Cyberfraud: Keeping Consumers Protected

The Costs of Internet Fraud

As you surf the Web, you are not alone. As a result, many countries have declared March to be the month to bring awareness to consumers about the dangers of fraud, including Internet fraud. Cybercriminals are estimated to cost consumers in the United States 1.2 billion dollars annually, and the amount of time victims need to correct the problem each year is steadily increasing.

E-commerce is a worldwide-phenomenal growth industry, but some experts believe that it hasn’t yet realized its full potential because of consumer wariness over cyberfraud. The segment of the population that steers clear of e-commerce is a loss of revenue to Internet businesses.

Cyberfraud Is a Lucrative Business

Many criminals are pulling out of the drug trade and concentrating on making money through fraud, including Internet fraud. It is believed that these acts from fraudulent medical claims to Internet scams are beginning to rival the drug trade business in many countries.

Those who regularly shop the Internet can be complacent about cyber criminals. According to a study by the Organization for Economic Co-operation and Development (OECD), many consumers believe that they would never fall victim to an Internet scam, but a study of cyberfraud concluded “being fooled by a scam is not a reflection of the education, age, or background of a victim.” An informed consumer is the best defense against cybercrime.

Email Scams

The first cyber scams originated through emails when most Internet users were only concerned with an overload of spam. An early email one was dubbed the “Nigerian” scam, and was a request for money by a so-called government official or a royal family member from an African country. It was a plea for assistance in transferring money out of a country. The victim needed to send small advance payments to cover banking transaction fees, but never received the promised money.

Since then email scams have become more sophisticated, but any request for advance fees and promises of large payoffs is a neon sign for cybercriminals at work. The best defense is to set your email filters at a high privacy level and not open any unsolicited emails.

Common Online Scams

Various other scams are operated on the Internet. Consumers aren’t as gullible as in the early days of the Internet, so the cyberthieves have had to respond with every more sophisticated schemes. But spam is still a tool for ID thieves. Some common ones are travel and credit-related schemes, fake lottery ploys, web and modem hijacking, and identity theft. Many scams are frauds that have always existed in the real world, but are now transferred to the online community.

Cybercriminals can operate on the Internet under the guise of legitimate traders with professional-looking websites which offer miracle products, work-at-home jobs, rock-bottom prices on items, or “once-in-a-lifetime” investment opportunities. They are also becoming adept at scams through text messages on cell phones.

Internet users are usually aware of “phishing” scams, which trick victims into disclosing personal information online. But to raise the level of sophistication and entice more victims, phishing scams now often include more personal information in the email, leading the victim to believe in the authenticity of the message.

Another deception is using a VoIP phone as the contact phone from websites or text messages, which can record account numbers entered into it.

Prosecuting Cybercriminals

A problem with cyberfraud is that it is difficult for consumers to take legal action when they have been victimized. Consumers don’t have the investigative means to find and identify the cybercriminal, and establish proof of criminal activity.

Another drawback is that the consumer usually doesn’t have the financial wherewithal to take criminals to court. And to complicate the picture, many cybercriminals are in foreign countries as the Internet doesn’t recognize boundary lines.

The Federal Trade Commission collects information on identity theft and helps consumers who have been victimized. Their website is helpful to anyone who would like more information on identity theft or needs to report a crime: http://www.ftc.gov/bcp/edu/microsites/idtheft/.

Reference:
1. OECD, Protecting Consumers from Cyberfraud, October 2006, http://www.oecd.org/dataoecd/4/9/37577658.pdf