Internet Fraud

1
Internet Fraud

• Group 3
• Antje Lembcke
• Aaron Mighty
• Sonmin Park
• ISM 6367
• 6/17/03

2
Introduction

• Original Article
• How information technology gives you Competitive
  Advantage by Porter and Millar
• Focus evolved during Presentation
• Dark side of information technology
• Todays Focus
• Dark side of e-commerce
• Specific Internet Fraud

3
General Disadvantages of E-Commerce

• Unreliable delivery after order placement
• e.g. annoying if special gift or urgently needed
  course books not in time (Half.com)
• Internet traffic increases especially during
  holiday
• customer satisfaction declines e.g. due to long
  waiting time while pages build up after order is
  placed

4
General Disadvantages of E-Commerce (cont.)

• Hard to find exactly what you're looking for
• It takes time to find a site that has the item in
  stock at a decent price.
• Its hard to see and to try e.g. clothing or
  items that aren't mass-produced
• E-commerce sites and their brick-and-mortar
  siblings typically operate on different planets
  
• Barnesandnoble.com store,
• CompUSAnet.com store

5
General Disadvantages of E-Commerce (cont.)

• Sites don't respect customers' privacy
• spamming customers
• selling customer data and e-mail addresses
  without permission
• Customer service is still not sufficient
• No real contact, often only FAQ section
• Fraud
• 70 000 complaints of fraud reported,
• 50 Percent increase from 2001

6
Internet Fraud

• IFCC
• Founded May 8th 2000
• Partnership between National White Collar Crime
  Center and FBI.
• Mission
• Address fraud committed over the Internet.

7
Yearly Comparison of Fraud Complaints
Referred By IFCC

• About three times more reported Frauds with IFCC
  than in 2001.

8
Top Ten IFCC Complaint Categories

• 90 of Frauds belong in three categories
• Auction Fraud
• Non-Delivery
• Credit Card Fraud

9
Top Ten IFCC Complaint Categories

• Auction Fraud
• Most reported offense, 46.1
• 7.7 increase from 2001
• Expl Case of Chris Chong Kim.
• Non-Delivery of merchant and payment
• Comprise 31.3 of all complaints
• 56 increase from 2001
• Expl Case of Teresa Smith

10
Complaints by Monetary Loss
11
Increase of Monetary Loss

• 48,252 referrals of fraud processed
• 36,332 reported monetary losses.
• Total dollar loss 54 million in 2002.
• Compared to 17 million in 2001.

12
Perpetrator Characteristics

• Nearly four in five (79) are male
• Half reside in either
• California, New York, Florida, Texas, or
  Illinois.
• Most perpetrators are from the US
• Perpetrators are also from
• Nigeria, Canada, South Africa, and Romania.

13
Complainant Characteristics

• 71 are male
• Half are between the ages of 30 and 50
• Over one-third reside either in
• California, Florida, Texas, or New York.
• Most complaints are from the US
• Also from
• Canada, Australia, GB, Germany, Japan.

14
Forms of Contact

• Most often used
• E-mail (66)
• Web (18.7)

15
Difficulties to Follow up on Internet Fraud

• Offender and victim may be located 100s or 1000s
  miles apart.
• Requires cooperation of multiple agencies to
  resolve a given Case.
• Offender is completely unknown
• established through e-mail or Web-pages
• no real name, address, telephone number,
  description of person, etc.

16
Conclusion

• Anyone who utilizes the internet is susceptible
• Complaints come from both males and females.
• Range in age is from age 10 to 100.
• Complainants can be found in all fifty states,
  in dozens of countries worldwide

17
Conclusion (cont)

• Victimization is on the rise
• The number of referrals at IFCC has tripled over
  the last year.
• These statistics represent only the tip of the
  iceberg.
• Adoption of technology as invaluable tool
  resulted in proliferation of problems

18
Outlook for the Final Paper

• Focus on Internet Auction fraud, as it is the
  biggest source of fraud.
• Show Steps to avoid being victimized.