Internet Fraud. An Overview

Term Paper, 2018

10 Pages, Grade: 1


Table of Contents


Forms of Internet Fraud

Actions to Take

How to Prevent Internet Fraud

Organizations Responsible for Internet Fraud

Some Cases about Internet Fraud




It appears that advances in the computer technology have led to the emergence of new crime activities. However, current wave of economic globalization requires extensive application of ICT in business transactions. As a result, e-commerce is seemingly assuming the center stage in the world of business. It has imparted sophistication in the way the global community carries out business transactions. Today, people do not need to have liquid cash in the pocket for business transactions as it used to be the case before the inception of e-commerce, in 1990’s. Moreover, electronic money transfers have offered people with a reliable alternative of buying and selling items through electronic means. Purchase and selling of goods and services are currently being conducted at the comfort of one’s sofa set in the house or on the office chair. This has been enhanced by the invention of e-payment services, in which buyers can purchase commodities via online connection, the so-called online shopping and send the payments to the seller through electronic money transfer means.

However, e-commerce appear to be accompanied by enormous financial risks, especially with regard to internet fraud through which users of online money transfers are losing colossal sums of money to cyber criminals. It is believed that millions of people among the global population fall victims of internet fraud every year and, the vice has been assuming upward trends year-by-year (Internet Fraud Alert, n.d.).

From an accounting perspective, Internet fraud is a cyber crime in which cyber criminal develop an internet scheme to deprive a person of financial resources, especially by the creating dishonest misrepresentation of fact. Australian Federal Police (2012) defines internet fraud as, “any type of fraud scheme that uses email, web sites (and) chat rooms or message boards to present fraudulent solicitations to prospective victims” (par. 1). Internet fraud assumes different forms. Therefore, this term paper will give a comprehensive overview of internet fraud.

Forms of Internet Fraud

It is believed that criminals transmit proceeds of financial fraud to individuals and financial institutions through their fraud schemes. In general, there are five common forms of internet fraud and they are perpetrated in different ways at different venues. These forms include internet banking fraud, shopping/auction site fraud, scams, identity theft and spam.

In internet banking fraud, criminals use internet technology to withdraw or transfer money across different bank accounts illegally. This form of fraud occurs often in banking institutions and, it is usually transmitted through mobile devices such as tablets and smart phones. Internet banking fraud is categorized into three forms: mobile banking, mule recruitment and phishing.

Mobile banking has become one of the most reliable means of banking. Therefore, financial institutions have developed sophisticated software system to protect their clients from internet fraud. However, criminals have devised tricky ways of persuading victims to reveal their confidential banking information from them. As a result, criminals use the victim’s banking information to access money in the victim’s bank accounts.

In mule recruitment, criminals convince other people to receive stolen funds into their bank accounts, which are then transferred to criminal networks overseas. In most cases, criminals connect with innocent persons through sending fraudulent employment recruitment emails to random email recipients. As a result, innocent persons fall victims to the criminals and they are used as channels of perpetrating criminal activities. The ultimate result for falling victim to cyber criminals is prosecution because; the victim’s information is available in the criminal network (Australian Federal Police, 2012).

In phishing, criminals gain access to internet banking information through fraudulent means. In most cases, they send spam emails, imposing as bank officials so that bank account holders can reveal their accounts’ logon information. Australian Federal Police (2012) defines phishing as, “the use of spam e-mails purporting to be from a bank, in this way criminals 'fish' for legitimate bank customer's log-on information” (par. 3).

In regard to shopping and auction site fraud, innocent customers are robbed of their money by criminals through the exposure of their payment details in unsecure payment services. In most cases, online shoppers follow email links provided by criminals to enter into fraudulent sites, where they make payments without knowing.

On the other hand, scams are perpetrated through the use of spam messages to the targeted victims. Unsolicited commercial electronic messages are sent to victims by criminals, through which they persuade them to commodities and services through criminal websites where the buyers expose their credit card details. It is worth noting that scams are related to identity theft, in which one’s personal information is used to facilitate fraud activities, especially with regard to financial fraud.

Actions to Take

In case one becomes a victim of internet fraud there are a number of actions, which can help the victims in various ways. The most fundamental step to take is to report internet fraud to either U.S Authorities or other relevant authorities overseas. The U.S Department of State advises fraud victims to file their financial loss complaints with the relevant organizations. For instance, one can report the case to the Internet Crime Complaint Center, which works in partnership with the Federal Bureau of Investigation (FBI). It is also advisable to notify one’s Secret Service field office to launch an investigation over the fraud.

In overseas, different State Security Agencies can assist the victims of fraud by intercepting the perpetrators. These agencies have hotline contact addresses, which enables fraud victims to solicit assistance from overseas authorities. For instance, fraud victims, in U.K can seek for assistance from the Metropolitan Police, whereas those in Canada can report fraud cases to the Canadian Anti-Fraud Call Center (U.S Department of State, n.d.).


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Internet Fraud. An Overview
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Caroline Mutuku (Author), 2018, Internet Fraud. An Overview, Munich, GRIN Verlag,


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