Email Fraud

Meaning of Email Fraud

Email fraud is the intentional deception made for personal gain or to damage another individual through email. Almost as soon as email became widely used, it began to be used as a means to defraud people.

Simply stated, mail fraud can be defined as unlawfully using the postal system to gain money or valuables. Email fraud can take the form of a “con game” or scam. Confidence tricks tend to exploit the inherent greed and dishonesty of their victims. The prospect of a ‘bargain’ or ‘something for nothing’ can be very tempting. Email fraud, as with other ‘bunco schemes’ usually targets naive individuals who put their confidence in get-rich-quick schemes such as ‘too good to be true’ investments or offers to sell popular items at ‘impossibly low’ prices.

Types of Email Fraud

Some of the most common email frauds are as following-

1)    Personal information scams (phishing)-“Phishing” scams are currently the most popular and, thus, dangerous form of email fraud. They use email messages that appear to come from a legitimate company or institution, such as your bank or university, and ask you to “update” or “verify” your personal information; the scammers then use this information to commit identity theft.

2)    Nigerian bank scams- A very common type of email fraud is advance fee fraud schemes. The perpetrators of advance fee fraud (sometimes referred to as Nigerian or foreign bank. scams) are often very creative and innovative. This fraud is also called 4-1-9 fraud after the section of the Nigerian Penal Code that addresses fraud schemes.

Nigerian nationals, purporting to be officials of government or banking institutions, will fax or email letters to individuals and businesses in the US and other countries. The correspondence states that a reputable foreign company or individual is needed for the deposit of an overpayment on a procurement contract. Some variations of this scheme have the son or daughter of a murdered official plead for your assistance in depositing an inheritance in a US bank. Individuals are asked to provide funds to cover various fees, and are also asked for personal identifiers sue- as social security numbers, bank account numbers, and other similar data. Once this information is received, the victims often find that their bank accounts are emptied.

It is hard to pinpoint how much has been lost in these scams since many victims do not report their losses to authorities for fear of embarrassment.

3)    Sweepstakes, lottery, and prize scams-Similar to the Nigerian bank scam, these scams trick you into thinking you’ve won large amounts of money. You sometimes have to send personal information that is then used to rob you, or you are asked for processing fees for your fictitious winnings.

4)    Pyramid schemes- This is a scheme in which a hierarchy is created by people joining under others who joined previously, and in which those who join make payments to those above them in the hierarchy, with the expectation of being able to collect payments from those who join below. Pyramid schemes are prohibited by US law, by the laws of each of the fifty individual states, and by the laws of most other nations. Pyramid schemes are variously defined under these laws either as a form of gambling or as outright fraud.

5)    Ponzi schemes- These are named after CHARLES PONZI, who ran such a scheme in 1919-1920. A Ponzi scheme is an investment scheme in which returns are paid to earlier investors entirely out of money paid into the scheme by newer investors. Ponzi schemes are similar to Pyramid schemes, but differ in that Ponzi schemes are operated by a central company or person, who may or may not be making other false claims about how the money is being invested and about the source of the returns. Ponzi schemes don’t necessarily involve a hierarchal structure, as in a pyramid scheme; there is merely one person or company collecting money from new participants and using this money to payoff promised returns to earlier participants. Ponzi schemes are not necessarily illegal, but they are difficult to distinguish from illegal pyramid schemes. In almost every case, only a very few early investors actually benefit from them.

6)    Multilevel marketing (MLM) schemes- Multilevel marketing plans, also known as network or matrix marketing, are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor: you will receive commissions for both your own sales and those of other people you recruit to join the distributors. Multilevel marketing plans usually promise to pay commissions through two or more levels of recruits, known as the distributor’s downline. While some MLM schemes are supposedly legitimate, if a plan offers to pay commissions for recruiting new distributors, it likely is illegal. Pyramiding is prohibited because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. When a plan collapses, most people, except perhaps those at the very top of the pyramid, lose their money.

7)    Chain mail- Chain mail is a form of junk mail. A chain mail message is generally sent to several people and includes instructions that each person should forward the letter to several others. These messages waste system resources and often grow quite large as senders append their own additions. Do not forward such messages. Email fraud and hoaxes often occur in chain mail.


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