Internet Fraud as Cyber Crime

Schemes to defraud consumers abound on the Internet. Among the most famous is the Nigerian, or “419,” scam; the number is a reference to the section of Nigerian law that the scam violates.

Although this con has been used with both fax and traditional mail, it has been given new life by the Internet. In the scheme, an individual receives an e-mail asserting that the sender requires help in transferring a large sum of money out of Nigeria or another distant country. Usually, this money is in the form of an asset that is going to be sold, such as oil, or a large amount of cash that requires “laundering” to conceal its source; the variations are endless, and new specifics are constantly being developed. The message asks the recipient to cover some cost of moving the funds out of the country in return for receiving a much larger sum of money in the near future. Should the recipient respond with a check or money order, he is told that complications have developed; more money is required. Over time, victims can lose thousands of dollars that are utterly unrecoverable.

In 2002 the U.S. Internet Fraud Complaint Center reported that more than $54 million dollars had been lost through a variety of fraud schemes; this represented a threefold increase over estimated losses of $17 million in 2001. In the United States, the largest source of fraud was online auctions. In many cases, individuals would put products up for sale on Internet auction sites, demand money before delivery, and never fulfill their obligations to the consumer. Such scams accounted for 46 percent of the fraud cases in 2002, with an average individual loss of $299. Unlike identity theft, where the theft occurs without the victim's knowledge, these more traditional forms of fraud occur in plain sight. The victim willingly provides private information that enables the crime; hence, these are transactional crimes. Few people would believe someone who walked up to them on the street and promised them easy riches; however, receiving an unsolicited e-mail or visiting a random Web page is sufficiently different that many people easily open their wallets. Despite a vast amount of consumer education, Internet fraud remains a growth industry for criminals and prosecutors. Europe and the United States are far from the only sites of cybercrime. South Korea is among the most wired countries in the world, and its cybercrime fraud statistics are growing at an alarming rate. In 2003 some 40,000 cases of cybercriminal activity, mostly fraud, had been reported to authorities. This represented an 18 percent increase from 2002. Japan has also experienced a rapid growth in similar crimes; in 2003 official National Police Agency statistics cited a 94 percent increase in Internet fraud since 2000.


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