There are plenty of legitimate businesses on the Internet. There are even some legitimate ways to make money with a home-based business on the Internet. But mixed in among these are thousands of Internet scams designed to pray on the naive or anyone looking to get rich quick. Don't fool yourself into thinking that other people are the only victims of Internet fraud. As scammers become more sophisticated, some very savvy people are losing money.
Here are some indications that you're about to be scammed:
You're a winner!
No, you're not, no matter what the e-mail or banner advertisement says. These scams fall into two categories. The e-mail lottery scam says that you've received a big prize, but you need to pay taxes or a transfer fee to claim it. You'll often be directed to send the funds to an international account. You send the money, you never get the prize. This isn't the way lottery winnings are taxed in the United States. You didn't enter the lottery in the first place, so how can you be a winner?
Banner ads promise a free iPod or free Xbox 360 if you click on them. They may offer a simple and irrelevant challenge or flat out declare that you're a winner. Either way, you're not. To get your "free" prize you'll need to buy a bunch of stuff you don't need and sign up for offers that will flood your inbox with spam. You may even need to sign up friends and family for the spam flood. Iwon.com (which, like this site, is owned by IAC Search and Media) is one of a handful of legitimate online contest sites.
I need your help
In this e-mail scam, you receive a letter from a "banker," a "church member," a "government official" or a "distant relative" spinning a tale of death and woe that ends with the claim that a huge sum of money is trapped in an international bank. The author can't move the funds, so you'll get a percentage of the cash if you facilitate the transaction.
This is known as a Nigerian scam because many of these con artists operate out of Nigeria. If you take the bait, you'll be asked to hand over "transfer fees" or "facilitation fees" so that the money can be moved. In return, you'll get excuses about why the money hasn't been moved and more room in your bank account. This is always a scam. There's no inheritance or free money coming your way by e-mail.
A new version of the scam claims to come from an assassin who's been hired to kill you but will let you live if you provide payments or bank account information. Assassins don't e-mail their victims. If you get one of these, forward it to local law enforcement.
The Unlawful Internet Gambling Enforcement Act of 2006 made it illegal for US banks to transfer funds to and from certain betting and poker sites. Most online gambling sites have closed their doors to US gamblers as a result of the legislation, but you'll get e-mails from casinos eager for your business. Since Internet gambling currently exists in a legal limbo, it's hard to tell if you're breaking the law by placing a bet, and scammers rely on the unwillingness of victims to come forward. Until the legal smoke clears, you're best off avoiding online gambling.
Pay by wire transfer
Internet scammers are quite fond of wire transfers as a payment method. Once you've wired the funds, you've got no way of getting them back. This lets the scammer take your money without shipping you the goods that you were promised. This scam has become so prevalent at online auction and classified sites that the rule of thumb is to assume that anyone asking you to pay by wire transfer is a scam artist. If you can't use PayPal or your credit card, don't buy.
As with wire transfers, fraud involving cashier's checks has become so widespread that the best advice is to never accept them and to stop doing business immediately with anyone who suggests sending one.
There are two versions of this Internet scam. Both take advantage of the quick processing of cashier's checks by banks and your trusting nature. The first one is targeted at people who sell online through sites like eBay or Craigslist. The scammer offers to buy whatever you're selling, then sends you a cashier's check worth far more than the purchase price and asks you to send the difference via a wire transfer. The cashier's check you receive is a fake, but you won't find that out until after you've wired the money.
The other variation is a work at home scheme. Most of these scams involve processing rebate checks or becoming a mystery shopper and getting to keep everything you buy. Again, the scammer sends cashier's checks in excess of the amount you're owed. You deposit the checks and wire most of the balance, minus your "pay," back to the scammer. Again, the cashier's check is a fake.
You're responsible for the money that's stolen in a cashier's check scam, so if you wire $2,000, you'll need to give $2,000 back to your bank. There is no protection for you in this situation. The only way to make sure a cashier's check is legitimate is to wait for the transaction to post from the originating bank; your bank may clear it in a few days, but it can take up to three weeks for the originating bank to clear the funds. Sit and wait, no matter how many e-mails you receive.
Where's my merchandise?
Some Web sites promise fabulous deals on popular items. Who wouldn't want an iPod for half price, or to buy merchandise at wholesale and sell it on eBay? Fraud runs rampant with these deals, particularly if they originate from China. The seller has no intention at all of sending you the merchandise and typically requests a wire transfer rather than a credit card. Sophisticated scammers will use phony customer reviews and fake certifications, sometimes bogus versions of legitimate certifications, to fool you into thinking the business is legit.
Legitimate online businesses take PayPal and credit cards. They don't use wire transfers. Anyone offering to sell knockoff jeans, handbags or electronics is guaranteed to be a scammer. Attempting to import these goods into the United States is illegal, so they prey on your unwillingness to report your involvement in a criminal enterprise.
Whether you're just trying to warn others or if you've fallen victim to Internet fraud yourself, reporting an Internet scam is a vital part of shutting these criminals down. Depending on the type of Internet fraud, you've got several potential options for reporting Internet scams. In some cases, you'll want to contact local authorities for cases of Internet fraud. In other cases, you may want to use the FBI or other institutions for reporting Internet scams.
After the recession, the United States government began pumping money back into the economy. Unfortunately, scam artists have taken advantage of the situation by running advertisements saying they can help you get your hands on some of that stimulus money.
You have only to click around the internet to discover one of the many scams that saturate the digital realm. They flood our e-mail inboxes, clutter the job search sites, and assault us with pop-ups that rapidly spawn 4 more of the same nuisances before we manage to close the first one.
Internet scams are on the rise, and their sole purpose is to separate you from your money or steal your identity. In some cases, Internet scam artists are more interested in stealing your identity than your money.