79 Protecting Yourself on the Net, Part I
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Dynamic Chiropractic – October 20, 1997, Vol. 15, Issue 22

Protecting Yourself on the Net, Part I

Cyberscams, Con Games and Frauds on the Web

By Michael Devitt
A few months ago, many members of America Online (AOL), including Dynamic Chiropractic, received this e-mail message:

Subj: ***** AOL Warning Missing Account Information ***** Date: 97-08-24 23:53:02 EDT From: RORUpdate1 BCC: EAuger5970

Good day AOL user, we have been notified at our financial department that you have not submitted the right credit card number, telephone number, and billing address with first and last name.

Please reply with that information and we will be glad to enter it on the computer for you. If you wish not to reply we will be forced to cancel you (sic) account. Please state the following in order.

  1. Current credit card company or bank
  2. Number of the card and exp. date
  3. Your name
  4. Address and state with zip and your home and phone number
  5. Number of bank or the beck (sic) of your card phone number
  6. Your AOL personal password
  7. Social Secutiry (sic) number
  8. Date of birth
  9. Mother's maiden name

Regards,
Keith Jenkins
Rules of the Road
America Online, Inc.

Notice anything funny about this message? How about the errors in grammar and spelling? What is this enigmatic "Rules of the Road." Who is Keith Jenkins?

The message is clearly fraudulent, but one wonders how many people will be fleeced by this scam. If you or someone you know has received such a message, forward it to your Internet service provider immediately.

The threat of fraud on the Internet is real. From the websites that offer a cure for AIDS and cancer, to get rich quick schemes that promise you can work from home in your bathrobe, there are thousands of con artists using the Internet for their own deceptive purposes. Considering the ease at which someone can offer their goods and services on the Net. How can you tell the company trying to make an honest living from a street-wise criminal just out to make some fast money?

Regulating Fraudulent Activities: A Growing Problem

When businesses on the Internet first began offering their services online, there was no new legislation created to regulate the type and content of advertisements shown to consumers. The Federal Trade Commission (FTC) considered it just another type of medium for advertising. As such, the laws that cover other types of media are the same as those used for the Internet. This means that the majority of fraud cases that are committed, whether by mail, telephone, in the newspaper, or over a computer network, are considered false advertising.

The problem is that false advertising cases aren't covered by a single jurisdiction. Each state has various business, civil, and criminal codes that may apply. Most states don't even have criminal penalties associated with consumer fraud statutes. On the federal level, the FTC, the Securities and Exchange Commission, and the Justice Department all have their own sets of regulations. And since most crimes that occur on the Internet happen over state lines and national boundaries, they become particularly hard to prosecute.

"It's clearly the wave of the future ..."

The FTC and other consumer protection agencies think it's very important to detect and stop suspicious business operations on the Internet as early as possible. But the sheer size of the Internet (there are more than 60 million registered web pages in the U.S. alone) makes this a near-Herculean task. Millions of people have signed up for Internet access in recent years, giving the con artists access to a much larger audience than just a few years ago. Says Bill McDonald, the chief of enforcement for the California Department of Corporations, "It's clearly the wave of the future in terms of fraud."1

Figuring out good, honest marketing from deceptive advertising is never easy. It's even more difficult on the Internet. People still expect at least some degree of truth in advertising, and that naturally carries over to the Internet. Because it is a newer form of media, some consumers may be willing to believe an online advertisement more readily than one on television or in the newspaper. And publishing a relatively inexpensive, eye-catching website can be accomplished in a matter of minutes. A well-produced web page that looks like it belongs to a legitimate corporation can easily snare unsuspecting customers.

And there are plenty of people out there who fall prey to false advertising. Although no data about Internet fraud is currently available, a Harris Poll which was commissioned by the National Consumer League in 1992 found that 9 of 10 Americans had been approached by a fraudulent operator at some point in their lives; 29 percent of those people approached had expressed interest in the scheme or operation.2

The Art of the Online Con

There are at least a half dozen different types of scams currently operating on the Internet. Most, like pyramid schemes or ponzis, are just a computerized versions of old con games. However, the Internet had opened up global variations of some scams and created new traps for consumers.

One popular type of fraud circulating on the Internet is a variation on selling security investments: offering shares in a company or product that doesn't exist. The SEC has broken up Internet scams selling bogus shares in everything from Costa Rican coconut chips, to a nonexistent ethanol plant in the Dominican Republic. The SEC reports that it gets about 40 complaints a day related to such fraudulent Internet projects.3

Other companies prey on the sick, offering miracle cures for everything from obesity and hair loss to AIDS and cancer. The Illinois attorney general recently filed suit against Westar Nutrition and its marketing branch, Viva America. On its website, the company was selling a product known as germanium sesquioxide, claiming that it could lower cholesterol, reduce arthritic joint pain, and help treat AIDS and cancer. In reality, the FDA banned the import of germanium after it was linked to irreversible kidney damage, coma, and death.4 Westar has since stopped running ads for the product online.

Don't Be a Victim

So how do you protect yourself from the ads that say, "Generate a guaranteed 100% return on your investment" or "make $5,000 a week from the comfort of your living room?" Here are a few quick tips that can help you avoid the hazards of Internet fraud:
  1. Be suspicious of any "miracle" or "wonder" products that are offered online. The rule of thumb is that if it sounds too good to be true, that's because it probably is.

  2. If you are interested in a product or service, make sure that the retailer has a telephone number you can call as an alternative. And yes, call the company to make sure the telephone number is legitimate.

  3. Don't buy a product or jump into a business venture solely on what you read online or hear in a chat room. Research the business through the Better Business Bureau. If it's a stock, call the SEC or your stockbroker to find out if it the stock or product is authentic.

  4. Don't send money to any enterprise that doesn't have a street address or verifiable business history. If you are victimized by such a scam, it becomes that much harder for you to track down the crook and recover your money.

  5. If you are going to buy something over the Internet, don't use cash. Credit card companies keep a record of every transaction your account makes. In the event of a fraud, your credit card company may be your only hope for financial or legal recourse.

  6. Above all, never give out personal information like your social security number, credit card account number, or online account passwords to people or websites you don't trust. It could cost you in the end.

There are also numerous sites on the Internet that provide free information on prospective investments, products, companies and personalities. A couple of interest are:

Consumer World. This site offers more than 1,400 links to the web pages of various consumer protection and regulatory agencies and other informational sites. The site provides you with a variety of current fraud and scam alerts, and a search engine that lets you look up certain types of fraud. Consumer World's web address is www.consumerworld.org.

The National Fraud Information Center (NFIC). This is a large consortium of antifraud resources compiled from government and private consumer agencies. The NFIC issues daily alerts on new scams and the status of past and ongoing fraud investigations. The website also contains links to other consumer protection agencies. NFIC can be reached at www.fraud.org, or you can call them at (800) 876-7060.

In part two of "Protecting Yourself on the Net," we'll discuss the issue of privacy on the Internet. What does the Web know about you? Is your private information really "private?" And how can you keep personal information from getting in the wrong hands? We'll show you how information is gathered (often without your knowledge or consent), and what you can do to stop it.

Future installments of "Getting Started on the Internet" will cover such topics as online auto repairs, movie sites and news resources. As always, we welcome your comments. If you have any questions or suggestions about this article, or if there is a particular website or subject you'd like to see reviewed, please contact me by e-mail or at the number listed below.

References

  1. Cyberscams. PC World, May 1997;170.
  2. Ibid.
  3. Ibid, p. 175.
  4. Ibid, p. 180.

Michael Devitt
Huntington Beach, California
Tel: (714) 960-6577
Fax: (714) 536-1482

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