Forms of Cyber Fraud

Cyber fraud may be defined as a crime in which the  perpetrator develops a scheme using one or more elements of the Internet to deprive a person of property or any interest, estate, or right by a false representation of  a matter of face, whether by providing misleading information or by concealment of information.

Some of the frequently reported cyber frauds are the following-

1)    Purchase frauds-Purchase fraud occurs when a criminal approaches a merchant and proposes a business transaction, and then uses fraudulent means to pay for it, such as a stolen or fake credit card. As a result, merchants do not get paid for the sale.

2)    Online automotive fraud-In this kind of fraud, a fraudster posts a non-existent vehicle for sale to a website, typically a luxury or sports car, advertised for well below its market value. An interested buyer, hopeful for a bargain, emails the fraudster, who responds saying the car is still available but is located overseas. Or, the scammer will say that he is out of the country, but the car is with a shipping company. The scam artist then instructs the victim to send a deposit or full payment via wire transfer to initiate the “shipping” process. To make the transaction seem more legitimate, the fraudster will ask the buyer to send money to a fake agent of a third party that offers purchase protection. The unwitting victims wire the funds, and subsequently discover they have been scammed.

3)    Cash the cheque system- In this kind of fraud, defrauders negotiate large purchases of thousands of dollars, with the victim, agreeing to an advance payment via bank wire transfer. After ordering, the fraudster claims that paying via wire transfer is impractical, and instead sends a counterfeit cheque drawn on the account of a real, uninvolved organization as an alternate payment. After the cheque clears, the victim company ships the goods. When the uninvolved organization notices the fraudulent transaction against their account, they request a chargeback, resulting in the victim losing both the money and the goods.

4)    Online auction- In an online auction scheme, a fraudster starts an auction on a site with very low prices and no reserve price, especially for typically high priced items like watches, computers, or high value collectibles. The fraudster accepts payment from the auction winner, but either never delivers the promised goods, or delivers an item that is less valuable than the one offered-for example, a counterfeit, refurbished, or used item. Fraudulent schemes appearing on online auction websites are among the most frequently reported form of mass-marketing fraud.

5)    Online retail scheme- Online retail schemes involve complete online stores that appear to be legitimate. As with the auction scheme, when a victim places an order through such a site, their funds are taken but no goods are sent, or inferior goods are sent. In some cases, the stores or auctioneers were once legitimate, but eventually stopped shipping goods after accepting customer payments.

6)    PayPal Fraud- In a collection in person PayPal scheme, the scammer targets eBay auctions that allow the purchaser to personally collect the item from the seller, rather than having the item shipped, and where the seller accepts PayPal as a means of payment.

The fraudster uses a fake address with a post office box when making bids, as Pay Pal will allow such an unconfirmed address. Such transactions are not covered by PayPal’s seller protection policy. The fraudster buys the item, pays for it via PayPal, and then collects the item from the victim. The fraudster then challenges the sale, claiming a refund from PayPal stating that he did not receive the item. PayPal’s policy is that it will reverse a purchase transaction unless the seller can provide a shipment tracking number as proof of delivery; Pay Pal will not accept video evidence, a signed document, or any form of proof other than a tracking number as valid proof of delivery.

7)    Call tag scam- In a call tag scam, criminals use stolen credit card information to purchase goods online for shipment to the legitimate cardholder. When the item is shipped, the criminal receives tracking information via email. They then call the cardholder and falsely identify themselves as the merchant that shipped the goods, saying that the product was mistakenly shipped and asking permission to pick it up when it is delivered. The criminal then arranges the pickup, using a “call tag” with a different shipping company. The victim usually doesn’t notice that a second shipping company is picking up the product, and the shipping company has no knowledge it is participating in a fraud scheme. The cardholder may later notice the charge on his statement and protest the charge, generating a chargeback to the unsuspecting merchant.

8)    Business opportunity schemes- Con artists often use the Internet to advertise supposed business opportunities that allow individuals to earn thousands of dollars a month in “work-at-home” ventures. These schemes typically require the individuals to pay nominal to substantial sums for the “business plans” or other materials. The fraudsters then fail to deliver the promised materials, provide inadequate information to make a viable business, or provide information readily available for free or a substantially lower cost elsewhere.

9)    Money transfer fraud- Money transfer fraud consists of an offer of employment transferring money to a foreign company, supposedly because it costs too much to do it through other methods.

10)  Dating fraud- With dating fraud, often the con artist develops a relationship with his/her victim through an online dating site and convinces the victim to send money to the fraudster. The requests for money can be a one-time event, or repeated over an extended period of time.

11)  Charity fraud- The scammer poses as a charitable organization soliciting donations to help the victims of a natural disaster, terrorist attack, regional conflict, or epidemic. The scammer asks for donations, often linking to online news articles to strengthen his 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.

12)  International modem dialing- Customers of dial-up Internet service providers, such as AOL, use a modem to dial a local telephone number in order to connect to the Internet. Some web sites, typically containing adult content, trick consumers into paying to view content on their web site by convincing them to unwittingly make international telephone calls with their modem. Often these sites claim to be free, and advertise that no credit card is needed to view the site. They prompt the user to download a “viewer” or “dialer” program to allow them view the content. Once the program is downloaded, it disconnects the computer from the victim’s usual Internet service provider and dials an international long-distance or premium-rate number, charging high rates to the victim’s long-distance phone bill.

13)  Internet marketing and retail fraud- Internet marketing and retail fraud is a fast-growing area perpetrated by dishonest internet marketing and retail sites involving a variety of products and services. The victim is tricked, by a legitimate-looking site and effective marketing, into giving his credit card information and in exchange for what they believe to be goods or services. The goods never arrive, turn out to be fake or are products worth less than those advertised.

14)  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.

15)  Phishing- Phishing is the act of masquerading as a trustworthy person or business to fraudulently acquire sensitive information, such as passwords and credit card details that a victim might think reasonable to share with such an entity. Phishing usually involves seemingly official electronic notifications or messages, such as e-mails or instant messages.


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