Internet Fraud Explained: Definitions, Types, and Defenses
The advent of the internet has opened up limitless opportunities for people and businesses around the world.
However, it also provides the possibility for people to use the anonymity of the internet to make claims against competitors or accidentally run afoul of the law with its ever-changing rules about internet use.
At Tidwell Law Firm, our criminal defense attorneys have experience defending our clients from a number of different internet fraud claims. However, the term “internet fraud” can be vague and confusing, so it is important to understand what prosecutors consider to be internet fraud and how best to defend yourself if you are charged with an internet fraud offense.
What is Internet Fraud?
Simply put, internet fraud is a term that encompasses a number of types of fraud that utilize the internet with the intent to defraud or otherwise take advantage of victims.
A crime can be labeled as internet fraud even if only part of the accused crime uses the internet or if the entire fraud takes place online. According to the Federal Bureau of Investigation (FBI), in 2017 they received around 300,000 complaints of internet fraud totaling over $1.4 billion in losses for the victims. Globally, some research estimates the total loss stemming from cyberfraud globally to be around $600 billion.
There are many methods to committing internet fraud, many of which include sophisticated methods to defraud their victims.
Business email compromise (BEC) and email account compromise (EAC) use email scams to target victims. BEC focuses on businesses that work with foreign companies and often pay through the use of wire transfers. This scam compromises legitimate business email addresses to authorize fraudulent wire transfers from the company. EAC targets the general public or professionals usually associated with banks or other financial organizations to request payments to fraudulent clients or locations.
Another method is through a data breach, which leaks data from a secured location to an unsecured location on the internet to gain access to personal contact information. Malware, scareware, and ransomware utilize software that can damage the computer, use scare tactics to coerce payments, or deny access to systems unless payment is made.
Types of Internet Frauds
Internet fraud can relate to a number of different crimes that occur in whole or in part on the internet.
Some internet fraud examples require highly technical computer knowledge, which others are very basic and require only the exchange of email or personal messages. Some of the most common types of internet fraud prosecuted today include the following:
Advance Fee Fraud
For this type of internet fraud, the offender requests fees or other payment up front in return for goods, services, or rewards that are never given to the victim. Typically, the scammer has a good sounding reason for the need of advance fees, such as to pay for taxes or shipping on the item in question, and the money is almost always requested as a wire transfer. This type of fraud is usually perpetrated by sending out the request to hundreds or thousands at the same time to see who takes the bait.
Auction, Classifieds, and Online Shopping Scams
Auction, classifieds, and online shopping fraud occurs when a person offers up an item for sale in an online forum and send the buyer an inferior or faulty item after the purchase is made.
In some situations, the seller never sends anything at all.
In others, the seller only pretends to sell an item on one of these forums just to collect credit card or bank account details.
On auction websites, a seller may claim that a potential buyer who lost has a second chance to purchase the item but needs the buyer to pay through a third party site where the money is lost, and the auction site cannot refund the buyer for the fraud.
Banking and Online Account Fraud
In this type of fraud, the perpetrator sends the victim messages pretending to be their bank, lending institution, or another online account.
In most cases, the messages will claim that there is an issue with the account and the victim needs to verify their account information in order to have continued access to their assets. The message usually sends the victim to a fraudulent but convincing copy of the institution’s website, where the victim will input their information to their sensitive accounts.
Charity internet fraud involves sending messages on behalf of a real or imagined charity organization, requesting funds to help pay for a worthy cause.
The reasons can range from helping shelter animals to sick children to saving the environment. Many of these cases have websites and false testimonials about the charitable organization. The offender either collects outright payments from the scam or collects credit card and banking information from victims that input their information to make a payment to the fake charity.
This type of internet fraud encompasses a range of computer hacking activities, which includes data breaches and phishing scams.
Computer hacking via the internet usually involves some type of message or email that includes an attachment, photo, or clickable link which embeds a virus or malware into the computer system. This gives the offender access to all of the information stored on the computer as well as potentially any computer attached to the computer’s larger system.
Credit Card Fraud
Credit card fraud on the internet refers to any unauthorized use of a credit card, debit card, or similar payment method to buy goods or services without the consent of the owner of the card.
This does not require physical possession of the victims’ credit card and can be done just with access to the credit card number, expiration date, and CCV number. Credit card fraud often happens after the successful conclusion of another type of internet fraud where the credit card information is obtained.
Dating and Romance Scams
For this type of fraud, the perpetrators create fake profiles on dating websites and enter into online relationships for the purposes of gathering the victim’s personal information or banking details.
Sometimes, the offender will claim that they are suffering from some kind of illness, injury, travel, or family crisis that requires money once they have established a strong connection with their victim.
Job and Employment Scams
Job and employment fraud occurs when a person posts a fake job or investment opportunity online for the purposes of collecting applicants’ personal information.
In other instances of this internet fraud, the fake employer will require that the applicant pay for upfront costs of employment, which may be for a business plan, training courses, software, security clearance, taxes, or fees.
Lottery, Sweepstakes, and Competition Scams
One of the oldest types of internet fraud, this type of scam involves receiving a message or email informing the victim that they have won a lottery, sweepstakes, or competition online even if you did not enter.
In order to claim the prize, the victim must typically pay some money up front or provide their contact information for verification purposes, which is then promptly sold or used by the offender.
“Nigerian Letter” or 419 Fraud
This type of fraud involves an email from a fake Nigerian prince, who offers the victim the opportunity to collect a portion of the prince’s vast wealth if the victim helps transfer the money out of Nigeria.
The offender encourages the victim to send information such as banking information, account numbers, and fax numbers to prove their willingness to participate in the scheme. The victim is then required to make payments, usually small and increasing in size, to the fake prince to handle various costs, such as bribes, taxes, and legal fees. If the victim refuses to continue payments, the offender may drain the victim’s bank accounts using the information they have provided during the course of the fraud.
Small Business Scams
Small business internet fraud targets the owners and operators of small businesses with invoices and bills for fake goods and services provided to the business.
Other forms of this fraud include the creation of unauthorized listings, advertisements, products, or services that have secret subscriptions hidden in the fine print.
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Defenses to Charges of Internet Fraud
If you or your business has been charged with internet fraud, you have options for your defense.
Speaking with an experienced criminal defense attorney is your best chance of overcoming charges of internet fraud. A lawyer can review the facts of your case and build the best possible defense to these accusations. Defenses to charges of internet fraud include the following:
The nature of internet fraud means that the victims of these crimes never see the perpetrator face to face. Because of this, it is easy to have a case of mistaken identity when it comes to cases of internet fraud, where it is assumed that one person committed the crime, but in actuality it was someone else.
This is particularly true if the internet fraud was perpetrated at a public or work computer, where multiple people have access to the same computer. In these cases, a forensic investigator is incredibly helpful at proving that the accused was on the internet using a different device at the time of the alleged fraud or was nowhere near the device used at the time the fraud was committed.
Illegal Search and Seizure
Another defense to internet fraud charges is that the prosecutors used illegal search and seizure methods to obtain their evidence.
Sometimes, authorities and prosecutors are overzealous and initiate searches without the proper warrant, and anything obtained as a result of an illegal search is considered fruit of the poisonous tree. An attorney can get any evidence taken during an illegal search thrown out of the case, which can often lead the prosecution with a lack of evidence to move forward with the case.
Internet fraud cases are complex crimes that can involve perpetrators and victims across the country or the world.
It can be difficult for prosecutors to collect all of the evidence it needs from such far away places, bring in witnesses to testify, or accurately estimate the true value of the loss from the accused crimes. If the prosecution lacks the proof to prove that you committed the crime beyond a reasonable doubt, you cannot be convicted for the crime.
Coercion or Duress
An affirmative defense to charges of internet fraud is that the crime was perpetrated under coercion or duress.
Being coerced into committing the crime means that you were intimidated through the implicit or explicit use of threats of violence or reprisal to commit the fraud. Duress occurs when someone uses actual threats, violence, constraint, or other action to force you to commit the crime. The use of coercion or duress to force you to commit the fraud is a valid defense against accusations of internet fraud.
Lack of Intent
One vital component of all types of internet fraud is that the offender must have the intent to defraud or otherwise harm the victims of the fraud when the crime occurs.
The prosecution must be able to show through some form of evidence that you intentionally and willfully meant to defraud a person. If the fraud occurred by accident or through a misunderstanding, then you lacked the intent to commit the crime.
One final defense to internet fraud is that you had consent to perform the actions you did from the alleged victim at the time of the alleged fraud.
If you have proof that the person or business that is claiming fraud actually gave you permission to do whatever is accused, then no fraud was committed. Even if the actions taken ultimately hurt the person who consented or were ill-advised, it does not constitute the crime of fraud if the actions were consented to by all parties involved.
Contact Our Office Today
If you have more questions about internet fraud or have been charged with internet fraud crimes, our office is here to help. Call the office or contact us today at Tidwell Law Firm to schedule a consultation of your legal needs.