Online scammers could bring down the whole economy and we're totally unprepared
Life is a quest for value. You know what has value?
Real stuff. Piles of corn. Bicycles. Tickets to the Dead and Company. Hugs from children. Sweet revenge.
Your money, on the other hand, ain't worth much. It's just ones and zeroes in a computer. And even that is ludicrously easy to steal, via online fraud and scams and Ponzi schemes.
More than 15 million consumers were defrauded last year. That's one out of every 20 Americans. They stole $16 billion dollars, up 15 percent from the previous year. That's like fifty bucks being stolen from every man, woman and child.
Is America ready for the vast wave of online robbery? Signs point to no. And our unpreparedness could cripple the economy.
Theft is getting easier, with dollars disappearing like dandelion spores in the wind. Even just in the last month or so, thieves have been stealing from the Starbucks app, stealing vacation money, stealing your Groupons, scamming Uber and ransomware'ing the world.
Many of these thefts are high-tech. But more is identity theft, used in 66 percent of all attacks by hackers, where scammers use bits of information about you, pretend to be you on the phone and online, and hijack your funds.
True story: If thieves have a check from you, they can use it to open a Venmo account and steal $2,999 in minutes by transferring money from your account to theirs.
True story: Verizon will transfer control of your phone number to another person if that person knows your billing information. With control of your phone number, the scammer can ask banks and wallets to reset the password. Money in your bank account vamooses.
True story: If a scammer pretends she's your wife, companies will hand over your email address; the scammer can use this to set up fake accounts and request a password change.
Fact: Ninety percent of all email is viruses and spam, says one expert.
Will this ever stop? The banking sector — run by paunchy ex-frat boys who aren't smart enough to stop wearing wool suits in the summer — don't seem capable of securing your money. Even worse, they don't seem to care that much. Ever have money stolen from you? Most times you call the bank and they're like, "OK, no problem, here's your money back," without even investigating. Only in 2 percent of cases of fraud, one estimate says, did the consumer eat the loss. Usually, the banks, the merchants and insurance coughs up. At least in Britain, only one in a hundred cases of cybercrime are investigated per year.
That’s fine; insurance can afford it. But what if things get bigger? What if there's a theft catastrophe and bank insurance can't absorb it, the way housing insurance couldn't absorb the housing crash?
No institution seems big enough or smart enough to be safe. In 2015, it was revealed that at least $1 billion was pilfered from 100 banks in 30 countries by a hacking group, a report says. Wells Fargo was hacked. They hacked the Pentagon. Gmail accounts have been hacked, and Gmail is Google, and Google is God. If God can get hacked, what else is vulnerable? All these companies have expensive anti-hacking squads, and if the large-scale institutions that are supposed to protect us are themselves vulnerable to a few smart people with WiFi connections, it underscores how much economic ruin is possible.
The government isn't ready, either. They're understaffed and old-fashioned. Think about this fact: in Canada, online villains are pursued by the "Royal Mounted Police." Which makes you want to ask the question: are quarter horses better for catching phishers, or appaloosas? Even when you learn that the mounted police are no longer mounted, and did unveil a $4 million a year "cyber security strategy," the website looks like it was written on Wix. They'll admit they're in deep. "This is not as simple as catching the car speeding down the street," Jeff Adam, of the Royal Canadian Mounted Police told Vice.
The digital money, the cryptocurrencies, aren't ready for all this theft epidemic either. Thieves and hackers invent new currencies — Ripple? Dogecoin? GNO? — and sell them for $12.5 million. They cook up other currencies and get raided by the government. They're just tumbling invented ones and zeroes, inherently worthless, and bouncing them around the web like in a Plinko game. Some of these currencies look specifically designed to be fraudulent.
Even when the currencies are trying to be legit, the imaginary money is easier to steal than ketchup packets from a Burger King.
A new form of online money — a sibling to bitcoin — called Ethereum looked promising. But the whole endeavor blew a tire and nearly careened off the road when $50 million worth was stolen, about a third of the total worth. They had to rejigger the whole thing, and it's still all cattywampus. There's now $20 billion worth of Ethereum. What happens if a third of that gets stolen? There's no insurance on Ethereum. Thousands could lose their futures.
It's more than just fraud, though.
If you think about money for more than five minutes, your train of thought just steams out into thin air, like a cartoon train driven by Wile E. Coyote. Your money is valuable because they print it in Washington? And Washington's paper is valuable ... because the Pentagon has all those tanks?
The smartest people I know invest in real estate, in locomotives, in restaurants. Housing might boom and bust but it won't go poof or be swiped through force — at least until the proles find the pitchforks, sharpen the guillotine and declare squatter's law.
Ones and zeroes are eventually worth zero, in the long run. When the climate collapses, you'll be better off with a semi-automatic gun and some night vision goggles than you will be with a bunch of bitcoin.
Money, in the end, is worth something because people trust that it's worth something. If fraud keeps happening, and Washington keeps proving itself a nightmare in a swamp, and digital currencies don't end up being reliable or safe, what then? A crisis of confidence could ruin the whole economy. It's happened before: in Zimbabwe, in Venezuela. Their money became so devalued a wheelbarrow full won't buy you a loaf of bread.
It can't happen here? We just elected a wannabe dictator. It can happen here.
Happiness is what matters, and purpose. We're transitioning out of the Service Economy to the Experience Economy, when people pay not for things but for living. So I remind you: place stock in things of value, real things — not just corn and bicycles, but that are useful and memorable: strippers with gold hearts, well-lubed Thai massages, dogs that bark at bad people and safe recreational drugs. These cannot be scammed away.