DEFINITION of 'Extortion'

Extortion is the wrongful use of actual or threatened force, violence or intimidation to gain money or property from an individual or entity.  Extortion generally involves a threat being made to the victim’s person or property, or to his/her family or friends. While the threat of violence or property damage is commonplace in extortion, it can also involve reputational harm or unfavorable government action. Acts of extortion can range from “protection money” paid by small businesses to local mobsters, to sophisticated cyber extortion schemes targeted at hundreds of companies.

BREAKING DOWN 'Extortion'

In the United States, the Hobbs Act of 1946 prohibits actual or attempted robbery or extortion affecting interstate or foreign commerce. The extortion statute of the Hobbs Act is frequently used in connection with cases involving public corruption and commercial disputes. In order to prove a violation of Hobbs Act extortion, responses to the following points must be in the affirmative:

  1. Did the defendant induce or attempt to induce the victim to give up property or property rights?
  2. Did the defendant use or attempt to use the victim’s reasonable fear of physical injury or economic harm to induce the victim’s consent to give up property?
  3. Did the defendant’s conduct actually or potentially obstruct or affect interstate or foreign commerce in any way?
  4. Was the defendant’s actual or threatened use of force or violence wrongful?

Types of Extortion

Extortion attempts can either be one-off in nature – such as attempts by deluded individuals to extract large sums of money from celebrities – or more widespread. For example, extortion carried out in an organized manner by national crime syndicates in many nations. Blackmail is a form of extortion in which, rather than physical harm, the threat is the exposure of damaging information related to the victim. In recent years, the rapid proliferation of technology has resulted in extortion on an unprecedented scale.

On a smaller scale, such cyber extortion typically involves the use of malicious software (malware) known as ransomware, in which a person’s computer files are encrypted, rendering them unusable until a ransom in Bitcoin has been paid. Larger cyber extortion attempts are almost global in scale and have been launched simultaneously in multiple countries.

Examples of Extortion

In May 2017, a cyber attack infected tens of thousands of computers in nearly 100 nations with a ransomware dubbed WannaCry. The attack disrupted operations at automobile production facilities, hospitals and schools, with Russia, Ukraine, Taiwan and the United Kingdom among the worst affected. Cyber extortionists reportedly used a hacking tool to trick thousands of users into opening malware attachments in emails that seemed to contain legitimate files. Once this self-propagating malware or “worm” was inside the network, it silently infected other vulnerable computers.

According to Symantec, WannaCry was much more dangerous than common ransomware “because of its ability to spread itself across an organization’s network by exploiting critical vulnerabilities in Windows computers, which were patched by Microsoft in Windows 2017.” Researchers said the attack targeted Windows computers that had either not installed the Microsoft security patch, or older machines running software no longer supported by Microsoft. While the extortionists demanded payments of $300 to $600 to restore access to infected computers, since some of these payments were made in Bitcoin and many organizations do not disclose if they make such payments, the amount paid to the extortionists is difficult to ascertain. 

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