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Trends in Online Fraud Exposed

written by: Charles M Bowen•edited by: Aaron R.•updated: 12/28/2011

The legions of schemers and fraudsters out there continue to grow bolder and cleverer day by day. We expose some of the recent online fraud trends to give you all the information you need to protect yourself from these online parasites.

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    Make No Mistake - They Are Hiding in the Woodwork.

    The Internet, with its sheer vastness of information, unfortunately gives scammers, fraudsters and con artists of every type plenty of dark water to hide in. There are entire cottage industries online that seem to revolve around relieving people of their hard-earned money under false pretenses. Everything from being scammed into buying a worthless $10 e-book to buying a million dollar home that does not exist is possible.

    McAfee Labs, a specialist in tracking online threats, recorded more threats in the first three quarters of 2011 than in all other years combined. In addition to the phenomenal growth in volume, the sophistication of malware and attacks shows no signs of slowing down. It is even getting more difficult to track unauthorized credit card transactions due to the rise of smartphones, which can be easily stolen and allow a scammer to perform a fraudulent credit card transaction without compromising their IP address. Many open source models can now even be customized so that they do not display an IP address or leave a tracking cookie, removing the need to constantly use other untraceable devices.

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    But He Seemed Like Such a Nice Guy... I Met Him on the Internet!

    We all know by now to disregard spam out of hand, but fraudsters have begun to invest much more time and effort on warming up their marks. Internet privacy violations are still a major route for fraud. One scheme on the rise involves hacking a person's email account long enough to get to know the mark's closest relations, then sending an email (from the friend or family member's very own hacked address) supposedly from that person claiming an emergency. A common refrain is, ''Mom! I lost my passport and wallet and I can't get another one unless you wire $1000, don't worry, my friend Abdul will collect it for me!''. Avoid this by getting the relation in question on the phone first, then delete and open a new email account.

    The same theme is on the rise in other forms, except the scammers are not technically sophisticated enough to play the email hacking game. Facebook and other social media sites give confidence scammers a means to work on dozens of marks at a time. Often these scams involve sending a wire transfer to cover shipping of a product, such as ''a 40-inch TV my brother's leaving in his apartment, you can have it but I need $200 to ship it!'' As charming and witty as your new ''friend'' may be, sending money to a person whose name and photo you are unable to actually prove is theirs is a very bad idea.

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    About That Operation...This Insurance Policy Won't Cover a Band Aid!

    Whenever there is a sudden change that affects the bulk of the population, some kind of online fraud tends to come out of it. Especially if it is controversial and leaves a significant portion of the public confused.

    Health and Human Services (HHS) Secretary Kathleen Sebelius cautioned state insurance commissioners this year to be on the lookout for new schemes to sell bogus insurance policies. These policies will ‘approve’ the applicant for special rates under the new health insurance legislation, pocket the fees, and leave you in the emergency room with no coverage.

    These fake policies are popping up all over the web and the sites are often indistinguishable from legitimate health insurance providers. The best way to avoid paying a monthly fee for a ‘service’ that will potentially leave you holding a huge basket of debt is to perform a rigorous background check on any company you are thinking of joining. If the company does not have several years of positive comments lying about the web, then I would consider it too risky.

    Ongoing frauds like this are some of the most rapidly growing and are a testament to how bold the scammers have become. It is no longer enough to rip off a mark once, they now expect to get away with it month after month! If you ever see an offer for something that seems a bit too good to be true, especially if it is regarding something you do not completely understand, research the company with a fine toothed comb, and if you smell anything but roses, walk away.

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    How NOT to Spend Money To Make Money.

    and he never saw a dime Another niche that is overwhelmed with fakers is the "work from home" market. With unemployment still near record highs and incomes stagnating, steady growth of this already huge magnet for scammers is one of the virtually guaranteed online fraud trends.

    If you have ever found yourself on a page that offers financial freedom in three weeks all for just one payment of $69.99, then you know what I am talking about. The best way to avoid falling for these scam artists is to avoid paying anything for a "work from home job." It should be common sense, a job is supposed to pay you, not the other way around!

    I have a colleague who would brag around the office every day how he had ‘earned’ $300 after work the night before just doing simple data entry tasks. He ended up with a screen taunting him with $5,000 he would never see, and a lesson in humility. And the website was convincing, he had an account ID, there were all sorts of policies and rules, and the site was well done. Yet the whole thing was a facade to dupe each victim long enough for them to fool thousands more victims out of ‘registration fees’ that ranged up to $100. Incredibly, this exact same site is still up, in spite of hundreds of negative comments posted by the unhappy victims blasting their duplicity.

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    You Can Automate Anything These Days!

    Lastly in our list of recent online fraud trends is that, in keeping with the scammers' newfound desire to hit their marks multiple times, there is an increase in fraud automation. With thousands of digital products now available for quick download, it is now possible for a scammer to get thousands of dollars worth of products paid for and downloaded within minutes. Even a mediocre programmer can set up a bot that will take all of your financial data and download 10,000 licenses of a friend's site. This increases the likelihood that your credit card will be maxed out to $10,000 before you get home and realize that you left your wallet in the park. E-commerce is currently growing much faster and the scammers are getting more innovative all the time. The best thing to do is to be careful and do regular research on the latest schemes out there.