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Consumer Fraud

Internet Fraud

The growth of the Internet as a communication tool has also meant its growth as an instrument of fraud. Internet fraud has grown so rapidly in recent years that FEDERAL BUREAU OF INVESTIGATION (FBI) and the National White Collar Crime Center launched the Internet Fraud Complaint Center, which compiles data and offers tips on ways to avoid being defrauded. In 2001, Internet fraud accounted for $17.8 million in losses, with a median loss of $435 per victim.

The most common type of fraud, accounting for nearly two thirds of all reported fraud, is Internet-auction fraud. Although there are a number of legitimate online auction houses, there are many that are simply scams. Consumers who purchase items on these sites find that the goods they bid for never existed, or that the goods are stolen, or that the seller has added numerous hidden charges. The seller might even act as a shill by placing false bids. (Some consumers jump on the fraud bandwagon, as well, by using aliases to place multiple phony high bids in order to deter low or moderate bidders.)

The Internet is also home to credit card scams, investment scams, and home-improvement scams. These may appear on web sites or they may be sent in the form of unsolicited commercial e-mail (UCE), better known as "spam." One common spam message is the "Nigerian Letter," in which a person who claims to be a former high official, usually from the Nigerian government, seeks help in converting millions of dollars in funds. The consumer is asked to provide bank account information so that the funds can be transferred to that account.

Additional topics

Law Library - American Law and Legal InformationFree Legal Encyclopedia: Constituency to CosignerConsumer Fraud - Identity Theft, Telephone And Mail Solicitations, Internet Fraud, Income Tax Fraud - Combating Fraud