The Internet is
a wonderful gift for mankind. It is wonderful
and unique not because of the technological marvel
of connecting 160 million servers or seamless
surfing across continents - but the real strength
of Internet is the people in front of those billions
of computers who can interact with each other
and build a society free from geographical, physical
and political barriers. It is a unique experience
in the history of mankind and is set to bring
about fundamental changes in our life including
how we do business.
Unfortunately, the ability to roam anonymously
in a borderless world has also given fraudsters
and scam artists a new tool to trick and defraud
more people across the continents - a huge scope
to scale up their operation.
It is extremely important that we understand
how this new generation of fraudsters and con
artists defraud people so that we remain ever
alert.
What is Internet Fraud ?
The age old principle of playing on greed to
defraud people remains same - fraudsters have
adopted new techniques. The term 'Internet Fraud'
generally refers to any type of fraudulent scheme
or scam that uses one or more components of the
Internet, e.g. e-mail, chat, bulletin board, websites,
auction etc.
Internet Frauds are more dangerous than ordinary
crimes as they can affect far more people in far
less time than was possible with many fraud schemes
in the past.
How Large is the Rip-Off ?
The size of Internet fraud is, in all probability,
much larger than you think. In the absence of
worldwide scam reporting and policing system -
it is extremely difficult to assess actual size
of the scam but sectoral or geographical studies
point to a significant scale.
For example, Internetweek has reported that more
than 1 percent of total online sales (US$ 700
million) was lost due to fraudulent activity in
2001 (according to Gartner Inc.'s G2 research
service). The $700 million, which represents 1.14
percent of total online sales of $62 billion,
is nearly 20 times higher than the dollar value
of fraud losses related to offline sales. In an
Internet survey of 1,000 adult online consumers
in the U.S., Gartner found 5.2 percent were the
victims of credit card fraud in 2001, while 1.9
percent were victims of identity theft. (http://www.internetweek.com/story/INW20020304S0005)
The Royal Canadian Mounted Police estimates Canadians
have lost about $30 million to Nigerian Advance
Fee scam over the last ten years and reports that
about 10,000-15,000 letters pushing variations
of this fraud from Nigeria have circulated in
Canada (http://www.rcmp-grc.gc.ca/scams/nigerian.htm).
What are the Different Types
of Internet Frauds ?
I have compiled following 34 scams, frauds and
hoaxes by researching various Govt and NGO websites,
scanning news articles and interviewing scam victims.
By no means is the list comprehensive - innovative
scam artists are always looking for new avenues.
- Fake/Non-Implementable Letter of Credit
- Pay 25% advance and forget the rest
- Advance Fee Loans
- Auction Fraud
- Business Ventures
- Chain Letters
- Classified Directories
- Computer Crime
- Computer Security
- Counterfeit - Currency
- Counterfeit - Payment Cards
- Credit Card Fraud
- Credit Card Insurance
- Domain Name Registration Scams
- Donation Solicitation
- False / Deceptive Invoices
- Fraudulent Online Purchases
- Gemstone Scams
- Home Renovation/Repairs Fraud
- Identity Theft
- Investors International
- Lottery Scams
- Nigerian Advance Fee Scam
- Online Shopping
- Pentagano Scheme
- Phoney Bank Inspector
- Phoney Job Opportunities
- Prime Investment Scheme
- Pyramid Schemes
- Spam
- Telemarketing Fraud
- Theft of Telecommunication
- Work-at-home Schemes
- Virus Transmission
We shall discuss every item in future issues.
If you are a scam victim or know of a novel scheme
that is not reported here - please inform. I shall
be happy to include in the list and share with
other readers.
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