Internet Fraud Schemes
Over the years, there have been a number of scams that have evolved, which are designed to defraud consumers and investors. In the past, many of these fraud schemes were conducted through telemarketing, mail, or in person. The global economy available through the Internet has provided a new forum for these and other scams.
While there are new schemes appearing on the Internet, there are a number of common ones you may come in contact with. These include:
Auction and E-Commerce Fraud
One of the most common Internet fraud schemes involves online auction sites, or Web sites that sell items as retail vendors. In this scam, items are offered for sale. The item may be an expensive watch, jewelry, computer, collectibles, or other expensive goods. The victim purchases the item, but doesn't receive what he or she expected. Either nothing is delivered, or the victim receives a counterfeit or less valuable item than was promised.
Credit Card Fraud
The most common method of credit card fraud on the Internet is obtaining another person's credit card number, and then making online transactions with it. With this scheme, the credit card is used to purchase items from other Web sites, over the telephone, or other methods that don't require the physical card to make a purchase. The victim may provide the information initially purchasing something from the criminal, entering information into a form on a Web site, or any number of other methods. The criminal may max out the credit card, but this isn't always the case. Small purchases may be made, so that there is a good chance it may be overlooked by the victim when he or she reads the monthly credit statement.
Another credit card scheme involves a variation of the e-commerce or auction fraud mentioned above. In this particular scam, the criminal poses as a legitimate e-commerce site or auction seller. The criminal sells an item online at a price that's lower than normal, and offers that no payment is necessary until after the item is delivered. When a victim purchases an item, the scam goes into action. The criminal use's the victim's real name with another person's unlawfully obtained credit card number to buy that product from another e-commerce site, and has it shipped to the victim. Once the victim receives the item, he or she then authorizes the credit purchase to be completed, and the payment is made to the criminal.
There are multiple victims in this crime. The legitimate e-commerce site who delivered the item has been bilked out of the product and the money for it. All they have is the name of the person it was delivered to, and another person's unlawfully obtained credit card number. The person who purchased the item from the criminal believes the items paid for, but their name is now attached to a fraudulent transaction made with the legitimate e-commerce site. While this is being sorted out, the criminal has the money and may be victimizing other individuals and companies in this manner.
· Divorce Schemes
Offers of quick, uncontested divorces have been offered over the Internet, which allow married couples to get divorces for a relatively inexpensive fee. People are offered a divorce through a foreign country (such as the Dominican Republic), without having to visit that country or attend the proceedings. Unfortunately, these divorces may be invalid. The victims find that they are not divorced, and may not have even dealt with an actual legal service.
· Fake Diplomas and Degrees
University degrees and college diplomas have been offered for a few hundred dollars on the Internet. These offers claim that people will receive a valid diploma, degree, or doctorate from legitimate educational institutions. However, these diplomas and degrees aren't authentic, and don't qualify as actual proof of education. People who actually receive the fake diploma or degree aren't registered with the educational institution. If used to obtain employment, an employee may be fired for fraudulently representing themselves, or risk criminal charges.
· Identity Theft
In this scheme, the goal isn't to initially trick the victim, but to obtain information about the person for future scams. Personal information (such as the person's name, address, employment, credit card information, etc.) is obtained about the victim through a variety of methods. The victim may enter the information into a form on a Web site, purchase something online and provide credit payment and delivery information, or any number of other methods. In some cases, information about victims was stolen from the databases of legitimate businesses or organizations, and then used by the thief for fraudulent purposes. Using the victim's personal or credit information, the criminal can then apply for credit cards, loans, or purchase items under the victim's name. The victim may not become aware of this scam until months later when the cards are "maxed out" and payments have been stopped.
· "Nigerian" Letter Scam Advance Letter Scheme
This fraud involves issuing faxes or e-mails to random businesses. These faxes or emails claim to be from an official representing a foreign government or agency. This scheme promises the transfer of millions of dollars into the recipient's personal account, and claims there is no risk.
The business community is usually targeted by this fraud. The faxes or e-mails do not target a single company, but rather are sent out en masse. The business names are usually obtained by trade publications or mailing lists.
Although the offer appears transparent, the criminal will eventually reach someone who, while skeptical, desperately wants the deal to be genuine. It sets the stage for the rest of the scam. After responding to it, the criminal begins convincing the victim to invest money for expenses, so that the millions of dollars can be obtained. The excuses for needing the money include legal fees, customs fees, bribes, and/or other costs that will "free up" the money. This continues until the victim is broke.
· "Work at Home" Schemes
This scam offers the business opportunity to make thousands of dollars by working at home. In this scam, the victim is offered the chance to make hundreds or thousands of dollars a month by becoming a part of a money making opportunity. The victim pays to acquire a start-up package, but never receives the materials or information for the business to run properly. In other cases, the person does receive the start-up package, but there is no possible way for the business to make as much money as was promised initially.
Beware of "Too Good To Be True" Deals - Remember the old saying If it's too good to be true, it probably is! Think about why they're making the offer if it's that good a deal. After all, if there were millions of dollars to be gained, why wouldn't the person making the offer invest in getting the millions his or herself? If there are thousands of dollars a month to be made at a work-at-home business, why is this person sending email to you about it. Shouldn't they be working that the business they're pitching and making all that money? By questioning the offer and the motives behind the offer, you will be better able to avoid falling victim to a scam.
Just because a Web site looks professional, doesn't mean it is professional - Web sites may look impressive and appear to be representative of a good, legitimate company or individual. This may not be the case however. Software packages are available to setup e-commerce sites, and Web page designers can be hired to create a site. This allows criminals to look as professional and authentic as the genuine e-commerce merchants.
Be wary of individuals who hide their identities - One of the attractions of the Internet is that it allows anonymity to people, but you should beware of people who refuse to disclose who they really are. Email addresses that don't provide relevant information about the person is an indication of someone who wants to hide their true identity. For example, a person may have an email address like XYZ123@someprovider.ru. Another example would be someone who doesn't give contact names and addresses, but only provides the name of the Web site.
Avoid "Advance Fee" demands - Don't pay for an item or service before you receive it. Many companies will bill you for an item or service after its been provided to you. By avoiding payments before receiving them, there is less chance that you will pay for something you didn't want, and avoid not receiving anything at all.
Investigate the businesses you deal with - Look up information on merchants on the Internet before doing business with them, and look into offers that are made to you before agreeing to them. Information on various types of frauds are publicized on Web sites, and allow you to see whether an offer may be fraudulent. Some auction sites allow visitors to provide feedback about a seller, and may also provide fraud protection (so that if you don't receive what you want, all or a portion of your money will be returned). You can also use services like the Better Business Bureau at http://www.bbb.org/ to look up information on various businesses.