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Common categories of online fraud

• Auction fraud – The most common sort of online fraud, auction scams represent 42% of all 2005 complaints to the National Consumers League’s Internet Fraud Watch. Auction fraud occurs when an item won in an online auction never arrives or has been significantly misrepresented.
• Goods not delivered – This is when consumers don’t receive goods they’ve paid for online. After auction fraud, the second most common Internet scam.
• Bogus money offers – A common form of spam, someone contacts you because you’ve supposedly been left millions of dollars from an estate. Just give them your bank account information and pay them a small fee to transfer the money to your account. Unfortunately, there is no estate, no money, and no recourse if you fall for the scam.
• Bad checks for services or goods – In this scenario, the con artist buys an item or service and sends the seller a check for an amount exceeding the price. The seller is asked to wire back the extra money. The original check then bounces and the seller not only loses out on their payment, but also on the additional the money he or she wired.
• Work-at-home plans and pyramid schemes – In these schemes, serious money is promised for doing work out of your home or for signing up more “distributors” of a product. Instead, you end up paying for work kits that never arrive, buying large amounts of a product no one wants, or investing in a pyramid that collapses before you see any money. In all cases, the outlay of cash is greater than the return.
• False loans or credit help for a fee – Often spam based, these are fraudulent promises to provide loans—especially to help consumers out of existing debt or bad credit situations. In these schemes, the “lender” requests a fee to apply for the loan and is never heard from again.
• Charity frauds – Spiking around the time of natural disasters and other calamities, charlatans impersonate legitimate charity organizations in emails and on Web sites to bilk charitable citizens out of their money.
• Fake government grants – Contacting you because you’re a “good taxpayer,” the perpetrator requests a fee or financial account information so they can process a grant application you’re qualified for. The grant, like the fake charities, are a hoax.

How to protect yourself

• Don’t do business with an organization you can’t verify or don’t trust.
• Check with your consumer protection agency and Better Business Bureau for outstanding complaints.
• Confirm contact details, including physical addresses, phone numbers, and localities of incorporation. Don’t do business with organizations that won’t freely provide this information.
• Understand all the rules of an auction before bidding.
• Confirm an auction sellers’ track record and contact details before bidding on their item.
• Avoid buying collectible or one-of-a-kind items in an online auction. If you can’t inspect it beforehand, how do you know it’s the real thing?
• Don’t send cash or use wire transfers to pay for online goods, services, or auction items.
• Insist on a cashier’s check for the exact amount of goods or services you’ve sold over the Internet. Never deposit a check you’ve received for amounts exceeding the price you’ve negotiated.
• Even if you’re familiar with a charity, call the organization to confirm their online request before making a donation.
• Use good judgment when responding to offers of easy money. If the offer appears too good to be true, it probably is.
• Be wary of unsolicited requests for upfront fees from lenders, government agencies, or other organizations.
• Make all online transactions with credit cards over secure Web sites. Even if you’ve done your due diligence and decided to transact business with someone, you should still pay the safest way.

Summary

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