Online crime costs more than drugs - but the real losses go beyond dollars

Steve Ranger's Notebook: Why it's not just about the money...

Digital crime is claimed to cost the world economy more than the global trade in illegal drugs - but the real cost can't be measured yet, says editor Steve Ranger.

Online crime is now costing more than the global drugs trade, according to some new research, which puts the amount stolen by online criminals - plus the cost of putting things right again - at about $114bn annually.

Adding in the value victims surveyed placed on time lost due to online crime, this figure hits $388bn - significantly more than the global black market in drugs, including marijuana, cocaine and heroin.

Getting down to some UK specifics, every second 19 people fall victim to some form of online crime, with viruses, credit card fraud and social network hacking the most common forms of abuse, according to the Norton Cybercrime Report in the UK.

As a result, online crime is costing the UK about £474m a year. Add the value of time wasted and the overall cost passes the £1bn mark.

It sounds like a lot of money but in many respects these numbers are too large to be useful or meaningful. To me, it's not helpful to compare the damage done by the global trade in illegal drugs, wrecking lives and undermining governments, with someone having their Facebook account hacked by their ex-boyfriend.

But in other ways the figures are useful in that they illuminate the scale of what is a hidden crime.

First, it's hidden because most of it is trivial. If a teenager loses a few pirated films because they downloaded a virus along with their stolen movies, then nobody is really going to shed a tear.

Similarly, if some malware tears up my holiday snaps, it's a major irritation - but one that I'm going to survive. And if my Twitter account gets hijacked, I'll be embarrassed but I will recover.

Also, it tends to be hidden because some unwise behaviour online is likely to put you at greater risk, which makes victims reluctant to talk. The report found that eight out of 10 people who have viewed adult content online have also suffered from online crime, compared with 67 per cent of those who said they did not view adult content online - or who might just be unwilling to admit their online habits to researchers.

Secondly, it's a hidden crime because no one will bother reporting it to the police for the simple reason that the police can't, don't and won't do anything about it.

They can't because the crooks will always be out of their jurisdiction. They don't because they have trouble working out what crime has actually been committed, and they won't because they've got plenty of other more important things to do instead. Like, maybe, arresting drug lords.

But none of this is to underestimate the pain that online crime can cause when it rises above the trivial level, especially the nastier advance-fee scams. And of course there are gangs that harvest credit card details and create botnet armies which create all sorts of havoc. But still, for the vast majority of consumers it is an irritation, because for most, their digital life is a subset of their real life.

Digital crime is actually a much bigger threat to businesses because they are so much more dependent on those digital records, and intangibles such as reputation, which can be wrecked by criminals online. And businesses are gradually getting a grip on online security, although potential new threats in the shape of smartphones and tablets are already emerging.

To me, the real problem of digital crime is one that you can't easily measure in pounds and dollars - yet. The real problem is that this kind of crime slows down the digital economy, introducing friction by raising the levels of doubt, as consumers become reluctant to use online services. It gnaws away at the essential ingredient in any relationship: trust.

If consumers and businesses aren't sure who they are doing business with online, they will be far less willing to use electronic channels. That's actually more damaging and costly in the long term and it's much harder to fix.

By Steve Ranger

Steve Ranger is the UK editor-in-chief of ZDNet and TechRepublic. An award-winning journalist, Steve writes about the intersection of technology, business and culture, and regularly appears on TV and radio discussing tech issues. Previously he was th...