Cyber Fraud: Types, Cases and Laws - Coursework Example

Cyber Fraud: Types, Cases and Laws INTRODUCTION The emergence and development of the internet has impact people’s lives in so many ways. People’s lives have changed in the way they do business and the way they handle social relations. The influence can be seen to cut across all aspects of people’s lives. However its development has also brought with it many consequences that countries individuals and other international bodies are working hard to counter. It can be argued that technology is important as it leads to changes in how people do things but technology has to be adapted by people in their culture and way of life. If this fails to happen, it means that people begin to see consequences as it goes against their norms and expectations. These consequences resulting from the development if the internet and related technologies has made it necessary to craft laws and policies that will help alleviate the problem or rather manage these problems. The dynamic nature of the internet and nature of technology makes it difficult to actually craft laws that fit all situations. Technology changes every day and a law that was important today may be obsolete tomorrow necessitating a continuous kind of review to match new challenges and developments that come up. This paper is going to examine cyber fraud, laws that have been established to counter it; a few cases will be looked at to find out if the current laws are still applicable to the changing nature of internet crimes. CYBER FRAUD Cross and Mille define cyber-crime as “any violation of criminal law that involves knowledge of computer technology for its perpetration, instigation or prosecution” (156). This involves many crimes such as fraud, embezzlement and theft of intellectual property as long as it is committed with aid of computers. Actually these are not new crimes but rather crimes that have been in existence for long in which the internet has now become the instrument for wrong doing (Cross and Mille 158). Fraud on the other hand is any misrepresentation knowingly made with the purpose of deceiving another and on which a reasonable person would and does rely to her or his detriment. Cross and Mille also define cyber fraud as fraud committed over the internet. The internet has led to increasingly interesting and creative ways in which people commit fraud. Scholars say that actually internet fraud is simply an electronic version of frauds formerly perpetuated by sending letters. Cyber fraud therefore includes the following: online auction fraud, online retail fraud, phishing, vishing, employment fraud, malvertising, and email fraud among others (Miller and Jentz 180). Online auction fraud is a very simple process in which a person puts up an expensive item for auction on either a legitimate or a fake auction site, and then the individual refuses to send the product after receiving payment. In other instances the wrongdoer may provide the purchaser with an item that is worth less than the one offered in the action (Morley and Parke 403). Auction fraud is very common on such websites as E-bay and the company has tried so much to protect its consumers against such schemes by providing warnings about deceptive sellers (Miller and Jentz 181). They have also measures in place such as insurance to make sure such things do not happen. The nature of the internet has made it very difficult to counter this problem and I believe it is because of the ability of people to change identities at any one time. People can assume multiple identities and thus making counter measures difficult as it becomes almost impossible to pin point fraudulent sellers. If they are found they can easily change screen names and continue with their actions. Online retail fraud is somewhat similar to online auction fraud. However in this type of fraud consumers pay directly without placing bids on merchandise for items which are never delivered. Because of the fact that consumers have become knowledgeable and will buy products only from reputable sites such as amazon.com, criminals have had to take advantage of some of the complexities of cyber space to lure in unsuspecting customers (Miller and Jentz 181). Research has shown that online retail fraud comes second to online auction fraud in terms of prevalence. By the time these people are known most of them have fraudulently got a lot of money from people (Cross and Mille 403). Phishing may be classified as a form of identity theft. In this type of fraud, the perpetrator technically “fishes” for financial data and passwords from consumers by posing as a legitimate business, such as a bank or a credit company. The criminal in most cases sends an email asking the recipient to update or confirm vital information that may be related to his account often with a threat of the discontinuation of services or the account if the information was not provided. Once the unsuspecting enters the required information, the fisher then uses it to masquerade as the person or to drain his or her bank or credit account. This type of cyber fraud has been on the increase in the U.S with many cases being reported. However such is not difficult to track and in the end these people are usually arrested (Miller and Jentz 183). Vishing is yet another form of cyber fraud which involves some form of voice communication. An individual may receive an email with information that there is a problem with an account which belongs to that individual. The email will instruct the individual to call a certain telephone number in order that the problem may be solved (Miller and Jentz 183). In some cases the email may also say that a telephone call is being requested so that the individual knows that it is not a phishing attempt. The end result is the usually stealing of account information and passwords. Most of the time, these perpetrators use Voice over Internet Protocol (VoIP) service which makes them able to hide their identities (Cross and Mille 157). Employment fraud is another type of cyber fraud where criminals look for victims on job posting sites. These people claim to be employment officers of well-known organizations. The criminals then send bogus emails to unsuspecting clients asking them to reveal as much information about themselves as possible. This usually leads to identity theft as that information is used elsewhere for malicious purposes. In other instances, the criminal may ask that the job seekers pay a given amount of money so that their forms may be processed which never happens. In the end the job seekers are duped and the money lost because they come to learn that they were not dealing with a legit organization (Cross and Mille 158). Malvertising on the other hand is a term for malicious or fraudulent content camouflaged as a run-of-the- mill advertisement. It works by camouflaging malicious code as a harmless online advertisement. These advertisements then lead to harmful or deceptive content. For example, advertisements may redirect a user to a website with rogue security software that falsely claims to prevent threats on the computer (Ferrera, Bird and Reder 404). Malvertising may directly infect the computer because they may come with malicious software or Trojans that can damage data, steal personal information or even bring the computer under the control of a remote user. This is dangerous for the individual because everything that the individual does is monitored by a third party, any new changes of passwords are recorded and account information updated. It could be very costly to the individual if the threat is not quickly identified (Ferrera, Bird and Reder 404). Email fraud is another form of cyber fraud. This is one of the biggest problems on the internet in the 21st century and is becoming difficult to solve each and every day. The major purpose of email fraud is to get some form of response from the victim. Some emails will promise the victim large returns on very small investments (Cascarino 368). Others try to convince you that you are donating to a humanitarian organization and this is especially true after a huge disaster in the country or in the international arena. These emails typically look highly professional and therefore are not very easy to detect and generally elicit very high responses from well-intending people. Unfortunately, as it is in many cases, the transfer of funds takes place electronically and the trail disappears almost immediately making it very difficult to track the criminals. Furthermore an individual should be wary of emails that contain attachments. Such attachments may come with malicious software that might be installed on the computer without the knowledge of the individual and thus bring the computer to the control of a remote person or help steal your information (Cascarino 368). There are many types of cyber fraud as it has been established. The problem is that with the advancement of technology every day, the threats become new as the criminals adapt to the changes in technology. It becomes difficult to implement laws because the laws and other policies require constant review so that they fit the changing nature of cyber fraud. Many cases have appeared in court that have challenged some of the laws making it necessary to go back to the drawing board to craft new laws that can help protect individuals from cyber fraud. The court cases are many some of them are discussed below. COURT CASES AND DECISIONS One of the major cases that raised concerns in the tech security community was the case involving spammer Robert Alan Soloway aged 27 years located in Seattle in the year 2007, the criminal was charged with continued spread of junk email or spam. Soloway made millions of dollars from selling crude spamming kits to new spammers and aided access to zombie networks to help customers accelerate spamming. Microsoft won the case against him and he was ordered to pay $7.8 million. In 2010, a federal court in Miami sentenced a defendant to 68 months imprisonment in connection with his operating a massive eBay auction fraud scheme. The criminal operated between 2003 and 2008 conducting over 5500 eBay transactions using at least 260 different eBay accounts. The criminal is said to have received a total of $717,000 from many bidders and purchaser. In all the instances the items were never shipped or delivered. In another case in Utah, Mark Pentrack was sentenced to 135 months imprisonment when he pleaded guilty to mail fraud, misuse of social security number, attempted destruction of evidence and making false statements in connection with an internet fraud scheme. He offered car parts, aircraft parts and other items for sale on the internet but did not possess them and did not deliver those items. The criminal made over $200,000 before was arrested (USDOJ 1-14). In Texas, in May 2011, Thor Morris was sentenced to 37months in prison on charges of fraud and related activity connected with computers. He also was planning to hack into approximately 35 Houston area ATMs in an attempt to embezzle over $200,000 (US Today). Another man by the name Mathew Simpson was charged with participating in a conspiracy to defraud more than $15 million from two telecommunication companies Verizon and AT&T. He used his company in performing the said operations in the city of Texas (USDOJ). In another case in 2004, William Quinn was indicted for allegedly obtaining unauthorized access to Verizon computers and posting access codes for those computers over the Internet. Accessing Verizon computers in this way would allow hackers to disable phone numbers (including 911, hospitals) from making or receiving calls. The New York Economic Crimes Task Force conducted the investigation. In all these cases, the court decisions were either to sentence the person or criminal to jail or to direct the individual to pay a given amount of money. I believe that these charges are less likely to stop or prevent people from continued engagement in cyber fraud. In some cases, the law stipulates that offenders may be liable to imprisonment for up to 25 years but some of these court decisions only give the offender a sentence of not more than 5 years. The case that was considered major the offender was sentenced to 137 months in prison, which is approximately 12 years. This means that with the low sentence people will still engage in the crime. LAWS GOVERNING FRAUD There are two major laws that govern fraud in the United States. Federal criminal Code 18 U.S.C 1029 is a statute that prohibits computer fraud and any other related activity that is made possible through counterfeit access devices such as PINs, credit cards, account numbers and any other type of electronic identifiers (Doyle 3). The following are areas of criminal activity are covered by the section: producing, using and trafficking in counterfeit access devices; using or getting unauthorized access devices to obtain information; possessing unauthorized access devices; producing counterfeit device making equipment, effecting transactions through the use of access devices given to another person for purposes of receiving payments; soliciting a person with an aim of providing an access device that can be used to obtain access; the use, production or trafficking in telecommunication devices that has been altered so as to enable unauthorized use of telecommunication services and causing a person to present, to a credit card system member or its agent for payment, records of transactions made by an access device. In all these instances the offenses must be committed knowingly by an individual and with the purpose of defrauding individuals (May 5). The federal computer fraud and abuse statute, 18 U.S.C. 1030, outlaws conduct that is seen as liable to victimize computer systems. Generally it is a computer security law. It is aimed at protecting computers in which the federal government has interest in them. These include federal computers, bank computers and any other computer that is used in interstate and foreign commerce. The law is aimed at shielding these computers from trespassing, threats, damage, espionage and from corruptly being used as instruments of fraud (Doyle 2). Scholars agree that this law is not a comprehensive provision; instead it fills gaps in the protection afforded by other state and federal criminal laws. It is a work that over the last two decades, congress has kneaded, reworked, recast and amended to bolster the uncertain coverage of more general trespassing, threat, malicious mischief, fraud and espionage statutes (Doyle 2). This only shows that computer crimes evolve on a daily basis with the advancements in the computer technology. Therefore laws established today may be challenged tomorrow and that is why congress has continuously worked on these laws to ensure they are up to date (May 2). CONCLUSION Cyber fraud is evolving each and every day. The various forms of cyber fraud explained above grow in sophistication with the advancements in technology. The technology in one way makes it easier for the criminals to easily deceive people and works against the prevention agencies as it makes it difficult for them to trace criminals or the transactions. Many court cases have been solved with many people being sentenced or fined but the sentences are too lean such that the problem still persists. The laws on the other hand are clear but the problem is that they need to be changed with the changes in technology. An applicable statute today may be obsolete tomorrow and therefore continuous review is very important in order to curb the vices. Works Cited Cascarino, Richard E. Auditors Guide to IT Auditing. Hoboken: John Wiley & Sons, 2012. Print. Cross, Frank B. and Roger LeRoy Mille. The Legal Environment of Business: Text and cases: Ethical, Regulatory, Global and Corporate Issues. Belmont, CA: Cengage Learning, 2011. Print. Doyle, Cahrles. "Cybercrime: Asketch of 18 U.S.C 1030 and related federal criminal Laws." February25 2008. CRS. Web. 19 April 2012. Ferrera, Gerald R., et al. CyberLaw: Text and Cases. Belmont , CA: Cengage Learning, 2010.Print. May, Maxim. "Federal computer crime laws." May 2004. SANS. Web.19 April 2012. Miller, Roger LeRoy and Gaylord A. Jentz. Business Law Today: The Essentials. Belmont, CA: Cengage Learning, 2009. Print. Morley, Deborah and Charles S. Parke. Understanding Computers: Today and Tomorrow, cmprehensive. Belmont, CA: Cengage Learning, 2010. Print. US Today. "Case Study-Cybercrime." 2007. USA Today College. Web. 19 April 2012. USDOJ. "Background on operation websnare." 2004. US department of Justice. Web. 19 April 2012. —. "Major Achievements in the court room." 2011. United States Department of Justice. Web.19 April 2012. Read More