Internet Fraud

The term Internet fraud refers to any type of fraud scheme that uses email, web sites, chat rooms or message boards to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions or to transmit the proceeds of fraud to financial institutions or to other connected with the scheme.

Identity theft schemes

Most Internet fraud is done through the use of stolen credit card information which is obtained in many ways, the simplest being copying information from retailers, either (online or offline). There have been many cases of hackers obtaining huge quantities of credit card information from companies' databases. There have been cases of employees of companies that deal with millions of customers in which they were selling the credit card information to criminals.

Despite the claims of the credit card industry and various merchants, using credit cards for online purchases is inherently insecure and carries a certain risk. Even so called "secure transactions" are not fully secure since the information needs to be decrypted to plain text in order to process it. This is one of the points where credit card information is typically stolen.

ClickFraud

Clickfraud occurs when advertising network affiliates force paid views or clicks to ads on their own websites via Spyware, the affiliate is then paid a commission on the cost-per-click that was artificially generated. Affiliate programs such as Google's Adsense capability pay high commissions that drive the generation of bogus clicks. With paid clicks costing as much as $100 and an online advertising industry worth $10 Billion+, it is clear why this form of Internet fraud is on the increase.

Online Dating Fraud

This is an option when people you met on an online dating website, chat, or instant messaging get acquainted with you. These people usually live in other countries so you can see them only in photos. They appear to look like very pretty and sexy. After communicating with these girls/guys for some period you feel that have become close friends. Then you both want to see each other in real life. These people usually ask for some money to buy airplane tickets to come to you. You transfer money via Western Union and then these people just disappear. The Computer Crime Research Center receives a lot of claims saying people were tricked out of as much as $5000.

Phishing

Phishing is the act of attempting to fraudulently acquire sensitive information, such as passwords and credit card details, by masquerading as a trustworthy person or business with a real need for such information in a seemingly official electronic notification or message (most often an email, or an instant message). It is a form of social engineering attack.

Phishing has been widely used by fraudsters using spam messages masquerading as large Banks (Citibank, Bank of America) or Paypal. These fraudsters can copy the code and graphics from legitimate websites and use them on their own sites to create a legitimate-looking scam web pages. They can also link to the graphics on the legitimate sites to use on their own scam site. These pages are so well done that most people cannot tell that they have navigated to a scam site. Fraudsters will also put the text of a link to a legitimate site in an e-mail but use the source code to links to own fake site. This can be revealed by using the "view source" feature in the e-mail application to look at the destination of the link or putting the cursor over the link and looking at the code in the status bar of the browser. Although many people don't fall for it, the small percentage of people that do fall for it, multiplied by the sheer numbers of spam messages sent, presents the fraudster with a substantial incentive to keep doing it.

This article is adapted from: wikiPedia.com