- PC World
Top Five Online Scams
Thu Mar 10, 3:00 AM ET
After years of trying to recover from the dot-com
hangover, the Internet is booming again. Online retail
sales increased by 26 percent in 2004, according to
comScore Networks. In September 2004, the number of
domain name registrations hit 64.5 million--an all-time
high. You know what else is on the rise? Internet
Complaints about online fraud nearly doubled from
2003 to 2004, according to a December 2004 report
by the FBI (news - web sites) and the National White
Collar Crime Center. Research firm Gartner estimates
that nearly 10 million Americans were hit by online
fraudsters last year--largely due to a wave of phishing
e-mails seeking to steal users' identities.
In fact, phishing attacks seem to be the new, hot
scam. Scammers send you an e-mail that tries to lure
you to a legitimate-looking Web site where you'll
be asked to enter personal information. The thing
is, it's all fake; and if you fall for it, someone
is ready to take your Social Security (news - web
sites) Number and start opening credit card accounts.
The FBI recently began warning people of scammers
posing as tsunami-relief organizations. And late last
month, the FBI warned that someone out there was even
posing as the FBI itself--sending a fraudulent e-mail
with the subject line "FBI Investigation"
and trying to lure people into buying products from
a separate, fictional scam artist whom the Feds were
supposedly on to.
Confusing? Sure. But just ask yourself this: When
was the last time the FBI sent a polite e-mail when
they wanted someone's cooperation in an investigation?
Thousands of con artists, grifters, fraudsters, and
other denizens of the dark are trolling for victims
online. Can you recognize online fraud when you see
it? Here's a quick guide to the Top 5 scams and schemes
you're most likely to find on the 'Net.
1. Auction Fraud
The setup: Online auction fraud accounts for three-quarters
of all complaints registered with the FBI's Internet
Crime Complaint Center (formerly the Internet Fraud
Complaint Center). There are many types of eBay chicanery,
but the most common one is where you send in your
money and get nothing but grief in return.
What actually happens: You never get the product
promised, or the promises don't match the product.
The descriptions may be vague, incomplete, or completely
fake. One scammer accepted bids for Louis Vuitton
bags that she didn't own, and then scoured the Internet
looking for cheap knockoffs that cost less than the
winning bid. She managed to collect at least $18,000
from bidders before she got nailed. A buyer thought
he'd purchased a portable DVD player for $100, but
what he got instead was a Web address for a site where
he could buy a player for a $200 discount. The stories
are virtually endless.
The risk: You get ripped off, losing time and money.
If you spill the beans about the scam, the seller
may retaliate by posting negative eBay reports about
you using phony names.
The question you've gotta ask yourself: Who in their
right mind would sell a $200 bag for $20?
2. Phishing Scams
The setup: You receive an e-mail that looks like
it came from your bank, warning you about identity
theft and asking that you log in and verify your account
information. The message says that if you don't take
action immediately, your account will be terminated.
What actually happens: Even though the e-mail looks
like the real deal, complete with authentic logos
and working Web links, it's a clever fake. The Web
site where you're told to enter your account information
is also bogus. In some instances, really smart phishers
direct you to the genuine Web site, then pop up a
window over the site that captures your personal information.
The risk: Your account information will be sold to
criminals, who'll use it to ruin your credit and drain
your account. According to Gartner, phishing scammers
took consumers (and their banks, who had to cover
the charges) for $1.2 billion in 2003.
The question you've gotta ask yourself: If this matter
is so urgent, why isn't my bank calling me instead
of sending e-mail?
3. Nigerian 419 Letter
The setup: You receive an e-mail, usually written
in screaming capital letters, that starts out like
"DEAR SIR/MADAM: I REPRESENT THE RECENTLY DEPOSED
MINISTER OF AGRICULTURE FOR NODAMBIZIA, WHO HAS EMBEZZLED
30 MILLION DOLLARS FROM HIS STARVING COUNTRYMEN AND
NOW NEEDS TO GET IT OUT OF THE COUNTRY..."
The letter says the scammers are seeking an accomplice
who will transfer the funds into their account for
a cut of the total--usually around 30 percent. You'll
be asked to travel overseas to meet with the scammers
and complete the necessary paperwork. But before the
transaction can be finalized, you must pay thousands
of dollars in "taxes," "attorney costs,"
"bribes," or other advance fees.
What actually happens: There's no minister and no
money--except for the money you put up in advance.
Victims who travel overseas may find themselves physically
threatened and not allowed to leave until they cough
up the cash. (FYI, "419" is named for the
section of Nigeria's penal code that the scam violates.)
The risk: Serious financial loss--or worse. Victims
of Nigerian letter fraud lose $3000 on average, according
to the FBI. Several victims have been killed or gone
missing while chasing a 419 scheme.
The question you've gotta ask yourself: Of all the
people in the world, why would a corrupt African bureaucrat
pick me to be his accomplice?
4. Postal Forwarding/Reshipping Scam
The setup: You answer an online ad looking for a
"correspondence manager." An offshore corporation
that lacks a U.S. address or bank account needs someone
to take goods sent to their address and reship them
overseas. You may also be asked to accept wire transfers
into your bank account, then transfer the money to
your new boss's account. In each case, you collect
a percentage of the goods or amount transferred.
What actually happens: Products are purchased online
using stolen credit cards--often with identities that
have been purloined by phishers--and shipped to your
address. You then reship them to the thieves, who
will fence them overseas. Or you're transferring stolen
funds from one account to another to obscure the money
The risk: Sure, you can make big bucks for a while.
But after a few months, you're going to look inside
your bank account and find it cleaned out. Worse,
when the feds come looking for the scammers, you're
the one they're going to nail.
The question you've gotta ask yourself: Why can't
these people receive their own darn mail?
5. "Congratulations, You've Won an Xbox (news
- web sites) (IPod, plasma TV, etc.)"
The setup: You get an e-mail telling you that you've
won something cool--usually the hot gadget du jour,
such as an Xbox or an IPod. All you need to do is
visit a Web site and provide your debit card number
and PIN to cover "shipping and handling"
What actually happens: The item never arrives. A
few months later, mystery charges start showing up
on your bank account. The only thing that gets shipped
and handled is your identity. (A more benign variation
on this scam drives you to a site where you're asked
to cough up your contact info and agree to receive
spam from advertisers until unwanted e-mail is coming
out of your ears.)
The risk: Identity theft, as well as lost money if
you don't dispute the charges.
The question you've gotta ask yourself: When did
I enter a contest to win an Xbox (iPod, plasma TV,
Award-winning journalist Dan Tynan has written
about Internet scams and scammers for more than a
decade. He's the author of PC World's Gadget Freak
column and the upcoming book, Privacy Annoyances (O'Reilly
Media, 2005). He has never come to the rescue of a
deposed African bureaucrat