Understanding Internet Fraud

Why is Internet fraud growing so fast?
Internet ScamBusters #5

This issue of Internet ScamBusters is a bit different. We were recently interviewed by Arman Danesh for a feature article about fraud on the Internet for “The Dataphile”, a leading English-language magazine covering the Internet in Asia (based in Hong Kong). The questions we were asked include some of the questions we get asked most often, so we want to share our answers with you.


Arman: It seems that with the rise in popularity of the Internet has come a rise in what many would deem criminal activity on the Internet whether in the form of copyright violations, verbal abuse, or theft of information and data. To what extent has fraud become prevalent on the Internet?

ScamBusters: Given all of the media hype, people get the impression that there is almost nothing but fraud, scams, and criminal activity on the Internet. Actually, this is not true at all. Most people and activities on the Internet are legitimate. In fact, only a very small proportion of the people on the Net are “crackers,” thieves, or scam artists. This is just like a typical city: only a small proportion of the people in a city are criminals. However, that doesn’t mean you shouldn’t beware of serious risks.

Arman: What aspects of the Internet make it attractive (or unattractive) to those engaging in fraudulent activities?

ScamBusters: There are at least 4 aspects of the Internet that make it attractive to those engaging in fraudulent activities:

1) The most important is anonymity. It’s very easy to hide your identity and it is difficult for others to figure out who you are.

2) Low cost is also important. It costs a few dollars a month to get an email account, and with that, someone can cause a lot of grief. For a bit more money, they can create a fraudulent Web site.

Both can be very inexpensive, compared to other methods of committing fraud.

3) Since there is such rapid expansion of the Internet, there is always a huge base of new users to exploit. These new users are unaware of common scams and how to protect themselves. And since parts of the Internet have such a sense of community (which fosters trust), people sometimes trust others whom they shouldn’t.

4) Many of the scams on the Internet are either similar or identical to those in the real world. Often, these scams are very sophisticated, having been developed over many years, and are often very difficult to detect. We hear from victims of such scams every week. However, the Internet allows virtually instant communication and ridiculously low cost, so these scams can be spread *very* quickly.

Arman: What types of fraud are common on the Internet? Are these basically activities common in other media (i.e.. via telephone, mail, etc.)? Are there new and unique types of fraud which are only found on the Internet? Do these depend on the Internet for their success?

ScamBusters: There are so many different types of fraud on the Internet. Naturally, you have most of the same activities as in other media, such as “get rich quick” schemes, chain letters, pyramid schemes, 900 numbers, erasing bad credit scams, fraudulent use of credit cards, etc.

I don’t think there are too many unique types of fraud on the Internet yet. Even stealing email and breaking into computer systems can be (and are) done through other media. But that may change over time.

Arman: If you had to tell Internet users, especially novices, how to avoid fraud on the Internet, what would you tell them? Are there one or two key steps that users can take to protect themselves?

ScamBusters: Subscribe to our FREE electronic newsletter, Internet ScamBusters! 🙂 (a shameless plug!)

Be skeptical. If something sounds too good to be true, it probably is. For example, many people who promote bulk email will tell you that sending out bulk email is the road to riches. It isn’t.

One thing most novice Internet users don’t realize is that email is not necessarily private. Never send email that you wouldn’t want others to see–you’ll probably come to regret it. And realize that there are many ways that people can read your email if they really want to. But don’t get too paranoid about this: it is unlikely that your email will be selected for viewing. But it does happen.

Don’t assume that email necessarily comes from the person who supposedly sent it to you. People can send email that looks like it came from you. If in doubt, check with the sender of an email.

Also, take safety precautions. For example, select passwords that are not words contained in any dictionary. Don’t give your passwords to anyone. Be careful about private information you give out on the Net (don’t publicly state when you’ll be on vacation so burglars know the ideal time to rob your home).

But don’t let the fear of scams and fraudulent activities overshadow your enjoyment of the Net.

Arman: How does the trans-border nature of the Internet affect the ability of organizations and governments to prevent and fight fraud?

Is it harder to track down perpetrators? Is it harder to bring them to justice if identified?

ScamBusters: Of course.

Arman: What do you feel that governments, Internet organizations and the cyber-community as a whole can do to help prevent rampant fraud on the Internet as it becomes increasingly accessible to people?

ScamBusters: Education is extremely important. The more people understand the risks, the better equipped they’ll be not to fall for the scams. It’s a *very* difficult problem. That’s why we publish Internet ScamBusters–it’s our small contribution to help.