Internet Fraud Explained

To express it generally, Internet Fraud is any fraud scheme that uses the one or more components of the Internet.  Websites, chat rooms, emails, message boards and even instant messaging facilities are some of the many components of the Internet used to conduct Internet fraud these days.  Unfortunately, due to the speed at which the internet and all of its increasing capabilities are expanding it is getting increasingly difficult to keep up with the Internet scams out there.

According to the FBI, “Internet auction fraud was by far the most reported offense, comprising 44.9% of referred complaints. Non-delivered merchandise and/or payment accounted for 19.0% of complaints. Check fraud made up 4.9% of complaints. Credit/debit card fraud, computer fraud, confidence fraud, and financial institutions fraud round out the top seven categories of complaints referred to law enforcement during the year.”  

Effectively, this means that almost ½ of the fraud complaints out there originate from Internet transactions.  Of the Internet fraud present out there, some of the main types include the following:

Credit Card Schemes - Involves the use of fraudulent or illegally obtained credit card numbers to purchase services or goods on the internet.

Investment Schemes - Involves the use of the internet, spam emails and fraudulent company information to inflate or deflate the stock price of a public company in order to profit without the Buyer or Seller being aware.  

Identity Theft - Involves using the personal details of someone other than you without the knowledge of said person to obtain funds whether they are through credit card applications, bank loans or other.

Business Opportunity - Involves the promoting of a business opportunity scheme (typically “Work from Home” scheme to exact monies from unknowing victims for business materials or information to enable the Work from Home experience but fail to deliver said information in the end.

Auction / Wholesale - Auction and Wholesale purchase scams are some of the most prevalent scams operating currently.  Typically these schemes offer seemingly unbelievable prices for quality genuine goods but often either fail to deliver or deliver counterfeit goods instead, if at all.

Whilst it is becoming increasingly difficult to avoid internet fraud, particularly if you are firm on getting the best deal ever, there are a few measures that you can take when approaching your transaction online.  


Reducing Internet Auction Fraud

-    Read and understand entirely the details of the auction, how payments work and all costs involved.  All facets of the transaction should be understood before you make your first bid.
-    Learn about the buyer protection offered by both the site and the Seller.  If you are unsure about any of the procedures then email the respective party involved and keep the correspondence as your proof incase problems arise and they need to be provided.
-    Gather as much information as possible about the Seller. eBay and similar auction websites often provide the facility to obtain Seller information once you have won the auction, but it is often better (if possible) to obtain this information before you place your first bid.  Check with country relevant authorities for business registration information.
-    If possible, use a payment method that offers you levels of security including chargebacks and refunds.  Major credit cards and similar payment facilities such as 2CheckOut and PayPal offer facilities to dispute purchases and assist in payment recovery.  
-    Escrow services can provide incredible peace of mind when dealing with larger transactions due to payments being held until the satisfaction of the Buyer ultimately releases the funds.  


Reducing Business Fraud

-    Typically regarded as Wholesale fraud, this business to business fraud occurs when a smaller business attempts to purchase significantly reduced-priced stock from a larger Company with infinitely greater “buying power”.
-    Research the company you are intending to trade with.  Be sure to read through as much information as possible about the company obtained through your search engine results.  Be careful to discriminate between useful information and those posted by merciless competition as you may be missing on a genuine good deal.  Overall, if you find yourself presented with several instances of “business fraud”, chances are you might be next if you proceed further.
-    Be weary of businesses operating with free email addresses.  This is not to say that they aren’t legitimate, just proceed with caution.  Most successful businesses with developed websites will often have their own domain in their email address, and not and hotmail or yahoo extension.
-    Once you find contact information of a business, try to communicate with them along these channels to be sure that they are active and not simply random numbers or email addresses included in an attempt to alleviate your anxiety before you purchase.


Reducing Investment Fraud

-    Do your research before investing in a company.  Check with the relevant authorities as to the legitimacy of the enterprise, the Website alone is not enough.  
-    Be wary of unscrupulous emails claiming to provide any kind of opportunity to make money.  Scammers well versed in the art of conning you out of money will often request only a small amount at first.  
-    If you are thinking of investing your hard earned money into the cause, be sure you acquainted with all of the terms and conditions of the investment.  The investment may turn out to be real but you may ultimately receive much less than expected due to the clauses in the terms and conditions.


Reducing Credit Card Fraud

-    Do a background check on the site you are purchasing from before you enter in your details.
-    Check to see if the site is secure on the page you are entering your credit card details on – usually indicated by a padlock in the right-hand corner of your web browser.  
-    Verify the business information provided by the company in their contacts page. Check to see whether they have an actual physical address, phone numbers and valid email address.
-    If possible, use a payment method that offers you levels of security including charge backs and refunds.  Major credit cards and similar payment facilities such as 2CheckOut and PayPal offer facilities to dispute purchases and assist in payment recovery.  
-    If any part of the transaction appears questionable you should contact your card provider immediately so they can monitor the transaction.


In the unfortunate instance that you are adversely affected by a fraudulent internet based scam, you can file a complaint online directly with the Internet Fraud Complaint Center (http://www.ifccfbi.gov) – a joint initiative by the FBI and the National White Collar Crime Center.  


As frightening as I may have made it appear to trade on the internet, there are definitely bargains to be found.  With effectively billions (if not trillions) of dollars traded as a result of internet transactions daily, there are certainly profits to be made out there. Remember, if a transaction looks too good to be true, it usually is.  Always proceed with caution.

Article Resource: http://www.moshenarte.com/business_articles/internet_fraud_explained/

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