Media Centre
Fraud Updates
PCB News
Fraud Updates 2003
12 November
It was reported earlier today that organised gangs of criminals are using the threat of hacking to extort money from companies in the UK. The organised gangs thought to be based in Eastern Europe, have been targeting online companies and costing those companies millions of dollars in lost business.
The National Hi-Tech Crime Unit is currently investigating how a betting site was disabled. The site later received a threat that it would suffer similar attacks unless it paid thousands of pounds. One UK company was reported to be losing up to £1million a day in business following attacks. More than a dozen offshore gambling sites serving the US have also been attacked. Site owners have been asked to pay up to $50,000 to prevent attacks over the course of the next year. This is an example of hacking and the Internet being used to carry out the modern day protection racket.
Online companies must take the appropriate steps to try to ensure that their networks and data are secure from hackers and cyber criminals. Failure to take appropriate steps may involve an infringement of the Data Protection Act 1998. If payments are made to organised criminal gangs company directors may find that they have failed in their duty to act in the best interests of the company by preserving its assets.
10 November
It has been reported that the Serious Fraud Office (SFO) is targeting possible fraud and price fixing of generic drugs sold to the NHS by the pharmaceutical industry. Price fixing is thought to cost the NHS as much as £2billion per annum. The SFO will mount criminal investigations into the alleged cartel arrangements under the Enterprise Act. The investigation is the biggest ever carried out by the SFO and no charges have yet been brought.
One set of civil proceedings has already been commenced. The Department of Health are claiming damages of approximately £29 million as a result of alleged price fixing relating to the drug known as Warfarin. A second civil suit may also be commenced in respect of penicillin.
If an individual is convicted of a cartel offence under the Act he can face up to five years imprisonment and an unlimited fine. Some believe that companies and individuals will inform on each other in order to secure leniency. It is thought that the possibility of criminal charges together with this increased prospect of being caught will result in a deterrent effect. However the SFO has a limited budget with which to prosecute fraud. Legislation is only useful if enforcement agencies have the resources to use it. Organisations may find that they are more likely to recover fraud losses by commencing civil proceedings.
6 November
It has been reported that Microsoft is now offering a reward to catch the writers of computer viruses Blaster and SoBig. Currently three virus writers face prosecution in relation to the variants of the Blaster virus including an 18 year old US citizen and a Romanian. The SoBig and Blaster viruses caused global havoc when released earlier this year. In particular the Blaster virus attacked Microsoft's website with the intention of preventing the company from distributing patches to secure users' computers.
Virus attacks have reportedly led to attempts by some victims in the US to bring class actions against Microsoft, holding the company responsible for the losses caused by the virus. Software companies generally attempt to exclude such liability in their standard contracts. Attempts to exclude liability in the UK may be subject to the Unfair Contract Terms Act which requires certain standard contract terms to be reasonable.
It may be possible to bring civil proceedings against third parties for the losses caused by a cyber criminal. This may be the case where a software company has left holes in the security system it has provided for an organisation's computer network.
| December 2003 | October 2003 |