In general, the same types of schemes that have victimized consumers and investors for many years before the creation of the Internet and e-commerce are now appearing online. The term Internet fraud is used loosely to describe any type of scheme that uses one or more components of the Internet, such as chat rooms, e-mail, or message boards, to do one of the following:
- To present fraudulent solicitations to prospective victims
- To conduct fraudulent transactions
- To transmit the proceeds of fraud to financial institutions or to others connected with the scheme
Here are some of the major types of Internet fraud:
- Auction and Retail Schemes – These are the most commonly reported types of Internet fraud. These schemes generally propose to offer high priced merchandise for low prices, and induce the consumer to send money for the promised items, but then receive nothing or something of far lesser value in return.
- Work-at-Home Schemes – Fraudulent schemes often use the Internet to advertise opportunities that will allow individuals to earn thousands of dollars a month in work-at-home ventures. These schemes induce the consumer to send money for start-up materials, but then the materials they receive are usually not adequate for the purposes of starting a successful business.
- Identity Theft – Some forms of Internet fraud involve identity theft. An Internet posting will induce someone to send a driver¿s license number or a social security number for the purpose of fraud or deception.
- Market Manipulation Scheme – Action taken by the SEC and criminal prosecutors indicate that criminals are using two basic methods under this type of fraud: Pump-and-Dump Schemes which use false or fraudulent information in an effort to cause dramatic price increases in thinly traded stocks or stocks of shell companies, then immediately sell their holdings of those stocks to realize substantial profits, and Scalping Schemes disseminate false or fraudulent information in an effort to cause price decreases in a particular companies stock.
- Credit Card Fraud – Credit card fraud is a variation on auction schemes. In credit card fraud, the con-artist uses unlawfully obtained credit card numbers to order goods and services online.
Because jurisdiction can be complicated in cases involving e-commerce, the most active prosecution has been in the federal court system. Backed by the FCC, SEC, and countless statutes, offenders of Internet fraud face a wide variety of fines and, in some cases, federal prison time.
If you are the victim of Internet fraud, it is best to contact a local or federal prosecutor to file a report, but you may also want to contact a business attorney to initiate a civil action against the fraudulent person or company. If you have been accused or arrested for Internet fraud, the advice of a defense attorney specializing in white collar crime could be extremely helpful.