Scams Online

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This article was published by ComputorEdge, issue #2712, 2009-03-20, as a feature article, in both their PDF edition (on pages 9-11) and their website.

Charlatans and chicaneries of all types have probably existed throughout human history, originating not long after people had established rudimentary monetary systems for storing value, and languages for communicating transactions and other business deals — including the fraudulent kind. Swindlers of all sorts have continuously adapted their methods to fit the evolving milieu, seeking better methods of finding potential victims and convincing them that they can get something for nothing. (Even their lingo is rich in clues, as documented in The Big Con: The Story of the Confidence Man, David Maurer's study of urban anthropology and terminology.) Our modern era is no exception.

The Internet makes it easier for everyone to make new acquaintances and make money — everyone, including scammers. When e-mail usage reached levels high enough to attract the attention of shameless promoters, the world got its first taste of spam (and not the canned meat variety). From those inauspicious beginnings, the flood of spam has reached the point that an estimated 95 percent of all e-mail messages sent in 2007 were spam. This is a phenomenal increase from just six years earlier, when the figure stood at five percent. Yet spam must seem to be a mere annoyance to those people who have fallen victim to far more serious and damaging forms of digital deception — including auction fraud, phishing attacks, fake charity requests, identity theft, Nigerian letters, and many others.

There are numerous broad categories of Internet trickery, each with associated variations that tend to emerge when they best fit the current cultural climate and newsworthy events of the day. As people gradually learn of these newer scams, and governments and security organizations update their crime-fighting techniques, the effectiveness of those scams gradually declines. That's just about the time when another major event allows cyberspace con artists to cook up some new ideas, or a technology is introduced that can be exploited as a new vector for reaching prospective victims.

In this article, we will consider a few of the most frequently seen scams on the Internet, and what you can do to avoid falling prey to them.

Charity Chicanery

Humans are, in most cases, humane. We are generally willing to help others, especially those who are suffering mightily from natural disasters and other circumstances beyond their control. This is particularly true of Americans, who have a long history of generosity among themselves and to the world at large. (In fact, Americans have the highest rate of charitable contributions, per capita — even during the Great Depression.) It is human nature to assist others in need. Sadly, it is also human nature that is targeted by the unscrupulous.

Charitable causes are a favorite hunting ground of modern fraudsters, because it exploits our willingness to help others, and does not rely upon the victim's own greed for making a quick buck. It typically takes the form of pleas for contributions to fake charitable organizations that claim to be helping the victims of the latest disaster, when in fact little or none of the money donated will ever be given to those victims. An example of this is the plethora of bogus donation requests that appeared in people's e-mail boxes just hours after Hurricane Katrina had devastated the Gulf coast of the United States — a natural disaster that claimed over a thousand lives and tens of billions of dollars. That tragedy didn't stop the merciless swindlers from trying to take advantage of others.

These types of cons are especially heartless, because they leverage sympathy for one group of victims to create a second group, the marks targeted by the scamsters. Avoid becoming an unfortunate member of the latter group, by never assuming that a solicitation for financial help is coming from a legitimate requester. If you wish to donate to a well-known charitable organization, such as the American Red Cross, contact them directly, rather than clicking on a link in an e-mail message, regardless of how legitimate it appears. To better determine which organizations would use your donation most wisely, check with charity evaluators, such as Charity Navigator.

Slave at Home

Anyone sitting in rush-hour traffic cannot help but wonder at times if it would be better to turn in the corporate job, the fabric-covered cubicle, and the hour-long commute, in exchange for some sort of home-based business. Even though there are some nontrivial downsides to freelancing from home — no steady paycheck, no health or dental benefits, less cash flow, etc. — the advantages can be quite alluring. This prospect must appear even more attractive to the growing number of Americans laid off in our current financial and economic meltdown.

People have an understandable desire to make a good living with fewer of the typical disadvantages, and an opportunity to spend more time with their families. Cyber crooks try to make the most of these wishes, by promising to help people work from home. Their advertisements can be seen in all sorts of venues — including Craigslist, physical bulletin boards, and even taped to street signs. But they are usually distributed as spam. The schemes work by requiring victims to pay various fees upfront, using online payment systems that make tracking and recourse much more difficult. The fees are often claimed to be needed to test the legitimacy of the victim (note the irony), but truly have no payoff, since the victims are usually never given any paid work.

Even worse are the cases where the victims are put to work, receiving money into their own bank accounts and being instructed to wire it to accounts overseas — oftentimes in Eastern Europe. These "money mules" are promised a portion of the proceeds, and usually do not realize — until they get into trouble with authorities — that they are engaged in international money laundering. If you ever receive such a solicitation, either delete the spam message or forward it to the appropriate law enforcement authorities. If you already have been hoodwinked, contact those authorities immediately. They include the Better Business Bureau, the Internet Crime Complaint Center, and the National Fraud Center.

Subprime Scams

With the market in home loans cratering in the United States, the UK, and other countries that had enjoyed the massive real estate bubble, countless people are on the verge of losing their homes to foreclosure, if they haven't done so already. The loss of one's nest, as well as one's nest egg, can wreck untold damage upon one's credit rating, social status, and feeling of self-worth. Little wonder that most at-risk homeowners are willing to do just about anything to retain their homes and the equity they have invested in them.

As expected, fraudulent schemes began popping up on the Internet just as fast as "For Sale" signs on suburban lawns. These schemes took the form of spam messages claiming to offer services that would allow scared homeowners to rescue their mortgages. Naturally, people who unwisely sign up for these programs end up forking over what little money they have left, but receiving no protection of their home, or any other benefits. In fact, the victims can lose more than just cash: In one popular scheme, the victim is told that the so-called "rescue" organization can block the bank (which holds the lien on the house) from foreclosing on the property, provided that the victim pays fees upfront for the service, and also signs over the deed to the house. Since the scammer legally cannot — and does not — do anything to stop the foreclosure, the homeowner loses not only the money they paid to the scammer, but they also lose their house, and thus the equity that they had paid to the bank.

It may be difficult for some of us to imagine someone being so gullible as to sign over the deed on their property to a stranger, but desperate homeowners are apparently tempted to desperate actions. Do not join the ranks of these victims. As with any other questionable spam message, either delete it or report it. In addition, spread the word to others of the dangers out there — particularly to trusting people who may be more susceptible to cyber fraud.

Largely free of government meddling, the Internet has been likened to a modern wild west, where citizens have the freedom to express themselves, connect with others, and transact business all over the world. Just don't let any online outlaws wrangle you out of your money.

Copyright © 2009 Michael J. Ross. All rights reserved.

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