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Saturday, May 12, 2007

Start Here: Internet Fraud 101

What is Internet fraud?

Generally, any type of fraud scheme that uses one or more components of the Internet – such as chat rooms, email, message boards or Web sites – to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or to others connected with the scheme.

What are the major types of online Internet fraud?

Auctions and retail schemes, online auctions being the number one avenue for Internet fraud
Business opportunity/"work-at-home" schemes
Identity theft and fraud
Investment schemes
Credit card offers
Credit repair
Dating scams
Vacation prize promotions
Nigerian money offers – This scheme involves someone claiming to be a Nigerian official, who promises big profits in exchange for help moving large sums of money out of their country
Advance fee loans
Internet access services
Health and diet scams
Free goods, like long distance phone cards, computers, electronics, etc.
Cable descrambler kits
Fake Lottery emails

What is being done to combat Internet fraud?

The Department of Justice

Prosecutes cases throughout the country against individuals and groups who have engaged in a variety of types of Internet fraud
The Internet Fraud Initiative – a joint initiative between the Department of Justice, Federal Trade Commission, Federal Bureau of Investigation and the National Advocacy Center

Develops information on the nature and scope of the problem
Develops and provides training for prosecutors
Establishes a program of public education
The Federal Trade Commission (FTC) – has authority to bring civil lawsuits to federal district courts. Since 1994, the FTC has brought more than 140 law enforcement actions against more than 490 companies and individuals.

FTC Surf Days – the FTC, along with other state and federal agencies, searches the Internet for sites containing deceptive claims. The site operators then receive warnings
Teaser Sites – fake scams constructed by FTC staff. As a consumer clicks through the site a warning eventually appears stating, "If you respond to an advertisement like this, you could get scammed!"
Consumers Fraud Sentinel Database

Provides secure Internet access to more than 220,000 consumer complaints for more than 200 law enforcement organizations across the United States and Canada
National Cyber Security Alliance (NCSA) – joint effort between industry and the government to foster awareness of cyber security through educational outreach and public awareness

What precautions can I take to secure my personal and credit information?

Keep your personal information private
Be especially careful about online communications with someone who conceals his true identity
Use a secure browser
Use inexpensive filtering software to filter programs to protect your family from inappropriate sites
Pay your bills online with credit card instead of using personal checks
Review your telephone bill and other bills and challenge any charges that you don't recognize


What precautions can I take when conducting business online?

Beware of offers that sound too good to be true
Watch out for "advance fee" demands
Take your time in making investment decisions, researching the potential investment opportunity thoroughly
Have an attorney or accountant look at any proposed contracts
Call every supplier or customer of the company and verify that they really do business with the company
Check out the people running the company
Contact your local consumer protection agency and the consumer protection agency in the city where the company is headquartered for more information about the company
Interview business references in person at the place of business if possible and try and get a number of names to choose from. This will help you avoid talking with people who were paid to give favorable responses.
Get earnings claims in writing when considering Internet-related business opportunities
Get references on any travel companies and get details about the trip in writing, including the cancellation policy
Consult with health-care professionals before buying any "cure-all" that claims to cure an ailment quickly or offers easy solutions to a serious illness
What precautions should I take when shopping online?

Keep your password(s) private
Don't judge item by initial appearances posted online
Check out the seller, especially when shopping online auction sites
Shop with companies that you know or at least know who you are dealing with; make sure that the company is legitimate
Get all the details involved before making an Internet transaction, such as complete descriptions, total price, return policy, etc.
Ask your credit card issuer about "substitute" or "single-use" credit card numbers – these allow you to use your credit card without putting your real account number online
Only share credit card information when buying from a company that you trust
Pay by credit or charge card online, because you have a legal right to dispute charges for goods and services that were never ordered or received
Keep a record for proof of the transaction
How can I file a complaint about Internet fraud?

You can file complaints about specific types of fraud with the following agencies:

Commodities Fraud: Commodity Futures Trading Commission (CFTC)
Securities Fraud: SEC Enforcement Division Complaint Center or your state securities regulators
If you think that you've been the victim of a fraud scheme that involved the Internet, you can also file a complaint online with the Internet Fraud Complaint Center, a joint project of the FBI and the National White Collar Crime Center.

How can I get more information about Internet fraud?

Please see the links above!


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