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As more and more people connect to the Internet, online fraud is on the rise.
Although e-fraud is not commonplace (only about 0.03% of all business-to-consumer
transactions), it does happen. Anytime you make an online purchase or sale
you should be wary. Although impossible to eliminate, with the proper care
you can ensure you are never the victim of online fraud.
For anyone who has ever been a victim of e-fraud, the problems with compensation
can be endless due to the properties of the Internet. When online, you may
never know exactly with whom you are dealing with; it may be someone who lives
on the other side of the world. Resolving problems with someone you do not
know can be more complicated in long-distance or cross-border transactions.
Tracking people down is very difficult, as individuals who commit online fraud
can disappear without a trace. Web sites can be created, and used to commit
fraud, only to disappear soon thereafter. The almost complete anonymity of
the Internet allows for many fraudsters to avoid being caught.
Types of E-Fraud?
Online fraud falls into many different categories - from unauthorized credit
card use to false investment, and even sales from what seems to be a reputable
The most common type of fraud on the Internet is found in online auction dealings.
According to the National Consumers League fully 87% of Internet fraud comes
from online auctions. When using online auctions you will rely on a seller
you don't know to send you a product you have never seen. Sellers face a similar
problem because they can never be sure if the buyer is on the up and up. Other
high fraud areas to note include general merchandise sales (7%), Internet access
services (2%), and computer equipment/software (1.3%). Credit card fraud is
also something to be aware of. This affects everyone whether they are a buyer
or seller. People can use your credit card number to make purchases or they
can use someone else's card to purchase from you.
People have also made a living by practicing investment fraud over the Internet.
Being able to reach large numbers of people through newsgroups, e-mail, and
bulletin boards allows fraudsters to spread incorrect information almost instantly.
People give false investment advice and then reap the rewards when individuals
act on the advice.
Tips on How to Avoid E-Fraud
The Internet is no different from the real world in that, as long as you are
careful, you can avoid problems. You would never buy a product from a stranger
who telephoned you, offering something for sale and asking for your credit
card number. So why would you buy something from a web site you know nothing
The best advice for avoiding e-fraud is very simple: Be careful. Avoiding
e-fraud is not difficult, it just requires due diligence.
- When dealing with a company, before you make a purchase, be sure that they
are someone you know and trust. Conduct research about the company to find
out their track record and where they are physically located. Knowing as
much as possible about the company will allow for a faster resolution, if
there are any problems.
- Make sure you completely understand the offer. Read all the information
about the products or services the company is offering. Ask for more information
if you do not feel there is enough provided. Legitimate companies will
have no problem sending you more information. If a company refuses or does
not respond to your enquiries, do not take the risk of dealing with them.
- Never judge a web site by its appearance. Anyone can create a flashy web
site. Just because it looks professional does not mean it is run by a professional!
- Never give out financial or other personal information, such as bank account
or credit card numbers unless you are sure that the company is legitimate
and the information is necessary for the transaction.
- Credit card payment is safest because you can dispute the charges if the
goods are misrepresented or never arrive.
These tips can be applied in many different circumstances.
- Be cautious when using online auctions. Ebay has features that allow you
to research the person you might be dealing with.
- There are also Internet middlemen you can use for online auctions. Escrow
services like tradesafe.com can
help you prevent being ripped off by holding your money until your purchase
has been delivered.
Never trust investment advice received via e-mail, bulletin boards or newsgroups.
If you feel a tip is genuine, research the company before you purchase.
For small business merchants credit card fraud is a very real problem. Most
do not have the resources to discount lost sales. Because credit card laws
protect the cardholder, there might be no recourse for a merchant, and they
will end up without a product’s payment. There are a number of web sites
that are specifically designed to help small businesses deal with fraud. Antifraud.com offers
business owners tools and resources to help fight fraud.
A fraud detection and risk management service available to online merchants
is eFalcon (http://www.efalcon.com/).
Some merchants have taken strong measures towards making their sites fraud-proof,
by not accepting orders from people who use web-based e-mail addresses (eg.
@hotmail.com, @yahoo.com etc…); often it is difficult to ascertain the
identity of the address owner. Most online fraud is committed by individuals
using web based e-mail addresses.
There are a number of informative sites that deal specifically with combating
e-fraud such as www.scambusters.org and www.fraud.org.
Scambusters has a free newsletter full of the latest information about Internet
scams and viruses.