Internet fraud facts for kids

Internet fraud is a type of cybercrime where people use the Internet to trick others. It often involves hiding information or giving wrong information to get money, property, or valuable things from victims. Internet fraud isn't just one crime. It covers many different illegal actions that happen online.

It's different from theft because, in fraud, the victim actually gives their information, money, or property to the scammer. They do it willingly, even if they're tricked. Also, internet fraud often involves scammers who are far away from their victims, both in time and place.

According to the FBI's 2017 report, there were about 300,000 complaints about internet crime. Victims lost over $1.4 billion in online fraud that year. A study by the Center for Strategic and International Studies (CSIS) and McAfee found that cybercrime costs the world economy as much as $600 billion. That's a huge amount! Online fraud comes in many forms, from spam emails to complex scams.

Types of Internet Fraud

Charity Fraud: Tricking Kind Hearts

In this scam, the fraudster pretends to be a charitable organization. They ask for donations to help victims of disasters like hurricanes or earthquakes. They might also claim to be raising money for research into diseases like cancer or AIDS. Sometimes, they pretend to work for orphanages or famous charities like the Red Cross.

Scammers often link to real news articles to make their stories seem true. They target people who want to help others. Once the money is sent, it's usually gone forever, and the scammer disappears. Sometimes, they keep asking for more payments.

Victims might even get into legal trouble if they try to claim these fake donations on their taxes. In the United States, you can only deduct donations made to real non-profit organizations. The scammer might give fake proof of donation, but if checked, the victim could face penalties. While these scams are common, especially after big disasters, people usually don't lose as much money compared to other types of fraud. This is because victims are less likely to borrow money to donate.

Internet Ticket Fraud: Fake Tickets

This scam involves offering tickets to popular events like concerts or sports games. The tickets are either fake or are never delivered. With so many online ticket sellers, it's easier for dishonest ticket resellers to trick people. Many of these scams are run by British ticket touts, even if they operate from other countries.

A big example was the scam involving tickets for the 2008 Beijing Olympic Games. A company called "Xclusive Leisure and Hospitality" sold fake tickets through a professional-looking website. It was reported that over A$50 million worth of fake tickets were sold.

Online Gift Card Fraud: Stealing Balances

Businesses are worried about gift cards bought with stolen credit card numbers. So, cybercriminals are now focusing on stealing information from gift cards that have been issued but not yet spent.

One way hackers do this is by using automated programs called "bots." These bots try many different combinations to guess gift card numbers and PINs. Once they get the gift card data, they check the balance online. Then, they use the funds to buy things or resell the gift cards on other websites. When gift cards are resold, the attackers get cash. This can also be a way to "clean" stolen money, making it look like it came from a legal source. This type of fraud hurts customers, damages the store's reputation, and costs businesses a lot of money. Another way is to steal someone's credit card information and use it to buy new gift cards.

Counterfeit Postal Money Orders: Fake Payments

According to the FBI, there was a rise in fake U.S. postal money orders being used for online fraud. Scammers use these fake money orders in emails or chat rooms. For example, if someone is selling an item online, the scammer might pretend to be from an auction site like eBay and send a fake money order as payment.

It's hard to know exactly how much money is lost through these fake orders, but the United States Postal Service believes it's millions of dollars. The main targets are small online sellers or everyday people selling items on the web. Because there aren't many clear warnings, more and more people are affected.

Companies like UPS and Federal Express are working with the United States Postal Service to try and spot fake money orders. They advise people to be very careful when dealing with money orders. Between 2004 and 2005, 160 counterfeiters were arrested, many caught while trying to cash in their stolen money. In the United States of America, making or using fake postal money orders can lead to up to ten years in jail or a $25,000 fine.

Purchase Fraud: Non-Existent Goods

In this type of fraud, a scammer uses the World Wide Web to advertise products or services that don't actually exist. You send your payment, but the goods or services never arrive.

Scammers often offer these fake products at very low prices. They usually want payments through electronic transfers right away. They avoid secure services like PayPal or credit cards because those services offer more protection to buyers. These payment methods are a big clue that something might be a scam.

Another way to spot a scam is if the website lacks important information. This includes privacy details, contact information, delivery details, or terms and conditions. Scammers often use fake online stores. They promote these fake stores through social media because so many people use it. These stores don't stay online for long. They might only be up for a few sales, then they close the site and move on. A good way to check if a store is fake is to look for online reviews. If there are no reviews, it's a big red flag.

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