Fraud takes many forms and costs hundreds of millions annually. Common internet frauds described include Nigerian scams, fake foreign lotteries, work-at-home scams, sweepstakes scams, and spoofing/phishing. To avoid becoming a victim, the document recommends not responding to unsolicited emails, researching offers thoroughly, being wary of requests for personal information, and consulting friends before making financial decisions. Basic security practices and awareness of common schemes can help reduce fraud risks, and victims should report crimes to the appropriate law enforcement.

1. Fraud: What and How?
“Fraud and falsification are highly destructive to market capitalism and, more broadly, to the
underpinnings of our society. Our market-system depends critically on trust. Trust in the word of our
colleagues and trust in the word of those with whom we do businesses”----Alan Greenspan
According to the US Secret Service, hundreds of millions of dollars are lost annually and the losses
continue to escalate. Types of frauds are categorized under Corporate Fraud, Securities and
Commodities Fraud, Mortgage Fraud, Health Care Fraud and Money Laundering. Fraudsters carried out
these scams mostly through letter, email, text and telephone.
Let’s look at the top internet based frauds:
1. The Nigerian scam, also known as 419/ Advance fee fraud:
Consumer receives letter, fax or email asking for help in transferring money overseas. Recipient
offered slice for themselves for transferring money, usually 25-30%.
In every variation, the scammer is promising obscenely large payments for small unskilled tasks.
This scam, like most scams, is too good to be true. Yet people still fall for this money transfer
con game.
2. Fake foreign lotteries:
Letters, phone calls or emails tell of big win and ask recipients to send money to cover
administration or taxes.
3. Work at home and business opportunity scams:
Offers of quick way to make money without having qualifications or expertise. Money up front
demanded as registration fee or to buy goods for selling.
4. Sweepstake scams and misleading prize draws
Notification of a cash prize in return for up-front payments.
5. Psychic scams
Letters sent by so-called psychics or clairvoyants offer prediction or threaten dangers if no
payment received.
6. Pyramid schemes and chain letters
If enough members join, pyramid will grow. But in order for every member to make money
there has to be endless supply of newcomers.
7. Spoofing/Phishing fraud:
Spoofing is a type of fraud in which a fraudster masquerades as another person by using another
person’s identity to transact business and obtain vital information such as bank account
numbers, credit card numbers and associated passwords. Phishing is a form of spoofing in which

2. the web page of a particular entity can be duplicated and positioned with URL for the purpose of
luring people to divulge vital financial information.
8. Rebate Phone Call:
In this scam, consumers receive a phone call from someone identifying himself as an IRS
employee. The caller tells the targeted victim that he is eligible for a sizable rebate for filing his
taxes early. The caller then states that he needs the target’s bank account information for the
direct deposit of the rebate. If the target refuses, he is told that he cannot receive the rebate.
9. Ponzi Fraud:
This is a system of luring investors to invest in a scheme in which the investment firm promises
abnormally high returns, meanwhile the early investors shall be paid with investment capital
obtained from success investors. The payment chain would continue till the point of collapse.
Technological advancement is the backbone of an economy. However every positive side has a dark side
associated with it. It is important that when a common man uses internet to explore the world of
information he also is aware about the probable frauds floating around. He must be educated about the
pros and cons of using internet and awareness programs should be conducted against cyber crime. We
shall discuss how to avoid becoming a victim of cyber fraud in our next blog.
Avoid becoming a victim of cyber fraud: Do’s and don’ts

3. Cyber Fraud also known as International Mass Marketing Fraud is a crime that uses distance and
location as its primary means of success, making it more difficult for law enforcement to track and
prosecute the perpetrators. In part, this is due to jurisdictional authority of law enforcement agencies
throughout the world.
What to look for :
• Being asked for personal financial Information such as bank account information or credit card
numbers via the telephone or by email.
• Using high pressure sales tactics so as not to give you time to think about the information you
are providing.
• Being told you have won a foreign lottery or sweepstakes.
• Being asked to help transfer funds out of a foreign country for a share of the money.
• Being offered help in repairing credit scores for an advanced fee.
• Receiving a counterfeit casher’s check or money order for more than the cost of the item you
are selling.
Do’s and don’ts:
• Do not respond to unsolicited e-mail.
• Research any offers received over the Internet or telephone.
• Do not deposit any checks that are supposed winnings from a lottery or sweepstakes, especially
if you didn’t enter one.
• Keep in mind that online businesses, including banks and merchants, typically will not ask for
personal information, such as usernames and passwords, via e-mail. When in doubt either call
the company directly or open your computer’s Internet browser and type the known website’s
address. Don’t use the telephone number contained in the e-mail, which is likely to be
fraudulent as well.
• Be wary of individuals representing themselves as foreign government officials.
• Beware when asked to assist in placing large sums of money in overseas bank accounts.
• Avoid filling out forms in email messages that ask for personal information.
• Consult friends and family or a trusted advisor before making any major financial decision.
• If you have been a victim of Internet crime, please file a complaint at http://www.IC3.gov/.
Although the threat posed by cyber criminals is real, through the use of a few basic Internet security
practices and an awareness of the more common cyber criminal schemes, individuals can reduce their
risk of becoming a victim. Users should remain aware of the latest online fraud scam. However, if an
individual believes he has already been the victim of a cyber crime, he should notify the appropriate law
enforcement agency as soon as possible, and may file a complaint. Providing timely and thorough
information detailing the particulars of the scheme and identifying characteristics of the criminals helps
law enforcement develop an effective investigative strategy.