Top 10 Online Scams

We’ve all opened our email and found something suspicious in the inbox. It happens to me nearly everyday. I just hit delete and away it goes - until the next one comes in 24 hours later.

Unless you’ve been living in a cave, you know the Internet is riddled with correction and crime. While you can’t avoid it, you can defend yourself.

With a little knowledge and common sense you can recognize what types of schemes Internet criminals are trying to pull off.


Please take a look at these — before someone tries to pull the wool over your eyes.----------------------

1. Auction Fraud

Auction fraud typically involves the misrepresentation or non-delivery of a product advertised for sale through an online auction site. In one common auction fraud, the seller posts the item as if he resides in the United States, then responds to the “winner” (buyer) with an e-mail stating that he is out of the country for some reason and requests that payment be wired directly to him via Western Union, MoneyGram, or bank-to-bank wire transfer. Using those sources makes the money virtually unrecoverable and leaves the victim with no recourse. For more details on auction fraud and how to avoid it, visit www.eBay.com and www.paypal.com.

2. Counterfeit Cashier’s Check

This scam targets individuals who use internet classified ads to sell merchandise or vehicles as well as landlords who advertise their rental properties online. Typically, an interested party outside the United States contacts the advertiser and agrees to make the purchase or rent the property. To make the payment, the “buyer” explains that someone owes him money and he will have that individual send a cashier’s check in the amount owed to the seller. The amount of the cashier’s check will be significantly more than the purchase and the seller is asked to deposit the check and wire the excess funds to the buyer or an associate of the buyer.

Most banks will release the funds on a cashier’s check immediately or within a day or two. Many consumers believe this means the check is valid, but it can take up to several weeks for a bank to determine that a cashier’s check is counterfeit. When that happens, the bank will hold the person who deposited the check responsible for the full amount of the check. A victim of this scam has lost the merchandise sold, the amount of money he wired to the “buyer,” and probably bank fees for the returned check.

3. Employment/Business Opportunities

A common scam in this category is when bogus foreign-based companies recruit U.S. residents on employment-search websites for work-at-home employment opportunities. These positions often involve reselling or reshipping merchandise to destinations outside the U.S.

Prospective employees are required to provide personal information as well as copies of their identification, such as a driver’s license, birth certificate, or Social Security card (which puts them at risk of being victims of identity theft). The employees that are “hired” by the bogus company are told that their salary will be paid by a U.S. company that is a creditor of their new employer because the employer does not have any banking set up in the U.S.

When the employee is paid, the amount of the check is significantly more than what is due. The employee is told to deposit the check and wire the excess payment to the employer’s bank overseas. When the check is later found to be fraudulent, the victim is in the same situation as victims of counterfeit cashier’s checks.

4. Escrow Services Fraud

Legitimate escrow services play an important role in protecting buyer and sellers in online transactions. However, scammers have been known to create phony escrow sites to which buyer victims send money and receive nothing in return or from which sellers wait for payment after shipping merchandise—payment that never comes. If you use an escrow service, be sure it’s one you know and that you can verify its legitimacy.

5. Internet Extortion

Internet extortion involves such activities as hacking into and controlling various industry databases, promising to release control back to the company in exchange for money. The perpetrator may threaten to compromise the information in the database unless a payment is made.

6. Lottery Fraud

A common lottery scheme involves sending an e-mail advising the recipient that he has won a lottery and provides instructions on how to collect the winnings. Typically the “winner” is asked to pay an initial fee ranging from $1,000 to $5,000 and often requests for additional payments follow, but the “winner” never receives the promised jackpot.

7. Nigerian Letter

This common scam involves an e-mail from individuals representing themselves as Nigerian or other foreign government officials, or as victims of foreign government political situations. They offer the recipient the “opportunity” to share in a percentage of millions of dollars in exchange for assistance in placing large sums of money in overseas bank accounts. The letters go into great detail about the situation, which may include the death of a loved one, political persecution, or other sympathy-grabbing story. The recipient is solicited for money to pay taxes, bribes, and legal fees, as well as for personal information, such as bank name and account numbers. The scammer promises to reimburse the victim for the expenses as soon as the funds are out of his or her country. Of course, the money is never repaid and the victim is also at risk of additional theft by having provided bank account information.

8. Phishing/Spoofing

Spoofing generally refers to e-mail which is forged to appear as though it was sent by someone other than the actual source. Phishing, often utilized in conjunction with a spoofed e-mail, is sending an e-mail that falsely claims to be an established legitimate business or government agency in an attempt to dupe an unsuspecting recipient into divulging personal, sensitive information such as passwords, credit card numbers, and bank account information. Phishing e-mails typically direct the user to a fake website set up for fraudulent purposes.

9. Reshipping

The reshipping scheme requires individuals in the United States, who sometimes are co-conspirators and other times are unwitting accomplices, to receive packages at their residence and repackage the merchandise for shipment, usually abroad. Typically this merchandise was purchased with fraudulent credit cards and the scam unravels when the defrauded merchants begin to contact the reshipper.

Reshippers are often recruited through employment offers and in online chat rooms. As part of the employment application process, the victim is required to divulge personal information such as Social Security number and date of birth, which is then used to obtain credit in the victim’s name.

10. Third Party Receiver of Funds

In a work-at-home scheme, a scammer in a foreign country solicits assistance from U.S. citizens. The scammer claims to be posting Internet auctions but can’t receive the payments from the auctions directly due to being outside the U.S. and recruits the victim to act as a third party receiver of funds—funds that come from still other victims who think they are making a legitimate online purchase but who never receive their merchandise. The third party receiver of funds receives the money and wires it to the scammer. The scam typically comes to light when the victims complain about not receiving their merchandise.

Many online scams are obvious, but there are plenty of very sophisticated and creative criminals working on the Internet. Your best strategy is to be suspicious—remember, it’s not paranoia if they’re really out to get you. Insist on verifying the legitimacy of every online transaction with an unfamiliar entity and never give out personal information unless you initiated the contact and are certain of the authenticity of the site or individual you’re dealing with.