Many of us who use the Internet regularly may have our own suspicions over the most common form of Internet fraud, but according to the Federal Bureau of Investigation (FBI) and other watchdog organizations, the most reported incidents of Internet fraud involve the online auction trade. People who use online auction websites often report cases of fraud such as failure to deliver merchandise, misleading descriptions of products, and providing false or deceptive business contact information. Internet fraud involving online auction sales makes up at least 60% of all reports forwarded to the FBI and Better Business Bureau.
Other forms of Internet fraud, such as the Nigerian scam or phishing for personal financial information, run a distant second and third compared to online auction fraud. Although auction websites take numerous steps to verify buyer and seller identities, these safeguards are not foolproof. A sophisticated website for a non-existent business can be created within days, and often the only contact information available is a free or web-based email address. Internet fraud often succeeds because of a lack of real world accountability for online transactions.
Successful resolution of online auction Internet fraud can be challenging. Experts suggest that buyers obtain as much contact information as possible while communicating with unknown sellers. Occasionally, a fraudulent seller or buyer can be tracked down through a single email address, but investigators prefer physical identifiers such as post office boxes, telephone numbers, street addresses or business license information. Potential bidders should make an effort to learn as much about a seller as possible before entering into any kind of financial transaction.
Another common form of Internet fraud is identity theft. Some Internet users provide an extraordinary amount of personal information online, including their physical addresses, phone numbers and email addresses. In some cases, even more personal information, such as social security numbers or bank account information, may be obtained through low-level hacking of unsecured websites. Once an identity thief has enough information to impersonate someone's online persona, all sorts of Internet fraud can be perpetrated. Unauthorized purchases on a victim's credit card are quite common, followed closely by access to private banking information and accounts.
Other forms of Internet fraud include the Nigerian scam, in which recipients of an unsolicited email are asked to provide a safe bank account for the transfer of frozen or illegal funds. Quite often, the scammers will ask for a financial contribution in order to bribe officials or to cover a processing fee. Once this initial money is collected, the scammers either disappear or clean out the victim's bank account. A similar example of Internet fraud involves the victim's supposed winning of a previously unknown foreign lottery. The scammers promise to forward the winnings in exchange for a substantial processing fee.
The Internet fraud known as phishing is also very common. Emails that appear to be from legitimate online banking websites or real world banks may warn recipients of a recent unauthorized purchase or other action requiring immediate attention. When victims click on the link provided in the bogus email, they may be directed to a very sophisticated clone of the known website. Any personal financial information provided in the submission form goes directly to the scammers, not to the legitimate website owners. These Internet fraud masters can create false identities for themselves or sell the information to equally dangerous third parties.