

Criminal networks have emerged with online black markets where criminals trade with each other. Thieves steal PIN data and sell these to brokers, who in turn sell the credentials to cashiers that launder the money. Examines data on online crime, discusses the collective action problem applied to this case, describes the international nature of the problem, and offers ways to improve law enforcement. Concludes that significant improvements in the way we deal with online fraud are feasible. Estimates the overall loss suffered by the banking sector. Looks at security economics, phishing and electronic crime. Banks' trade associations can cooperate and target laundrymen, who attack the business as a whole. Banks could also share data and information, while policemen should focus efforts on phishing operations. The key to enforcement is understanding the economic incentives faced by different players in the online crime game.