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.


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. 

  1. Advanced Persistent Threats (APT)

    An Advanced Persistent Threat (APT) is a large-scale, sophisticated, ...
  2. Cryptojacking

    Cryptojacking is a form of cyber attack in which a hacker hijacks a ...
  3. Cyber Identity

    Cyber identity refers to the personality or personalities that ...
  4. Form 4797

    Form 4797 is a tax form distributed by the Internal Revenue Service ...
  5. Doxing

    Doxing is the intentional act of publishing someone’s private, ...
  6. Personal Use Property

    A type of property that an individual does not use for business ...
Related Articles
  1. Investing

    Microsoft Turns to AI to Fight Cyberattacks

    Microsoft is turning to artificial intelligence in the wake of the WannaCry ransomware attacks.
  2. Investing

    Report: Microsoft Charged for 'WannaCry' Patch

    Microsoft opted to charge users for a patch that would have slowed the global ransomware attack.
  3. Insights

    Top Cyber Security Risks for Financial Advisors

    Cyber crime is on the rise. Here's what advisory firms, big and small, need to be aware of and how to prepare.
  4. Personal Finance

    How Cyber Security Risks Impact Your Bank

    Here's how cyber security risks mean for the financial industry and consumers.
  5. Investing

    13 Ways to Invest in Cybersecurity

    Rarely a week goes by without a new media story about data breaches, hacking schemes or cyber attacks impacting individuals, companies and even governments. Four top investment experts who contribute ...
  6. Financial Advisor

    Your Financial Advisory Firm Has Been Hacked. Now What?

    Taking the right steps following a cyber attack can mitigate the impact on clients.
  7. Investing

    Microsoft Word Target of Zero-Day Malware Attack

    Microsoft's Word has a new vulnerability that can enable hackers to secretly install malware.
  8. Insurance

    Do You Need Kidnap & Ransom Insurance?

    Americans working abroad – and high-profile individuals traveling frequently in kidnapping hot spots – should consider this type of protection.
  9. Insights

    Apple Denies Claim That Its System Was Hacked

    An Apple spokesperson has clarified that hackers did not obtain information on 300 million accounts from Apple's system.
  10. Insights

    6 Ways To Protect Yourself Against Cybercrime

    Cybercrime is becoming more and more serious in the U.S. Here are some ways you can protect your finances from cybercriminals.
  1. The key difference between real estate and real property

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center