High-Tech Crime and E-Commerce Fraud

The Schemes

The Information Age has brought us great benefits from computer technology, but also dangerous new opportunities for fraud artists to use high-tech tools to cheat and defraud us.  Here are examples of the scams that have accompanied new technologies:

Is your favorite investment website a-buzz over a stock?  Online bulletin boards allow investors to trade tips and advice on stock buys, but you never know who’s really posting the messages.  Be wary of websites with anonymous rave reviews about obscure companies.  You don’t want to find out that the “objective” advice you relied on to play in the market was actually an insider talking up his own firm. 

Looking for work on an employment website?  Websites that allow you to search for work opportunities are a popular option for job hunters, but you should beware of bogus companies trying to lure you in.  One scheme to watch out for is when foreign businesses offer you a work from home opportunity.  You sign up for the job, and soon receive in the mail a check for significantly more than your salary.  The “employer” requests that you refund the overpayment by sending a wire transfer out of the country, typically to somewhere in Eastern Europe.  Once you transfer the funds, you discover that you’ve been tricked – the check you were sent turns out to be fake. 

Buying and selling goods online?  When you visit an online auction site like eBay, you should guard your wallet as closely as you would at a street market – maybe closer.  Watch out for these scams –

“Bid siphoning” is where con artists lure you off of the official auction site, promising you the same product you are interested in at a much lower price.  Off the official site, you lose protections, like insurance, so that if the seller never ships the product, but you already paid for it, you may be out of luck. 

“Second chance offers” come from fraudsters once you’ve lost on a bid.  Again, you’re lured off the official site, losing any of it’s protections, with the promise that you’ll get a second chance to purchase the item you lost out on. 

“Escrow service fraud” occurs after you’ve won on a bid and the seller requests that you use a certain escrow service for payment.  The way legitimate escrow services work is that you, the buyer, send payment to a 3rd party escrow company that holds onto your funds until you receive and accept the merchandise.  But if the seller convinces you to send payment to a bogus escrow service, the seller has your money, and you’ll never see the products you thought you purchased. 

“Parcel courier email schemes” are a variation on the “escrow” scam.  You purchase an item on an internet auction site.  The seller contacts you and says that the purchased item will be sent to UPS, and held there until the seller receives your payment.  Soon afterwards, “UPS” contacts you informing you that the items have arrived and are being held pending payment to the seller.  You then wire-transfer funds to the seller.  But when you try to contact UPS to schedule a time to pick up the item, your realize it’s all been a scam -  it wasn’t UPS that called you, and there are no items to pick up. 

“You’ve got mail”… from Nigeria? Watch out for emails sent from Nigeria offering too-good-to-be-true profit opportunities.  The scam often works like this: You receive an email from a Nigerian “government official” who asks you to help him transfer money out of his country and into your bank account.  In return for helping him transfer the money into the US, you are promised a share of his funds – several million dollars.  The only thing you have to do, you are told, is pay the official some “relatively modest” fees in order to make the transaction go through.  Some time after you send off the fees, you are asked to send even more fees.  This may continue for some time until you discover that you’ve been tricked – and you will never see dollar one from the fraudster.  

Think you’ve won the lottery without buying a ticket?  Remember that you can’t win a lottery that you never entered.  Watch out for spam emails alerting you that you’re the winner of an International Lottery.  You may be told that to begin collecting, you have to contact a processing company, which will ask for a “small fee” to start the process – anywhere from $1,000 to $5,000.  The fee may seem small, since you’ve been promised several hundred thousand dollars.  Of course, the lottery is a hoax and you will never see any of your “winnings.”  The only winner in this scheme is the con artist. 

Help For Consumers

An ounce of prevention is worth a pound of cure in these cases.

Tips by the Internet Crime Complaint Center on how to avoid several types of internet fraud: http://www.ic3.gov/preventiontips.aspx

Tips by the Fair Trade Commission about how to avoid internet auction fraud: http://www.ftc.gov/bcp/conline/pubs/online/auctions.shtm

Tips by eBay to avoid online auction problems: http://pages.ebay.com/securitycenter/mrkt_safety.html

Tips on avoiding and responding to the Nigerian email scam, including contacting the Secret Service (202.406.5572).  http://www.bbb.org/alerts/article.asp?ID=277