Internet Fraud

An Internet fraud (online scam) is the use of Internet services or software with Internet access to defraud victims or to otherwise take advantage of them; for example, by stealing personal information, which can even lead to identity theft. Internet services can be used to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or to others connected with the scheme. Research suggests that online scams can happen through social engineering[1] and social influence. It can occur in chat rooms, social media, email, message boards, or on websites.[2]

Counterfeit postal money orders

According to the FBI, on April 26, 2005 Tom Zeller Jr. wrote an article in The New York Times[3] regarding a surge in the quantity and quality of the forging of U.S. postal money orders, and its use to commit online fraud. Small Internet retailers, classified advertisers and individuals contacted by defrauders online are victims of this fraudulent activity.[]

In the United States of America, the penalty for making or using counterfeit postal money orders is up to ten years in jail and/or a $25,000 fine.[4]

Online automotive fraud

A fraudster posts a nonexistent vehicle for sale to a website, typically a luxury or sports car, advertised for well below its market value. The details of the vehicle, including photos and description, are typically lifted from sites such as Craigslist, AutoTrader.com and Cars.com. An interested buyer, hopeful for a bargain, emails the fraudster, who responds saying the car is still available but is located overseas. Or, the scammer will say that he is out of the country but the car is with a shipping company. The scam artist then instructs the victim to send a deposit or full payment via wire transfer to initiate the "shipping" process. To make the transaction seem more legitimate, the fraudster will ask the buyer to send money to a fake agent of a third party that claims to provide purchase protection. The unwitting victims wire the funds, and subsequently discover they have been scammed. In response, auto sales websites often post warnings to buyers, for example, those on Craigslist which warn not to accept offers in which vehicles are shipped, where funds are paid using Western Union or wire, etcetera, requesting those postings to be flagged as abuse.[5]

Re-shippers

Re-shipping scams trick individuals or small businesses into re-shipping goods to countries with weak legal systems. The goods are generally paid for with stolen or fake credit cards.

Online auction and retail schemes

In an online auction scheme, a fraudster starts an auction on a site such as eBay or TradeMe with very low prices and no reserve price, especially for typically high priced items like watches, computers, or high value collectibles. The fraudster accepts payment from the auction winner, but either never delivers the promised goods, or delivers an item that is less valuable than the one offered--for example, a counterfeit, refurbished, or used item. According to data from law enforcement and consumer protection organizations, fraudulent schemes appearing on online auction websites are among the most frequently reported form of mass-marketing fraud.[6]

Online retail schemes involve complete online stores that appear to be legitimate. As with the auction scheme, when a victim places an order through such a site, their funds are taken but no goods are sent, or inferior goods are sent.

In some cases, the stores or auctioneers were once legitimate, but eventually stopped shipping goods after accepting customer payments.

Sometimes fraudsters will use phishing techniques to hijack a legitimate member accounts on an online auction site--typically an account with a strongly positive online reputation--and use it to set up a phony online store. In this case, the fraudster collects the money, while ruining the reputation of the conned eBay member. When victims complain that they have not received their goods, the legitimate account holder receives the blame.

A more subtle variation of online auction fraud occurs when a seller ships an item to an incorrect address that is within the buyer's ZIP code using the United States Postal Service's Delivery Confirmation service. This service does not require the recipient to sign for the package, but offers confirmation that the Postal Service delivered the package within the specified ZIP code. The item shipped is usually an empty envelope with no return address and no recipient name, just a street address different from that of the victim. The delivery of the envelope with the Delivery Confirmation barcode attached suffices for the Postal Service to record the delivery as confirmed. The fraudster can then claim the package has been delivered, and offer the Delivery Confirmation receipt as proof to support the claim.

Dating fraud

With dating fraud, often the con artist develops a relationship with their victim through an online dating site and convinces the victim to send money to the fraudster. The requests for money can be a one-time event, or repeated over an extended period of time.

Although online dating has its dangers, three major dating services, eHarmony; Match.com and Spark Networks, have all agreed to take steps to keep their members safe from common online dating dangers.[7] These steps include: checking registered members against the national sex offender data base, including ongoing tips and guides on how to meet that special someone in person in a safe way, ongoing tips and guides on how to safely interact with other members so as to avoid fraud and rapid abuse reporting systems so members can report abuse or suspected fraud as it happens, allowing the companies to take swifter action.

A new term in dating fraud is "catfish", referring to "a person who creates a false online identity in the hopes of luring people into romantic relationships."[8]

Charity fraud

The scammer poses as a charitable organization soliciting donations to help the victims of a natural disaster, terrorist attack (such as the Sept. 11 World Trade Center attack), regional conflict, or epidemic. Hurricane Katrina and the 2004 tsunami were popular targets of scammers perpetrating charity scams; other more timeless scam charities purport to be raising money for cancer, AIDS or Ebola virus research, children's orphanages (the scammer pretends to work for the orphanage or a non-profit associated with it), or impersonates charities such as the Red Cross or United Way. The scammer asks for donations, often linking to online news articles to strengthen their story of a funds drive. The scammer's victims are charitable people who believe they are helping a worthy cause and expect nothing in return. Once sent, the money is gone and the scammer often disappears, though many attempt to keep the scam going by asking for a series of payments. The victim may sometimes find themselves in legal trouble after deducting their supposed donations from their income taxes. United States tax law states that charitable donations are only deductible if made to a qualified non-profit organization.[9] The scammer may tell the victim their donation is deductible and provide all necessary proof of donation, but the information provided by the scammer is fictional, and if audited, the victim faces stiff penalties as a result of the fraud. Though these scams have some of the highest success rates especially following a major disaster, and are employed by scammers all over the world, the average loss per victim is less than other fraud schemes. This is because, unlike scams involving a large expected payoff, the victim is far less likely to borrow money to donate or donate more than they can spare.[10]

Internet ticket fraud

A variation of Internet marketing fraud offers tickets to sought-after events such as concerts, shows, and sports events. The tickets are fake, or are never delivered. The proliferation of online ticket agencies, and the existence of experienced and dishonest ticket resellers, has fueled this kind of fraud. Many such scams are run by British ticket touts, though they may base their operations in other countries.[11]

A prime example was the global 2008 Beijing Olympic Games ticket fraud run by US-registered Xclusive Leisure and Hospitality, sold through a professionally designed website, www.beijingticketing.com, with the name "Beijing 2008 Ticketing".[12] On 4 August it was reported that more than A$50 million worth of fake tickets had been sold through the website.[13] On 6 August it was reported that the person behind the scam, which was wholly based outside China, was a British ticket tout, Terance Shepherd.[14]

Click fraud

Click fraud occurs when websites that are affiliates of advertising networks that pay per view or per click use spyware to force views or clicks to ads on their own websites. The affiliate is then paid a commission on the cost-per-click that was artificially generated. Affiliate programs such as Google's AdSense pay high commissions that drive the generation of bogus clicks. With paid clicks costing as much as US$100[verification needed] and an online advertising industry worth more than US$10 billion, this form of Internet fraud is on the increase.[15]

Internet "system" fraud

When reached by telephone, you are asked if you are (first name, then family name) and expected to reply as if it were anyone asking. What follows is designed to project an "authoritative message." It has been reported the caller says, "We are calling from Microsoft® Division 35." (or similar pronouncement)

"This serves as official notification that your computer has been spreading a virus which must be stopped. It has caused corruption up-and-down the Internet damaging servers; thus coming to the attention of Microsoft® engineers, in this corrective and disciplinary department. Failure to comply carries stiff monetary damages and punitive legal measures." This is followed with a vigorous message that you may employ the caller to take the necessary corrective action for you at a cost. Needless to say your money will be lost; also you risk losing your identity and other assets which can be attacked.

Variations of the message has been heard; assuredly it is all quite false. Microsoft® does not call "anyone" about the Internet. It is not even within their purview. If such happened indeed, it would likely be Cisco® Systems and they would send officials personally. Moreover, such things do not occur as stated.

If you recognize language dialects they are identifiable as being the "Indian Continent" dialect. To avoid repetitive calls, just hang up. Hearing lengths of the message is reported by one recipient as occurring monthly for over a year.[16]

Email spoofing

Sender data shown in emails can be "spoofed", displaying a fake return address on outgoing email to hide the true origin of the message, therefore protecting it from being traced. The Sender Policy Framework protocol helps to combat email spoofing.[17]

Short-selling or "scalping" schemes

A short-selling scheme is similar to the "pump-and-dump" scheme. The swindler disseminates false or fraudulent information through the same methods, but this time with the purpose of causing dramatic price decreases in a specific company's stock. Once the stock price falls to the desired level, the fraudster buys the stock (or options on the stock), and then reverses the false information--or just waits for the effects of the fraudulent information to wear off with time, or be disproved by the company or the media. Once the stock goes back to its normal level, the criminal sells the stock or option at a profit.[18]

See also

References

  1. ^ Muscanell, Nicole; et al. (2 July 2014). "Weapons of Influence Misused: A Social Influence Analysis of Why People Fall Prey to Internet Scams". Social and Personality Psychology Compass. 8: 388-396. doi:10.1111/spc3.12115. Retrieved 2016. 
  2. ^ "Be Scam Smart". bescamsmart.com. 
  3. ^ Tom Zeller Jr (April 26, 2005). "A Common Currency for Online Fraud: Forgers of U.S. Postal Money Orders Grow". New York Times. 
  4. ^ http://www.cybercops.com/counterfeit_postal_money_orders.php
  5. ^ craigslist - cars & trucks
  6. ^ Mass Marketing Fraud: The U.S Department of Justice
  7. ^ Attorney General Kamala D. Harris Announces Agreement to Strengthen Consumer Protections for Users of Online Dating Websites | State of California - Department of Justice - Ka...
  8. ^ "Online Dating Red Flags: Warning Signs of a Catfish". Dr. Phil.com. Retrieved 2014. 
  9. ^ http://www.irs.gov/pub/irs-pdf/p526.pdf
  10. ^ "Scam Watch - Nigerian Scams". Scam Watch - Australian Government. 12 May 2016. 
  11. ^ Jamie Doward (2008-03-09). "How boom in rogue ticket websites fleeces Britons". The Observer. London. Retrieved 2008. 
  12. ^ "USOC and IOC file lawsuit against fraudulent ticket seller". Sports City. Retrieved 2008. 
  13. ^ Jacquelin Magnay (4 August 2008). "Ticket swindle leaves trail of losers". The Sydney Morning Herald. 
  14. ^ Kelly Burke (6 August 2008). "British fraud ran Beijing ticket scam". The Sydney Morning Herald. 
  15. ^ Acohido, Byron (26 April 2010). "Cybercriminals increase Internet advertising click fraud". USA TODAY. Retrieved . 
  16. ^ Personal experiences of an AT&T® subscriber in Kansas, USA. 2014-2017
  17. ^ Gantz, John; Rochester, Jack B. (2005). Pirates of the Digital Millennium. Upper Saddle River, NJ 07458: Prentice Hall. ISBN 0-13-146315-2. 
  18. ^ Yun, Michelle. "Olam Survives as Short-Seller Block Proves Investors' Friend". BLOOMBERG L.P. Retrieved 2013. 

External links


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