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Internet Fraud

Internet fraud can be defined as any type of scheme that uses one or more components of the Internet (e.g., chat room, email, message board, Web site) to publish fraudulent solicitations, conduct fraudulent transactions or transmit proceeds obtained through fraud.

How to protect yourself

  • Learn about the types of Internet fraud.
    The more you know about various fraud schemes, the better you can protect yourself from them.
  • Use common sense.
    If something sounds too good to be true, it's probably a fraud. Offers of large sums of money in exchange for help in transferring funds out of a country (e.g., Nigerian letter scam) fall into this category.
  • Keep your personal information secure.
    Do not give out any information regarding your savings, checking, credit or other financial accounts.
  • Guard your Social Security number especially carefully.
    This is the single most important item sought by many types of fraudsters. They can use it to wreak financial havoc that will be very difficult and time-consuming for you to repair. Don't give this number out unless it is absolutely necessary. For example, you will need to submit it with an application for major credit or a mortgage but not for sales of merchandise or services. Take the time to make certain that anyone you give it to is legitimate.
  • Deal only with legitimate, reputable companies and individuals.
    Take time to thoroughly investigate the other party involved in your transaction. Use a search engine to find out what's already known about a business or individual. Check with Better Business Bureaus, online references, feedback from buyers or sellers. Don't be fooled by fancy Web sites, which can disappear quickly.
  • Buy direct.
    Purchase name brand items only from the companies who make them or have appropriate licenses to sell them. Especially low-priced new name brand products may actually be counterfeits.
  • Obtain and verify addresses and phone numbers.
    Get a physical address (not a PO box) for a company you are buying from and make sure it exists. Verify email addresses and be wary of those that could have been obtained without providing traceable information such as a credit card number. If the person or company won't give out the information you need, don't deal with them.
  • Be aware of the pitfalls of foreign commerce.
    It can be very difficult to deal with persons and companies in foreign countries with regard to warranties, returns and laws concerning sales. Educate yourself on all the requirements of a particular overseas transaction and its potential for fraud.
  • Learn how online auctions work before you bid or sell.
    Make sure you understand :
    • the obligations of both bidders and sellers
    • the actions that will be taken by the Web site hosting the auction in the event of fraud
    • feedback provided on the seller by other bidders
  • Clearly understand the details of an online sale or purchase.
    Make sure you know:
    • how and where payment is to be made
    • when delivery of the purchase is to be expected
    • all the additional costs involved in a transaction
    • conditions under which a purchase can be returned and credit received
  • Don't buy anything promoted in a spam email.
    Even if the seller is legitimate, you would be encouraging the use of spam.
  • Buy with a credit card.
    You can later dispute the transaction if there is a problem. Make sure a Web site is both reputable and secure before you enter your credit card number. It may not always be possible to know whether you are on a secure site. The URL should begin with https instead of http. In addition, you should see a locked padlock icon or similar security designation in the lower right corner of the browser window. Make sure the site's security certificate issuer (e.g., Verisign) is legitimate and the certificate is both valid and up to date. You should be alerted to any problem with a security certificate if you are using an up-to-date version of a major browser. Be aware that fraudsters can also use secure sites.
  • Consider using an escrow service, if appropriate.
    Some companies serve as go-betweens, accepting payment from buyers and delivering it to sellers. Be sure to research any escrow service thoroughly before you use it. Some of them are fraudulent.
  • Take your time.
    Pressure to complete a transaction quickly is often a sign of fraud.

What to do if you become a victim

Types of Internet fraud

To learn more about the following types of fraud, see Appendix V, pages 28-29 in the PDF file found in the IC3 2004 Internet Fraud - Crime Report (

  • Advance fee (Nigerian letter scam)
  • Business or employment scams
  • Counterfeit check
  • Credit or debit card fraud
  • Freight forwarding or reshipping
  • Investment schemes
  • Nondelivery of goods/services
  • Online auction and other sales
  • Phony escrow
  • Pyramid or ponzi schemes

Internet fraud also occurs as identity theft and phishing, which are increasing threats.



Last modified July 26, 2006 by cawalker











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