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From the Actrix Online Informer October 2008

Scams of the Month #4 Scam round up

The Internet can be a scary place if you're not careful, and it's not just viruses and spyware you have to worry about.  Just like the real world, the Internet has its share of baddies out to steal your cash (and your pride) by combining new technology with age-old confidence tricks.

Over the last few months we've been look at scams, and we've pretty well covered off the main ones. If you'd like to read past articles in the Scams of the Month series, check out the Actrix Online Informer article archive.

Pump and dump

One scam that is till very common is the 'Pump and dump' scam.  In this scam false information is sent via unwanted email (spam) about how great a certain company is doing. In fact their stock prices are about to go through the roof! The purpose is to get lots of people to buy the stock which does cause the price to go up, of course. This is the 'pump' aspect. The criminals behind the scam have already bought lots of this company's stock at low prices, and as soon as the price reaches a certain level they immediately sell it off – the 'dump'.

If all goes well for them, they make substantial profits before the stock price falls back to its usual low level. Any buyers unaware of the fraud are left as victims once the price falls. By the time they realise it's a fraud, it is too late to sell and they've lost a lot of their money. It's hard to believe some people would act on financial advice received in spam emails, but apparently plenty do, or this scam would never work.

This scheme can also work in reverse. When it does, it is known as the 'scalping' or 'short sell' scam. The criminals use chat rooms, forums, internet boards and spam, but this time with the purpose of causing dramatic price decreases in a company's stock. Once it reaches a low enough level, they buy the stock and then reverse the false information (or just wait for it to wear off or be disproved). Once the stock price is back to normal, the criminals sell at a profit.

Call tag scam

This scam emerged a couple of years ago. I haven't heard of it occurring in New Zealand, but there's always a first time. Under this scheme, criminals use stolen credit card information to purchase goods online, but they do it using the real name and details of the legitimate cardholder. After the item is delivered the scammer calls the cardholder and falsely identifies himself as the merchant that shipped the goods, saying that they were mistakenly shipped and could they please arrange to have them picked up.

The criminal then arranges the pickup using a courier company different from the one the original merchant used. The cardholder normally doesn't notice that there is a second courier company picking up the product and the courier firm doesn't know it's being duped either.

Work at home

There are types of work at home scam that differs from the money mule scam we covered in the second of our series of scam articles. In that one you're paid to launder money. Other forms of the scam just outright rip you off. Typically these scams also start with an unsolicited email offering you a business opportunity allowing you to earn thousands of dollars a month from the comfort of your own home. Before you can start, of course, you have to pay a fee: anywhere from $50 to several hundred dollars. In the most blatant of variations, you simply never receive the materials or information you're promised. And of course you suddenly stop getting replies to your emails.

Sometimes, after paying a registration fee, you will be sent advice on how to place ads similar to the one that recruited you in order to recruit others. This is effectively a pyramid scheme, and hardly a sustainable or ethical business model. 

Other types of work at home scams include home assembly kits. You pay a fee for the kit, but after assembling and returning the item, it's rejected as substandard, meaning you're out of pocket for the materials.

International modem dialling

This one has been around for a long time and usually originates with websites containing adult content. It's mainly aimed at people on dialup but would work with any computer that had a dialup modem installed and working, even if they were on broadband. Often these sites purport to be free and advertise that no credit card is needed. They then prompt the user to download a "viewer" or "dialler" to allow them to view the content.

Once the program is downloaded it disconnects any existing dialup connection and proceeds to dial an international long distance or premium rate number, charging anything up to $15 per minute. You're happily surfing away and don't notice that you're on a different connection. Meanwhile you're racking up an enormous bill, and you may have some explaining to do with your significant other as well!

Pet scams

Pet Scams come in all shapes and sizes, and happen quite a bit both here and overseas. Here are two or three variations.

In the first and simplest variation, you have placed an online ad about your lost pet and offered a reward if it is found. You then get a call from someone claiming to have found your pet. They want the reward in advance, though, and if you refuse to pay, they'll threaten to harm or abandon your pet.

In the second variation, again, in response to your ad, you get a call from someone who claims to have found your pet injured by the roadside. Often they say they're a truck driver which explains why they haven't been able to wait around. They say your pet needed vet care, which they have paid for. Could you please send them the money so they can send your pet back with another trucker in the same company who is driving back your way. Of course, you'll not only need to wire the money, but give this scammer your name and address, too.

In the third variation your lost pet ad prompts a call from someone who claims to have found an animal that might be yours. In the process of exchanging descriptions, the caller will say it seems to be a different animal, not yours. They'll apologise for your loss, and for taking your time. However, the information gained about you and your pet is then given to a second person who will call and claim to have found your pet. This time they'll be able to be very convincing because they know what your pet looks like. Again, they'll try to collect any reward money in advance.

Fake bank sites

It's not hard to make a copy of someone else's website and put it on the internet at a web address that is almost identical to the authentic one. To understand this scam, imagine you bank at Quickiebank, which has a website at www.quickiebank.co.nz.  The criminal scammer makes a copy of the Quickiebank website and puts it online at www.quickiebnak.co.nz. Now anyone typing 'bnak' instead of 'bank' in haste will end up at the bogus site which will look exactly like the real one. When they try to log in, however, their details are captured by the scammer who will be busy logging in to the real Quickiebank site and transferring your spare money out and away.

Online Auction Scams

There are all sorts of auction scams as well. The most simple and obvious is to advertise goods that don't exist. The scammer just disappears as soon as payment is received. Always make sure anyone you're buying from has good feedback and has been around for a while.

Another trick is auction rigging. If you are selling, a scammer can put in a low bid, then a very high bid under another name. This high bid stops anyone else bidding. Just before the auction ends the high bid is withdrawn , so their low bid wins. If you are buying: the scammers may use false bids to get you to bid higher.

Be careful with cheques. A favourite trick is for a scammer to send you a cheque for goods he's bought from you, but the cheque is 'accidentally' too much. They ask for a refund of the difference, which they hope you will pay to them online before discovering that their cheque bounces.

Charity Scams

Charity scams are very common. They're currently known as 'hurricane scams' because so many have come out after recent hurricane troubles in the United States. A little while ago they were known as tsunami scams or famine scams.

Its a simple system where you receive (unsolicited again) an email that pretends to be from an organisation like World Vision or the International Red Cross. It asks for donations to assist victims of the latest well-publicised disaster. They kindly link to a website where you can make a donation. The 'fake' website resembles the websites of real charitable organisation, of course, but its purpose is simply to get your credit card details from you. Still others may contain viruses or other malicious content that will try to take advantage of any out-of-date software you have installed.

Be very wary of any unsolicited emails that ask for donations, and don't click on donation links provided in them. If you wish to donate money online, go directly to the charity's official website.

What to do if you've been scammed

There are several organisations dedicated to helping out people who have been scammed. If you are not sure where to start contact NetSafe's toll-free helpline (0508 638723) or email queries@netsafe.org.nz.

Below is the advice NetSafe gives to people who think they have been scammed.

  • Keep copies of everything.
  • Scan your computer with an anti-virus and an anti-spyware program (emails can contain viruses and spyware).
  • Contact the police (depending on the case).
  • If you have given away any sensitive information, such as your credit card number, or bank account password, contact your bank immediately.
  • If you have given away any other passwords, make sure that you change them as soon as possible.
  • Online auction sites like TradeMe and eBay can usually help out when a trade was conducted entirely through their website.

Finding out more

Here are some sites to check out if you'd like to find out more about online scams.

 

Copyright 2008 Actrix Networks Limited | Contact: editor@actrix.co.nz