If PT Barnum were alive today, he may have changed his observation to note that in relation to the Internet, there is a sucker born every millisecond. Ok, so Barnum never really said that “there’s a sucker born every minute”, but that is for another article.
The Internet has proven to be invaluable to businesses and consumers. But it is like any technology and can be used for both beneficial and malicious purposes. Consumers need to be aware that they may often be at the receiving end of a bogus transaction and are often only an email aware from being defrauded.
This article
will look at two of the many types of fraud perpetrated on unsuspecting consumers via the Internet. While the scams described have variants on the details, the end result is the same, innocent people are robbed and taken advantage of.
It doesn’t take long for a new e-mail account to be inundated with spam. The spammers work off the law of averages. If they send tens of millions of emails, even an extremely small response can quickly become quite profitable. If you use email, you must be aware of this. If not, you may end up being defrauded.
The Internet Cesspool
The reality is that the Internet is a cesspool for miscreants. The FBI states that before the Internet, they were quite close to shutting down child pornography. With the Internet, child porn is once again a huge problem.
The FTC is spending much of its efforts on combating Internet fraud. But even if they quadrupled their staff and budget, it still would be insignificant to the problems they are attempting to fight.
With such a context, the best way to deal with the Internet is with a mindset of caveat emptor. The Internet and fraud go together. Keep that in mind when you get some magnanimous offer in your email inbox, as we shall see.
Advance fee
The advance fee fraud, also known as Nigerian 419 scam, is where you are promised tens of millions of dollars to assist in a large money transfer. The catch is that the perpetrators later tell you that you that they need a security deposit or transaction fee to release the money.
The email generally is in the form of an unsolicited and desperate email from someone in a third-world country such as Uganda or Ivory Coast. The sender requests urgent help since a relative has died, often killed by corrupt government officials. This relative has left tens of millions of dollars deposited in a bank in that country which is in suspense. They need the help of an outsider to transfer the money to and serve as the guardian of the fund.
They are willing to offer you 15-25% of the total sum as compensation for your effort after the successful transfer of this fund to your nominated account overseas. To facilitate this transaction, they will ask you to provide your bank account information in which to transfer the money.
At this point, the culprits either use that information to commence identity theft and start an illegal money transfer, or will tell you that they need a deposit to pay the lawyers or bank.
The perpetrators will create authentic looking documents to support their claims. But the end result is that there was never ay money. With word processing and graphics software, creating official looking documents is easy. Victims see millions of dollars, and not phony looking documents.
The US State Department created an advance fee fraud advisory in 1997 (see www.state.gov/documents/organization/2189.pdf), and even though this scam has been going on for decades, people are still falling prey to it in record numbers.
Foreign Lotteries
A similar twist on the advance fee fraud is an email stating that you have been awarded a huge lump sum pay-out from the free (Computer Email Ballot) international Lottery Program. Of course there is no such lottery or program. But the goal of the perpetrators is to get your personal banking information, and also have you transfer money to them to start the process.
While the purveyors of such scams will send official looking documents, they are all bogus. In addition, the purveyors will state that they need a deposit of a few thousand dollars to start the process. Of course, anyone who sends them a deposit will never see that or any money again.
Most of the victims are blind to these events and think that the official looking documents they are sent are indeed real.
In addition, many of these emails are sent from free email services such as Hotmail and Yahoo. These accounts are used for a few days and then discarded. Such uses make it difficult to track the culprits. In fact, US law agencies will rarely get involved in such cases given the difficulty of tracking such boiler room operations.
Conclusions
Boiler room operations have been around since the early days of the telephone system. While previous boiler rooms were in the basements of office buildings, today’s internet boiler rooms are in the Internet café’s of third-world countries. There areas are protected by corrupt governments and far out of the jurisdiction of US law enforcement agencies, who are therefore powerless to do anything.
The only way you can defend against these criminals is to educate yourself and be aware of the risks of using the internet. Email can be a powerful tool, both for businesses and consumers. But you need to realize that even with all its benefits, you may only be an email away from being taken advantage of.