Protecting Yourself from Internet Fraud

WHAT IS INTERNET FRAUD?¹
The term "Internet fraud" refers generally to any type of fraud scheme that uses one or more components of the Internet - like chat rooms, e-mail, social networking sites, websites, or message boards - to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or to others connected with the scheme.

WHAT ARE THE MAJOR TYPES OF INTERNET FRAUD?

According to the 2008 Annual Report by the Internet Crime Complaint Center (IC3), the top internet fraud was non-delivery of merchandise and/or payment.  The IC3 received a total of 275,284 internet fraud complaints in 2008. The total dollar loss linked to online fraud was $265 million; the average individual loss was $931. The two primary places where fraudulent contact occurred were through email and websites.²

Common types of internet fraud include:³

• Auctions and retail schemes  the 2^nd highest reported online fraud in 2008,  after sending money, consumers received an item less valuable than promised or nothing
• Credit Card fraud – using falsely obtained credit card numbers to run up charges
• Identity theft – using fraudulent personal information to obtain credit
• Counterfeit Cashiers Check schemes –Victim receives an offer from a buyer to overpay for an item. After receiving check, the victim will wire the excess amount back to the buyer. However, a few days after the check is deposited it is discovered to be fraudulent.
• Business Opportunity/"work-at-home" schemes – asks you to pay up-front for a business opportunity or makes promises that seem too good to be true
• Investment schemes – claims that with a nominal investment fee consumers will be guaranteed big returns
• Credit repair or Debt Elimination – offers to lower your credit fees for an upfront cost
• ‘Nigerian’ money offers - This scheme involves someone claiming to be a foreign official, who promises big profits in exchange for help moving large sums of money out of their country
• Advance fee loans – offers to provide a loan after you pay an upfront fee
• Lotteries – emails or letters claiming you won a lottery, but to collect winnings you need to provide a credit card number or pay a fee
• Phishing/Spoofing – Poses as a bank, or other organization, through e-mail or instant messaging, and directs users to enter information at a fake website which is almost identical to the real organization’s website.
• Ponzi/Pyramid schemes - plans require you to recruit distributors, buy expensive inventory or commit to a minimum sales volume
• Internet access services – consumers are lured by low cost or free internet access, only to discover charges for service or huge cancellation and termination fees
• Health and diet scams – be aware of claims that items sold through non-traditional suppliers are “proven” to cure serious health problems
• Vacation or travel promotions – promises low cost or free travel or vacations, but may include hidden costs, requires credit card information, or non delivery of goods

HOW CAN I FILE A COMPLAINT ABOUT INTERNET FRAUD?

Federal Trade Commission:1-877-FTC-HELP

File complaints about companies, business practices, identity theft, and episodes of violence in the media.

Internet Fraud Complaint Center online form

File complaints crossing the spectrum of cyber crime, to include online fraud in its many forms including Intellectual Property Rights matters, Computer Intrusions (hacking), Economic Espionage, Online Extortion, International Money Laundering, Identity Theft, and a growing list of Internet facilitated crimes.

Commodity Futures Trading Commission (CFTC):  1-866-FON-CFTC (866-366-2382)

Report suspicious activities or transactions which may involve the trading of commodity futures contracts or commodity options. CFTC investigates and prosecutes alleged violations of the Commodity Exchange Act and Commission regulations.

Security Exchange Commission Complaint Center

File a complaint or provide the SEC with tips on potential securities law violations

Report Internet Fraud in D.C.:

• Call to file a report with MPD (311). The report will then be forwarded to Financial Crimes and Fraud Unit.
• Or, contact Metropolitan Police Department Financial Crimes and Fraud Unit to schedule an appointment to meet with a detective and discuss your case.
  • Phone: (202) 727-4159
  • Email: mpd.fraud-unit@dc.gov
• Remember to bring all copies of all relevant documents to the meeting.
• To help expedite the process, you may provide the following information to the Financial Crimes and Fraud Unit before your meeting via email:
    Name
    Date of Birth
    Home Address
    Contact telephone number
    Contact e-mail address
    A detailed description of the incident being reported
    Date and time of your appointment (if you send this 
            information after the meeting has been scheduled) 
  More information can be found at MPD’s Identity Theft Website

Reporting Mail Fraud

United States Postal Inspection Service

File complaints if you suspect you are a victim of mail fraud. USPIS can act against a company or individual if there is a pattern of activity suggesting a potential scheme to defraud.

What precautions can I take to secure my personal and credit information?⁴

Keep your personal information private.

·        Do not share account numbers or personal information unless you know who you are dealing with.

·        Never click a link in an email when an organization or business requests information. Type (never copy and paste) their URL into the directly into the address bar.

·        Do not call an organization using the number located in the email if they have requested you to provide personal information. Use the phone number listed on your financial statement or in the phone book.

·        Never enter information unless you have a sign that the website is secure.

·        Don't give out personal information unless you know what will be done with it.

·        Read a website's privacy policy.

Keep passwords private

·        Strong passwords include a combination of capital and lowercase letters, numbers, and symbols. For example: iHav2dog$

·        Passwords should be easily remembered by you, but have little association to your personal information.

Know who you are dealing with

·        Be especially careful about online communications with someone who conceals their true identity.

·        Thoroughly research an organization or website that you are not familiar with.

·        If it is your first time on an unfamiliar site, call the phone number, so you know you can reach the company if you need to.

Keep security software current and use a secure browser.

·        Check regularly for spyware or malware.

·        Update your virus protection software.

·        Install firewalls.

·        Keep your operating system and internet browser up to date.

·        Check for security updates regularly.

If you suspect malware is lurking on your computer, stop shopping, banking, and other online activities that involve user names, passwords, or other sensitive information. Next, update your virus protection software and scan for any problems.

What precautions can I take when conducting business online?

• Pay your bills online with a credit card instead of using personal checks.
• Review your bills regularly and challenge any charges that you don't recognize.
• Beware of offers that sound too good to be true.
• Take your time. Resist any urge to "act now" despite the offer and the terms. Once you turn over your money, you may never get it back.
• Watch out for "advance fee" or “pay in advance” demands.
• Don’t fall for “check overpayment” scams.  
• Don't do business with a company that won't provide its name, street address, and telephone number.
• Research the people running the company.
• Contact your local consumer protection agency and the consumer protection agency in the city where the company is headquartered for more information about the company.
• Call multiple suppliers or customers of the company and verify that they really do business with the company.
• Interview business references in person at the place of business, if possible, and try and get a number of names to choose from. This will help you avoid talking with people who were paid to give favorable responses.
• Have an attorney or accountant look at any proposed contracts.
• Read the small print. Get all promises in writing and review them carefully before you make a payment or sign a contract. Get earnings claims in writing when considering internet-related business opportunities.
• Research the potential investment opportunity thoroughly, take your time in making investment decisions.
• Get references on any travel companies and get details about the trip in writing, including the cancellation policy.
• Do not submit financial information via email, it is not a secure method.

What precautions should I take when shopping online?

• Make sure your passwords are secure and keep your passwords private.
• Don't judge item by initial appearances posted online.
• Check out the seller, especially when shopping online auction sites.
• Shop with companies that you know or know who you are dealing with. Always make sure that a company is legitimate.
• Get all the details involved before making an internet transaction, such as complete descriptions, total price, return policy, etc…
• Only share credit card information when buying from a company that you trust.
• Pay by credit or debit card online, because you have a legal right to dispute charges for goods and services that were never ordered or received.
• Keep a record for proof of the transaction.
• Consult with health care professionals before buying any "cure-all" that claims will cure an ailment quickly or offers easy solutions to a serious illness.
• Never pay for a "free" gift. Disregard any offer that asks you to pay for a gift or prize. If it's free or a gift, you shouldn't have to pay for it. Free means free.  

What Precautions Can I Take On Social Networking Sites?⁵

• Keep your password secure.
• Keep your personal information secure. Do not post information that you do not want others to know.  
• Make sure your profiles are set to Private. Use the privacy settings offered by a site.
• Read about the site’s privacy policies. Make sure you know what will be done with your personal information.
• Know who your “friends” are. Be selective about who you choose to be a friend. 
• Use caution when you click links that you receive in messages from your friends. Type the link directly into your address bar
• Remember your “friends” may not be who they say they are. Hackers can break into accounts and send messages that look like they're from your friends, but aren't. If you suspect that a message is fraudulent, use an alternate method to contact your friend to find out.
• Be careful when downloading third-party applications. Criminals can use these applications to steal personal information.