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General Information about Internet Fraud

Don’t Judge by Initial Appearances. It may seem obvious, but consumers need to remember that just because something appears on the Internet - no matter how impressive or professional the Web site looks - doesn’t mean it’s true. The ready availability of software that allows anyone, at minimal cost, to set up a professional-looking Web site means that criminals can make their Web sites look as impressive as those of legitimate e-commerce merchants.

Be Careful About Giving Out Valuable Personal Data Online. If you see e-mail messages from someone you don’t know that ask you for personal data - such as your Social Security number, credit-card number, or password - don’t just send the data without knowing more about who’s asking. Criminals have been known to send messages in which they pretend to be (for example) a systems administrator or Internet service provider representative in order to persuade people online that they should disclose valuable personal data. While secure transactions with known c-commerce sites are fairly safe, especially if you use a credit card, non-secure messages to unknown recipients are not.

Be Especially Careful About Online Communications With Someone Who Conceals His True Identity.If someone sends you an e-mail in which he refuses to disclose his full identity, or uses an e-mail header that has no useful identifying data (e.g., “”), that may be an indication that the person doesn’t want to leave any information that could allow you to contact them later if you have a dispute over undelivered goods for which you paid. As a result, you should be highly wary about relying on advice that such people give you if they are trying to persuade you to entrust your money to them.

Watch Out for “Advance-Fee” Demands.In general, you need to look carefully at any online seller of goods or services who wants you to send checks or money orders immediately to a post office box, before you receive the goods or services you’ve been promised. Legitimate startup “” companies, of course, may not have the brand-name recognition of long- established companies, and still be fully capable of delivering what you need at a fair price. Even so, using the Internet to research online companies that aren’t known to you is a reasonable step to take before you decide to entrust a significant amount of money to such companies.

Specific Types of Internet Fraud


Online Auctions and Retail Sales Schemes

To reduce the chances that you may be victimized by fraudulent online auction or retail sales schemes, here are two basic tips:

Research The Prospective Seller Carefully. If you haven’t had personal (and favorable) experience with someone who’s offering certain goods for online sale or auction, look for sources of information at the Web site where the offeror’s information is posted, and at other Web sites. Some online auction sites provide their member with opportunities to provide “feedback” on their experiences with particular sellers (although certain sellers have tried to manipulate the “feedback” process by posting favorable but false reports about themselves).

Pay by Credit Card or Escrow Service If Possible. If you charge your online purchase on a major U.S. bank-issued credit card, your liability may be limited to $50 under any circumstances, and at least one credit-card issuer has recently indicated that it will waive the $50 deductible. In the alternative, some online auction Web sites offer escrow services that (for a small percentage) will guarantee delivery of the ordered goods before releasing your payment to the seller.

Investment Schemes Online

To reduce your risks from online investment opportunities that may be fraudulent, here are two basic tips:


Take Your Time In Making Investment Decisions. Remember that in any “get-rich- quick” scheme, there’s only one person who’s guaranteed to get rich quick: the person promoting the scheme.

If you’re thinking about pursuing some online investment opportunity, start by recognizing that you need to take your time in making decisions about what you do with your hard- earned money. Sound investing for the long term takes patience, the will to ignore momentary market fluctuations, and a carefully thought-out plan for reaching your investment goals.

Research The Potential Investment Opportunity - And Who’s Behind It - Carefully. Several agencies and self-regulatory organizations can give you a substantial hand with your research, at no cost to you:

The SEC’s Web site, contains a wealth of information about many companies.

The Federal Trade Commission’s Web site, ftg.ov, also has an internal search engine, which allows you to look for information on particular individuals or companies involved with your prospective investment, including listings of FTC enforcement actions.

The National Association of Securities Dealers (NASD) allows you to check for some disciplinary history on the broker or company that’s touting a particular investment. Go to or call the NASD’s Public Disclosure hotline at 800-289-9999.

If the potential investment involves commodities, you may also need to check out the Commodity Futures Trading Commission’s Web site,, and use its internal search engine to check out companies and people.

If the prospective investment supposedly involves an Internet financial institution, go to the Federal Deposit Insurance Corporation (FDIC)’s Online Banks Web pages, www.fdic. and use the FDIC’s Financial Institutions Search Engine you find there to see whether the financial institution has a legitimate banking charter and is a member of the FDIC.

When the potential investment is based outside the United States, remember that your money may be even more at risk, as you may have little or no recourse in the event of loss. The United Kingdom’s Financial Services Authority allows investors to check out U.K. and European Union-based investment offers at its Central Register (call 01-71-929-3652).

Filing Complaints about Internet Fraud

If you think that you’ve been the victim of a fraud scheme that involved the Internet, you can file a complaint online with the Internet Fraud Complaint Center, a joint project of the FBI and the National White Collar Crime Center. Go to