An Insight into Consumer Frauds

Consumer losses were reported by the Internet National Fraud Information Center in 2005 due to the Internet fraud which was approximately $13 million. Only 20% individual complaints were higher. If the number of complaints have increased that does not mean that the total amount of the losses have doubled which will indicate higher individual losses. Nigerian offers are the most expensive offers according to a recent study. In 2005, 42 people reported losses as compared to only 1 person in 2000.

High Performance Computing Act of 1991 – Title I was passed by the Congress. It says that guidelines should be set by the High-Performance Computing and the National Research and Education Network to secure the computer networks and the Internet in the Private Sector. The Goal’s of this Act include:

• Investment of the Private Sector in the high-speed data networking and to foster and maintain competition.

• To promote the development of telecommunications standards and commercial data communications.

• To provide security which will include the protection of the Intellectual Property Rights.

• To develop mechanisms of accounting which will charge the users for using copyrighted materials.

• To purchase network services and commercial transmission from the vendors.

Some government agencies like the Federal Bureau of Investigation have been responsible for the private business new scams and they have been charged of it. Studies have shown that 75% of the times websites are being used by the Internet criminals for the Internet related crimes and the rest of the crimes are through E- Mail. It has also been shown that the percentage of Internet thieves outside the United States is 37% and out of the 63% which are in the U.S., 9% are in California.

Types of Internet Frauds are:

Internet Auction Frauds

Auctions are launched on E-Bay or TradeMe by the fraudsters which has a low price and are mostly reserved for expensive items like watches or computers. Then the thieves receive the payment of the item and they deliver the item which is of a lesser price than the one which is ordered. The item delivered can also be a second- hand product. Some of them can also create Auction Web stores which appear to be authentic but they never deliver the goods.

Nigerian Offers

What the criminals do in the Nigerian schemes is that they arrange a lot pf people to recruit single women from Nigeria ands it is all done through chat rooms and matchmaking sites. After that the man convinces the woman online to marry her and come to her home one day. Then he convinces her to receive the gifts he is sending which he buys by using fake credit cards and gets them shipped to the house of her so called “future wife”.

After the packages arrive, the man makes an excuse for him not coming and asks the bride to pick up all the goods. As the woman has not spend any money on these gifts, she collects all of them. Soon after that there is a FedEx or UPS package that has pre-printed labels and she applies the labels to the boxes. Then the goods are shipped to the fraudster’s address. After this the victim stops receiving any calls from the man. After that a huge freight bill arrives at the woman’s house and she is supposed to pay it as the goods were shipped in her name.

Counterfeit Postal Money Orders

There has been a rise in the use of Counterfeit Postal Money Orders according to the FBI and the United States Postal Service postal inspectors. In 2004, within 3 months more than 3700 counterfeited postal money orders were intercepted by the authorities. The ordinary consumers are fooled by the quality of the counterfeits which is very good. The Federal Deposit Insurance Corporation (FDIC) is an independent agency is created by the congress, supervises banks and ensures that there are deposits upto $100000. It issued a public alert about counterfeit about U.S. Postal Money Orders which will present payments at financial institutions or online.

Phishing/ Pharming

Social engineering techniques are being used by Phishing which is a criminal activity.

There have been many attempts to acquire sensitive information fraudulently. It can be passwords or the details of the credit cards by masquerading as individuals who are trustworthy or represent a reputable business. It is usually done by the use of instant messages or by E-Mail.

What happens in Pharming is that there are some malicious codes which are installed on the personal computer of any person or on the server which misdirects the users to fraudulent web sites without them knowing about it. The website can then acquire personal information such as passwords which can be used for illegal purposes.

Credit Card Frauds

There are thousands of debit and credit card numbers and personal data which is sold on the internet everyday. All this information is acquired by Phishing by contacting the hackers who have a huge amount of data with them or from the local merchants. Then the thieves use the credit card numbers to make online purchases and these goods are then sent to the thieves address. The victim does not know about all this until the billing statement arrives.

Advance Fee Schemes

This happens when the victim pays money to someone to receive goods of a higher value but receives very little in return. There are many schemes which announce lotteries and investments. In this, the victim has to sign the contract in which they agree to pay the fee in advance. After they have paid the money, they find that they are ineligible for the financing.

Sometimes an individual can recover all his losses through the internet consumer fraudulents.