Internet fraud

Internet fraud is a type of fraud or deception which makes use of the Internet and could involve hiding of information or providing incorrect information for the purpose of tricking victims out of money, property, and inheritance.[1] Internet fraud is not considered a single, distinctive crime but covers a range of illegal and illicit actions that are committed in cyberspace.[1] It is, however, differentiated from theft since, in this case, the victim voluntarily and knowingly provides the information, money or property to the perpetrator.[2] It is also distinguished by the way it involves temporally and spatially separated offenders.[3]

According to the FBI's 2017 Internet Crime Report, the Internet Crime Complaint Center (IC3) received about 300,000 complaints. Victims lost over $1.4 billion in online fraud in 2017.[4] According to a study conducted by the Center for Strategic and International Studies (CSIS) and McAfee, cybercrime costs the global economy as much as $600 billion, which translates into 0.8% of total global GDP.[5] Online fraud appears in many forms. It ranges from email spam to online scams. Internet fraud can occur even if partly based on the use of Internet services and is mostly or completely based on the use of the Internet.

Counterfeit postal money orders

According to the FBI, on April 26, 2005 Tom Zeller Jr. wrote an article in The New York Times[6] regarding a surge in the quantity and quality of the forging of U.S. postal money orders, and its use to commit online fraud.

In the United States of America, the penalty for making or using counterfeit postal money orders is up to ten years in jail and/or a $25,000 fine.[7]

Example of online automotive fraud

A fraudster uses the web to advertise a nonexistent vehicle, typically a luxury or sports car, at well below its market value. The details of the vehicle, including photos and description, are typically lifted from sites such as Craigslist,, or An interested buyer emails the fraudster, who responds saying the car is still available but is located overseas; or that the seller is out of the country but the car is at a shipping company. The fraudster then instructs the victim to send a deposit or full payment via wire transfer to initiate the "shipping" process. To make the transaction appear more legitimate, the fraudster will ask the buyer to send money to a fake agent or other a third party that claims to provide purchase protection. The victims wire the funds but then do not receive the vehicle. In response, auto sales websites may post warnings to buyers which warn not to accept offers in which vehicles are shipped, where funds are paid using Western Union or wire transfer, etc.[8]

Charity fraud

The scammer poses as a charitable organization soliciting donations to help the victims of a natural disaster, terrorist attack (such as the 9/11 attacks), regional conflict, or epidemic. Hurricane Katrina and the 2004 tsunami were popular targets of scammers perpetrating charity scams; other more timeless scam charities purport to be raising money for cancer, AIDS or Ebola virus research, children's orphanages (the scammer pretends to work for the orphanage or a non-profit associated with it), or impersonates charities such as the Red Cross or United Way. The scammer asks for donations, often linking to online news articles to strengthen their story of a funds drive. The scammer's victims are charitable people who believe they are helping a worthy cause and expect nothing in return. Once sent, the money is gone and the scammer often disappears, though many attempts to keep the scam going by asking for a series of payments. The victim may sometimes find themselves in legal trouble after deducting their supposed donations from their income taxes. United States tax law states that charitable donations are only deductible if made to a qualified non-profit organization.[9] The scammer may tell the victim their donation is deductible and provide all necessary proof of donation, but the information provided by the scammer is fictional, and if audited, the victim faces stiff penalties as a result of the fraud. Though these scams have some of the highest success rates especially following a major disaster and are employed by scammers all over the world, the average loss per victim is less than other fraud schemes. This is because, unlike scams involving a largely expected payoff, the victim is far less likely to borrow money to donate or donate more than they can spare.[10]

Internet ticket fraud

A variation of Internet marketing fraud offers tickets to sought-after events such as concerts, shows, and sports events. The tickets are fake or are never delivered. The proliferation of online ticket agencies and the existence of experienced and dishonest ticket resellers has fueled this kind of fraud. Many such scams are run by British ticket touts, though they may base their operations in other countries.[11]

A prime example was the global 2008 Beijing Olympic Games ticket fraud run by US-registered "Xclusive Leisure and Hospitality", sold through a professionally designed website with the name "Beijing 2008 Ticketing".[12] On 4 August it was reported that more than A$50 million worth of fake tickets had been sold through the website.[13] On 6 August it was reported that the person behind the scam, which was wholly based outside China, was a British ticket tout, Terance Shepherd.[14]

Gambling fraud

Internet gambling has become a $15 million industry. Every online casino needs an operation license to conduct their business, and the operators may lose their license or even face imprisonment if they do not follow the regulations. Online casinos have become an extremely lucrative as well as competitive industry, with operators introducing new promotions on a daily basis. Promotional activities include attractive bonuses, prize money, jackpots and other offers aimed at making patrons' online casino experience as memorable as possible. Having a secure software like a 128-bit SSL (Secure Socket Layer) encryption is important.[15]

Online gift card fraud

As retailers and other businesses have growing concerns about what they can do about preventing the use of gift cards purchased with stolen credit card numbers, cybercriminals have more recently been focusing on taking advantage of fraudulent gift cards.[16] More specifically, malicious hackers have been trying to get their hands on gift card information that have been issued but have not been spent. Some of the methods for stealing gift card data include automated bots that launch brute force attacks on retailer systems which store them. First, hackers will steal gift card data, check the existing balance through a retailer's online service, and then attempt to use those funds to purchase goods or to resell on a third party website. In cases where gift cards are resold, the attackers will take the remaining balance in cash, which can also be used as a method of money laundering. This harms the customer gift card experience, the retailer's brand perception, and can cost the retailer thousands in revenue. Another way gift card fraud is committed is by stealing a person's credit card information to purchase brand new gift cards.

Social media and fraud

People tend to disclose more personal information about themselves (e.g. birthday, e-mail, address, hometown and relationship status) in their social networking profiles (Hew 2011). This personally identifiable information could be used by fraudsters to steal users' identities, and posting this information on social media makes it a lot easier for fraudsters to take control of it.

The problem of authenticity in online reviews is a long-standing and stubborn one. In one famous incident back in 2004, Amazon's Canadian site accidentally revealed the true identities of thousands of its previously anonymous U.S. book reviewers. One insight the mistake revealed was that many authors were using fake names in order to give their own books favorable reviews.[17] Also, 72% say positive reviews lead them to trust a business more, while 88% say that in "the right circumstances", they trust online reviews as much as personal recommendations.[17] While scammers are increasingly taking advantage of the power of social media to conduct criminal activity, astute risk managers and their insurance companies are also finding ways to leverage social media information as a tool to combat insurance fraud.[18] For example, an injured worker was out of work on a worker's compensation claim but could not resist playing a contact sport on a local semi-professional sports team. Through social media and internet searches, investigators discovered that the worker was listed on the team roster and was playing very well.[18]

See also


  1. Warf, Barney (2018-05-16). The SAGE Encyclopedia of the Internet. SAGE. ISBN 9781526450432.
  2. Brenner, Susan W. (2009-01-16). Cyberthreats: The Emerging Fault Lines of the Nation State. Oxford University Press. ISBN 9780190452568.
  3. Fisher, Bonnie S.; Lab, Steven (2010). Encyclopedia of Victimology and Crime Prevention. Thousand Oaks, CA: SAGE Publications. p. 493. ISBN 9781412960472.
  4. "FBI 2017 Internet Crime Report" (PDF). Federal Bureau of Investigation. May 7, 2018. Retrieved 28 August 2018.
  5. "The Economic Impact of Cybercrime— No Slowing Down" (PDF). McAfee. 2018. Retrieved October 24, 2018.
  6. Tom Zeller Jr (April 26, 2005). "A Common Currency for Online Fraud: Forgers of U.S. Postal Money Orders Grow". New York Times.
  7. " - Counterfeit Postal Money Orders". Retrieved 23 May 2017.
  8. "craigslist - autos". Retrieved 23 May 2017.
  9. "Charitable Contributions: For use in preparing 2016 Returns" (PDF).
  10. "Scam Watch - Nigerian Scams". Scam Watch - Australian Government. 12 May 2016.
  11. Jamie Doward (2008-03-09). "How boom in rogue ticket websites fleeces Britons". The Observer. London. Retrieved 9 March 2008.
  12. "USOC and IOC file lawsuit against fraudulent ticket seller". Sports City. Retrieved 1 August 2008.
  13. Jacquelin Magnay (4 August 2008). "Ticket swindle leaves trail of losers". The Sydney Morning Herald.
  14. Kelly Burke (6 August 2008). "British fraud ran Beijing ticket scam". The Sydney Morning Herald.
  15. "Casino scams – how to avoid black sheeps". Retrieved 2017-10-09.
  16. Francis, Ryan (2017-05-11). "What not to get Mom for Mother's Day". CSO from IDG. Retrieved 2017-11-28.
  17. Kugler, Logan. "Keeping Online Reviews Honest." Communications of the ACM, vol. 57, no. 11, Nov. 2014, pp. 20-23. EBSCOhost, doi:10.1145/2667111.
  18. Wilson, Brian. "Using social media to fight fraud." Risk Management, Mar. 2017, p. 10+. Academic OneFile, Accessed 27 Feb. 2018.


  • Legend, Therza. "CYBER FRAUD: How to be aware, to protect yourself and your business." Podiatry Review, vol. 75, no. 1, 2018, p. 32+. Academic OneFile, Accessed 1 Mar. 2018.
  • Lin, Kan-Min. "Understanding Undergraduates' Problems from Determinants of Facebook Continuance Intention." Behaviour & Information Technology, vol. 35, no. 9, Sept. 2016, pp. 693–705. EBSCOhost, doi:10.1080/0144929X.2016.1177114.
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