| Internet Scam Artists | | | [Type the author name] | 4/25/2012 |

Abstract
Scam Artists have been around for centuries. As technology increased so has a new breed of con artist; the online scammer. Using the Internet, the online scammer has become more successful in defrauding a large target audience. This success is the focus of much concern in the past few years. Much is being done on multiple levels of government and within the public and private sectors; online fraud is still continuing to thrive. As long as the scammer is motivated by greed and able to deceive others, fraud will always be in existence.

This paper examines the emergence of the scammer in cyberspace. Furthermore, I will discuss a few tactics and methods the online scammer uses in their attempt to successfully deceive others. It will provide a profile of those individuals who are victimized by scammers. Finally, it will list the steps being taken to help deal with the issue of online fraud.

Scammers: Who They Are And Motives
Virtual scam-artists are similar to the traditional scam artists encountered in the real world. Their fundamental motive is greed. However, there is one distinct difference; they utilize a completely different means in their mission to ultimately accomplish their goal of successfully deceiving others. The traditional scammer starts their venture off in a similar manner to that of a business entrepreneur. In regards to financing their operation, a relatively small amount of money is required. It is believed that funds in the range of one hundred to one thousand dollars are needed to allow the operation to get up and running. As little as one individual to as many as twenty can staff a typical operation. Some operations can be small and generally done on one’s spare time, while others may involve full time work and as much as office space. No matter how sophisticated the operation may be, each scammer must rely on their ability and motivation to find the weaknesses of their target audiences and exploit them (Matusic, 2001). During the months of May 2000 through November 2000 the Internet Fraud Complaint Center (IFCC) conducted an extensive study. The IFCC is a partnership between the National White Collar Crime Center (NW3C) and the Federal Bureau of Investigation (FBI) to help address the issue of fraud committed through the Internet. In this survey, the IFCC was able to compile data, which allowed a general profile of a typical online scammer to be made (About the Internet Fraud Complaint Center). According to the survey, the data suggests that individuals who are involved in fraudulent activities via the Internet are generally, individuals and not businesses. Furthermore, these individuals are predominantly males residing in largely populated states. The data also suggests that these individuals have diversified international backgrounds with representation in the United States, Eastern Europe and Canada (IFCC: Six Month Data Trends Report (May-November 2000)). In a recent article relating to the emergence of Internet fraud stemming from the recent terrorist attacks on the World Trade Center and the Pentagon (fake donation funds, etc.), an official at Britain’s National Criminal Intelligence Service (NCIS) stated "scammers typically exploit human misery, so they invariably create human misery. They are without scruples because this is how they make money. It is very grubby money" (IFCC: Internet Auction Fraud: May 2001). There is a saying: "another day, another dollar". If there is a dollar to be made, the scammer will do what it takes to make it.

Types of Online Scams Used by Scammers: Auctions
According to a study released in May 2001 by the IFCC, Internet auctions fraud account for sixty-four percent (64%) of all online fraud (IFCC: Internet Auction Fraud: May 2001). Online auctions are very similar to a real life auctions with the exception that an online auction has global reach and does not require an auction house. Online auctions it is quite possible to have multiple bidders and a limitless number of potential bidders for a specific item. According to the IFCC’s May 2001 study, "Internet auction fraud involves the following: non-delivery, misrepresentation, triangulation fee stacking, black market goods, multiple bidding and shill bidding" (IFCC: Internet Auction Fraud: May 2001). Non-delivery is a type of fraud involving an auction on items that do not exist. Misrepresentation happens when the seller deceives potential buyers. Basically, the seller lists false values and conditions for the items up for bid. Triangulation involves the buying of a stolen item (by the perpetrator) using fake identities and payment information to a bidder at an online auction web site. The winning bidder and online merchant are later questioned as to how they came across the stolen merchandise. Fee stacking is a type of fraud that involves tacking on extra fees by the seller after an auction closes. Black-market goods are another type of Internet auction fraud, and are generally shipped to the winning bidder without a box, instructions or manufacturer’s warranty. Multiple bidding occurs when the buyer places multiple bids for the same item using different aliases. Once the other potential bidders have lost interest and the auction is coming to a close, the high bids are withdrawn and the item is won at a lower bid. In shill bidding the seller, using different aliases, bids on the item, which results in driving the price of the item (IFCC: Internet Auction Fraud: May 2001).

Types of Online Scams Used by Scammers: Investment Fraud
Online investment fraud is a type of Internet fraud, which is becoming more common. Several brokerage firms are providing clients with great incentives to manage their accounts online. Furthermore, several websites have popped up within the past few years that offer financial advice. In a recent study conducted by ABCNews.com, it was found that seven million Americans used the Internet to trade investments. This figure suggests that approximately twenty five percent of all investment trades made by individual investors take place online (Raphael, 2000). This allows the scammer several different tactics that they can employ when attempting to commit investment fraud. Typically, scammers generate and distribute online newsletters. Such newsletters, which are commonly found on web site bulletin boards or via e-mail, often carry no subscription fee and offer the online investor information about specific stocks or corporations. If the scammer spends a little time in developing the newsletter and making it appealing they may be successful in deceiving some of those in his targeted audience. Based on the information they obtain from such newsletters, many individual investors may chose to either buy or sell a particular stock featured in the newsletter. The scammer profits considerably from either investing or selling the stocks they feature in the newsletters (SEC.gov). Scammers can also commit investment fraud through the Internet by making their way into chat rooms. There they can engage in real-time conversations with individuals who are interested in investing. This allows them to easily disseminate information to those in the chat room they intend to deceive.

There are several categories of Internet Investment fraud. One is known as the .pump and dump scam. In this scam, the scammer creates in their target’s mind the need to either buy or sell a stock immediately. Usually the scammer creates newsletters or posts on message boards claiming knowledge of inside information on a particular stock. In reality, this is just a deception the scammers use to reel their victims in. The scammer typically owns shares in this company and wants others who are gullible to buy the stock. By promoting a stock, the scammer is pumping this part of the scheme. Once the stock price has increased, the scammer will then dump the stock. As a result, the investors lose money, while the scammer profits enormously from the scheme. Scammers frequently use this ploy with small, lightly-traded companies due to the ability to manipulate a stock when there’s little or no information available about the company (Raphael, 2000). Some less common schemes conducted by scammers targeting online investors are those that fall into the following categories: risk free, fraud, and off shore frauds. Risk free fraud involves investment opportunities associated with selling too-good-to-be-true investments. Usually, such deals are offered via the Internet and it doesn’t take much money or effort for the investor to become involved. In actuality the investment is non-existent. Offshore fraud involves investments in overseas countries or markets. With the use of the Internet previous checks and balances, which prevented many from becoming involved in such investments, have been eliminated. These investments are particularly risky because they are in areas outside the United States and they become difficult to investigate if the investor suspects fraud (Raphael, 2000).

A Profile of the Victims
Between May and November, 2000 the Internet Fraud Complaint Center (IFCC), conducted a profile of a typical online fraud complainant. The report noted that the typical complainant was usually a single male between the ages of 30 and 50. Furthermore, the majority of the complainants reside in the United States, Canada and the United Kingdom. In the United States majority of the complainants reside in California, Washington, Florida, and New York (About the Internet Fraud Complaint Center).

The IFCC’s report is skewed. The report focuses on individual complaints and not those of businesses. Furthermore, the data that was collected only allows for analysis on victims who have actually filed complaints with the IFCC. Unfortunately, many victims do not contact law enforcement or file complaints. Internet Fraud often goes unreported because victims are either embarrassed or simply unaware of how to properly file a complaint (About the Internet Fraud Complaint Center).

Steps Being Taken
Internet fraud has become a very serious issue. Due to public concern the United States government has begun to take action on dealing with the matter. The IFCC is one example of how the US government is trying to do its part. The IFCC, is a partnership that exists between both the FBI and NW3C. Its mission is "to develop a national strategic plan to address fraud over the Internet and to provide support to law enforcement and regulatory agencies at all levels of government for fraud that occurs over the Internet" (About the Internet Fraud Complaint Center). There has also been a joint effort by the FBI, NW3C, the United States Postal Service (USPS) and the Securities and Exchange Commission (SEC) to combat Internet fraud. In May 2001, Operation Cyber Loss was initiated. During one of its operations, the FBI was able to capture and arrest 90 suspected online scammers. Recently, the Federal Trade Commission announced that they have compiled a database that it believes helpful in combating Internet fraud. The database is named Consumer Sentinel and takes information from those who have been victimized by alleged Internet abusers. All anyone needs to do to report a potential abuser is to click the site’s complaint button. Also the site offers consumers easy to find online information on the top cyber scams (SEC.gov). With the rise in online investment fraud, the SEC has been actively taking complaints from investors who feel they have been victimized by online scammers. Congress has held hearings on the future of Internet commerce. These hearings address Internet commerce safety issues. Furthermore, members of the House Telecommunications Subcommittee have held hearings to address how the nation is going to go about boosting consumer confidence levels while shopping for goods online. Many individuals believe that e-commerce will grow steadily into the future. Obstacles will be met along the way, and matters such as Internet fraud are just one of the many that need to be dealt with (About the Internet Fraud Complaint Center).

Works Cited
About the Internet Fraud Complaint Center. (n.d.). Retrieved April 25, 2012, from FBI.gov: http://www.fbi.gov/hq/cid/fc/ifcc/about/about_ifcc.htm
IFCC: Internet Auction Fraud: May 2001. (n.d.). Retrieved April 24, 2012, from IFCC: http://www.ifccfbi.gov/strategy/AuctionFraudReport.pdf
IFCC: Six Month Data Trends Report (May-November 2000). (n.d.). Retrieved April 24, 2012, from FBI.gov: http://www.fbi.gov/hq/cid/fc/ifcc.htm
Matusic, K. (2001, September 19). Beware of Internet Appeals. Retrieved April 24, 2012, from CBS News: http://www.cbsnews.com/now/story/0,1597,311791-412,00.shtml
Raphael, R. (2000, July 7). Online Investment Scams. Retrieved April 24, 2012, from ABC News: http://abcnews.go.com/onair/2020/2020_000707_onlineinvesting_feature.html
SEC.gov. (n.d.). Retrieved April 24, 2012, from Internet Fraud: How to Avoid Internet Investment Scams: http://www.sec.gov/investor/pubs/cyberfraud.htm