November 30, 1999

Article at PC Computing

Don't Get Fooled Again

Shysters. Scam artists. Flimflammers. Con men. Swindlers. Sharks. E-commerce is booming. So is online fraud, which is sucking the lifeblood out of the online explosion. It's on the rise — up 600 percent in the past year. Don't be a victim. You're smarter than that.

(PDF version here.)

A few months ago, just before Labor Day, customers of California ISP Value Net received an important e-mail message. Your account, the note said, is past due. To update it, please visit Clever customers noticed something amiss: the URL should have read But at least one trusting soul visited the site and unwittingly gave away his personal information to a con artist. The result? A hefty unauthorized charge on his credit card.

Not that you would have fallen for that scam.

A few months earlier, thousands of Net users received a "confirmation" e-mail saying their orders for sexually explicit materials had been processed and their credit cards charged accordingly. If they had any questions, a phone number was provided. The message failed to mention that the number, which was in the 767 area code, went directly to Roseau, Dominica. The result? Outrageous long-distance charges.

You would never be that gullible.

In April, investors visiting certain chat rooms came across a hot stock tip: A small California tech firm was about to be bought by an Israeli company in a deal worth billions. Even the most inexperienced investors know better than to trust an unsubstantiated rumor, so the message also provided a link to a Bloomberg article that corroborated the story. One problem: The article was a fake, and so was the Bloomberg site. Shares in the company skyrocketed the following day, then crashed when the truth leaked out. The result? Serious losses.

But you would have known better . . . right?

Not necessarily, said Susan Grant, the director of Internet Fraud Watch, a division of the National Consumers League. "No one is immune. Your susceptibility has nothing to do with your income or education level or knowledge of computers. What counts is what works on you personally. In another life, crooks could be very successful psychologists."

Over the next few years, con artists will have plenty of opportunity to find out what works on you and your fellow e-shoppers. A recent Yankee Group study found that online shoppers are actually growing less concerned about security; online retail sales should reach $125.6 billion in 2003, up from $11.5 billion in 1998. eBay, as of early October, had about 6 million registered users and 3 million items for sale. Once the numbers reach a certain level, notes eBay spokesperson Kevin Pursglove, fraud is inevitable.

And nowhere more so, according to the Internet Fraud Watch, than in auctions, which account for close to 70 percent of the online fraud complaints it receives. Tom Holland, director of fraud detection and prevention at, notes that auctions pose more risk to everyone involved. Whereas with online retail sales the vendor assumes most of the danger, with auctions the seller risks not getting paid and the buyer risks not getting the goods.

Fraud on the Net, like most everything else online, is still in its infancy. "There's a lot more in the brick-and-mortar world," said Holland, who's been in the fraud-fighting business for nearly two decades. But rest assured, the perpetrators are out there devising better ways to separate you from your money online. It wasn't long after auction sites created feedback mechanisms to rate buyers and sellers that shysters learned to rig the systems for their own nefarious ends.

Fraud 2.0 is on the way, and more versions are bound to follow.