Tactics include infiltrating a company's computer network or an employee's cellphone, stealing a file to indicate a system breach and threatening to leak sensitive documents if victims fail to agree to purchase security software of computer services from the perpetrator, Haaretz said.
The majority of victims refuse to complain to police opting to use private security firms, assuming police don't have the resources to deal with the issue, the daily said.
"It's very easy to track cellphones and infiltrate corporate networks using WiFi technology," Nimrod Kozlovski, an expert on Internet law and digital culture told the newspaper Monday.
"Penetrating employee accounts is terribly simple. And it's easy to locate passwords and documents in organizational networks, send the company a classified item, and blackmail it," he said.
He described the issue as a "plague." Police have the ability to deal with the issue but lack budget, manpower and priority, he said.
Joey Peleg of the Israeli Cyber Defense Institute told Haaretz the problem is more widespread than people realize, mainly because companies usually pay up rather than go to the police.
"Any digital system can be taken over, from a pacemaker to a car or any other electronic device, and certainly computers," he said.
A statement issued by Israel police said the officials recognize the importance of developing a system to deal with the issue.
"The development of such a system requires the allocation of many resources and we are in discussions about this issue with the Public Security Ministry," the statement read.