Internet Fraud Term Paper

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Internet Fraud

The slashing of prices of Home PCs and explosive growth of internet has increased the number of net users over the years. The keenness to exploit the advanced features of internet to utilize in the field of education, entertainment, communication, business, scientific research increased to a great extent. The wiping out of the geographical barriers is the greatest advantage that is provided by the internet which impels the net users to innovate newer methods day by day to supplement the tools used in the daily routine work in these fields. The e-mail, chat rooms, message boards and websites created a new virtual society among the net users. The business decisions, information searching, personal interactions etc. become very quick and made easier through use of these tools.

Crimes are inherent to every society and the virtual society created by internet is also not an exception to it. The same crime that were innovated by the criminals over the years in the real life society including theft, burglary, larceny, fraud, embezzlement, extortion, sabotage, espionage, kidnapping, and murder are being practiced by the criminals operating through internet with much ease and really in greater magnitude being equipped with the weapon of invisible shield. At every moment there is a possibility of the net users being susceptible to the victims of fraudulent practices of the malicious users. Even PC systems themselves are not exceptions which are vehemently attacked by the malicious viruses frequently. It has become a serious problem with the proliferation of such technology in the late 20th Century. (Internet Fraud)

Internet fraud thus refers to the use of internet tools such as e-mails, chat rooms, websites etc. By the malicious users to throw the bait to attract and capture the prospective victims to their fraudulent practices. It refers to any fraud scheme committed by means of special knowledge and expert use of internet resources to solicit and persuade the innocent victims to conduct fraudulent transactions or to transmit the fraud proceeds to the associated financial institutions. The advantages provided by internet through its unique capabilities like sending electronic messages through e-mails, worldwide instantaneously with a single click, ready accessibility of the information posted in websites from anywhere irrespective of the location withdraws all the boundaries and geographical barriers to the frauds.

The same type of frauds that victimized the consumers and investors in real life business is also beginning to operate online in e-commerce. The victimized consumers and investors are being exploited by the online criminals through presentation of their fraudulent schemes through e-mails with a sheer imitation of the products offered by the legitimate e-commerce merchants. The schemes are made so attractive as to easily persuade the gullible consumer and investors to throw themselves into the whirlwind. The process not only affects the victims only but also negates their confidence in the legitimate positive e-commerce and the Internet transactions. The internet fraud in the sphere of e-commerce is of varied forms. (Internet Fraud)

The online auction sites often offer online auctions and sale of retail goods professing to be of high value items but the victims after sending money receives nothing in return, if at all they get any thing that worth negligible in comparison to the money they already spent. Many fraudulent schemes often offer online business opportunities-"Work-at-Home" schemes. Initially they insist for a security deposit and never deliver the material required to make the work-at-home opportunity potentially viable after expropriating the security amount. By identity theft and fraud that involves obtaining and using up of the victim's personal data wrongfully the frauds manipulate for economic gains. Frauds in respect of illegal transfer of money and use of credit card by identity theft are instances in this category.

In the securities markets frauds are visible by the so called "pump and dump" schemes. The frauds find it profitable to increase the prices of the thinly traded stocks by disseminating false information then selling off immediately their holdings before the prices actually normalize. The innocent buyers being persuaded by the scheme who purchased the stocks at enhanced prices are victims after the fall of the prices. Similarly, the fraudulent schemes of short-selling or "scalping" increases the sell of a company's stock by disseminating false information that causes temporary fall in prices. Some times a combination of both Internet and traditional mass marketing techniques like telemarketing victimize large numbers of buyers to these fraudulent schemes. (Internet Fraud)

Frauds involving use of illegally obtained credit card numbers to procure goods and services online from legitimate e-commerce merchants even though, seems legal in all respects, at the same time victimizes the consumer and merchants alike.

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An example in this respect is seen in case of consumer items advertised to be sold at attractive prices. If a potential consumer being lured by the advertisement contacts the fraud seller the seller offers to ship the item to the consumer even before any payment is made. When agreed to the seller uses the real name of the consumer along with illegally obtained credit card number of another victim to purchase the item from a legitimate website.

After shipment of the item the consumer is convinced of the purchases and sends the money in favor of the seller thereby being a victim to the frauds of fraudulent sellers. Instances have also seen in some websites providing misleading and fraudulent information that purported to offer quick divorce even in absence of physical presence of the spouses through e-mail exchanges. After gratification of the specified amount of money the frauds send false letters stating legal divorce thus victimizing the gullible clients. (Internet Fraud)

Internet being global in nature the problem of the scope of internet fraud is not limited to a particular region or country. The internet fraud victimizes the net users across the boarders and geographical barriers as well as the neighbors alike. The instantaneous access and its wide reachability are the boons to the fraudulent practices over the Internet. Statistics have shown that the internet fraud has grown to a great extent by since the year 2002. It is reported by FBI that the complaints of internet fraud have soared up to 48,000 during the year 2002. Mostly, the complaints are against the auction frauds, non-delivery of promised merchandise, credit card fraud and fake investments. It has been reported to be a total dollar loss of $54 million as a result of these frauds during 2002. (Internet Fraud Rises in 2002)

These damages complained about are believed to be only a fraction of the crimes that are actually occurring. In addition to these complaints of about 37000 have been reported to be received during 2002 by the FBI, which actually did not said to be frauds but involved other such activities like unsolicited e-mails or SPAM, illegal child pornography and computer intrusions. Complaints against frauds are mostly received from California, Florida, Texas, New York and also from Canada, Australia, Britain, Germany and Japan. It has been calculated that the 46% of the total frauds constituted auction frauds with an average loss of per victim is $320. The average loss of $2,000 is suffered in case of frauds caused by identity theft. FBI has reported to have solved the case of selling computers online to which 300 peoples were victimized involving a loss of $800,000 during 2002. (Internet Fraud Rises in 2002)

Teresa Smith of Worcester, Mass., was found guilty in the process. Swindling of 700 people worldwide by commitment of trade of computers, camcorders and other electronic products and finally delivering nothing involving a fraud of $922,000 was revealed during 2002. Raj Trivedi of San Diego was pleaded guilty for the same. The magnitude of the problem is extending day by day. The scope of e-commerce over the Internet is increasing and with this growth of Internet Fraud is also expected to be soaring high over the years. Besides, the greater awareness of the victims regarding creation of the Internet Fraud Centre as a site to fight back Internet Fraud will encourage them to file complaints and thereby helping the means practiced by the frauds coming to lime light. (Internet Fraud Rises in 2002)

Frauds and Scams exist in each and every society since its evolution. It is typical to know that the success of each and every fraud and scams such as Ponzi or pyramid schemes, how to quickly get richer scams, tricky advertisings with deceptive outcomes, etc. all succeeds only after willing participation of the victims. The fraud begins with the identification by the schemer of that particular desire of the victim for profit, for gratification, for advancement or for anything else that conveniently be used by them as a bait to attract the potential victims. Gone are the good old days when the bank robbers needed shotguns and ski masks to make a big haul. Thanks to the Internet, the criminals presently proceed away with their goals by acquiring the personal information such as simply the social security numbers or credit card numbers,….....

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