Fraud and Scams in Our Society - Coursework Example

Fraud and Scams in Our Society 1. Unexpected Money Unexpected money is a scamming technique in which scammers make an attempt to convince the targeted person that he or she has won or inherited some money (Office of the Children’s eSafety Commissioner, n.d.). The scammers can contact the targeted person via SMS or email or by making a call. The scammers request for the targeted person’s banking particulars or other details, which they say are required in order for the targeted individual to receive their money. However, all this information is false since the scammer’s aim is to try and gain access to the target person’s money and steal it (Office of the Children’s eSafety Commissioner, n.d.). There are various kinds of unexpected money scams such as inheritance scams, Nigerian scams, reclaim scams, and up-front payment and advance fee frauds (Scamwatch, n.d.). In an inheritance scam, the scammer informs the targeted person that they are entitled to an inheritance and that their particulars such as bank information are required for the purpose of sharing the inheritance money (Ononuju, 2013). A Nigerian scam involves the scammers offering to share with the targeted individual a big sum of money provided that the targeted person helps them to transfer the money out of their country. The scammer will ask for the target’s bank account information or request them to pay a small fee so that the money can be processed through their account (Office of the Children’s eSafety Commissioner, n.d.). In reclaim scams, the scammer tries to convince the target that he or she is entitled to a reimbursement or rebate from a bank, a government institution or a trusted organisation. The scammer will ask the target to make a small initial feel to cater for taxes or administration fees so as to claim the amount (Office of the Children’s eSafety Commissioner, n.d.). Up-front payment and advance fee fraudsters ask the victim to send some money in advance so that later on they can receive some kind of reward such as a pre-approved loan or a prize. The scammer may also ask the target to provide their banking information to facilitate the processing of the offer (Office of the Children’s eSafety Commissioner, n.d). One real-life example of an unexpected money is a Nigerian scam that involved a circulated email from a Mr. Dan Patrick “from the Democratic Republic of Congo”, as stated by Christensen (2013). Mr. Patrick claimed that before the former president of the DR Congo, Laurent Kabila died, he had left them (Patrick and his colleagues) with US$20,500,000 for the purchase of arms. Mr. Patrick claimed that after Kabila was assassinated, the new regime became hostile towards them such that they could not move the money from where they had kept it. Mr. Patrick was therefore looking for someone who would help them to move the money out of DR Congo and have a share of the sum afterwards. He provided an email through which potential targets of the scam could reply for further information and promised to keep the communication “extraordinarily confidential” (Christensen, 2013). 2. Fake Charities Fake charities are scams that involve the scammers taking advantage of people’s compassion and generosity for groups or individuals who are in need (Scamwatch, n.d.). The scammers will steal people’s money by presenting themselves as authentic charities and asking the public to contribute towards a particular cause. Fake charities take advantage of emergencies or disasters such as cyclones, floods, bushfires or earthquakes to make people contribute their money towards helping the affected individuals (Scamwatch, n.d.). The scammers will set up emails, phone numbers or web pages through they make requests for donations or people’s bank information such as bank card details, which they then use to steal money from unsuspecting individuals (Office of the Children’s eSafety Commissioner, n.d.). According to Sadri and Frakes (2016), “disaster relief scams” are the most notorious fake charity scams, where the scammers pose as genuine charity sites and ask for contributions to assist people who have been rendered homeless by earthquakes, floods or volcanic eruptions (p. 63). For instance, if a scammer has a website that imitates that of organisations such as Red Cross or other aid organisations, then it is very likely that some members of the public will donate to that fake charity. Fake charities can also involve scammers either posing as agents of legitimate and familiar charities or creating their own charity names (Scamwatch, n.d.). The charities may be focused on a wide array of causes, such as medical funds or funds to help needy or sick children. The money that is received through the scheme is then pocketed by the individuals who are involved in the scam (Sadri & Frakes, 2016). Real-life examples of fake charities can be seen in relation to various hurricanes that occurred in the United States. After Hurricane Katrina, many scammers started buying domain names with the word ‘Katrina’ (Atlantic Publishing, 2008), which they could then use to set up websites to make appeals for donations to help the affected people. The Red Cross also requested the FBI to investigate about 15 fake websites that were structured to appear as genuine Red Cross appeals for Donations. As well, following Hurricane Sandy, a charity that called itself Hurricane Sandy Relief Effort was able to raise $600,000 to assist people affected by the hurricane (Scott, 2015). However, it was later established that the charity was in real sense a ploy by some con artists to benefit from the donations that were made (Scott, 2015). The real-life examples above show how fake charities can be used to raise funds from compassionate people using various ways. One way is to use a name or representation that appears to resemble that of a well-known charity organisation such as the Red Cross. Another approach is to use a name that is related to a known emergency or disaster, as was the case for the charity called Hurricane Sandy Relief Effort. Unsuspecting members of the public will make their donations to the fake charities, and the fake charity organisers will disappear once they have received the funds. 3. Dating and Romance Scammers capitalise on people who are searching for romantic partners, in most cases through social media, dating websites and apps (Scamwatch, n.d.). To elicit the interest of potential targets, the scammers pretend to be prospective companions. They use emotional triggers to get the targeted person to provide personal details, money or gifts (Scamwatch, n.d.). The primary aim of people involved in dating and romance scams is to use the relationships that they create with the targeted individual to lure such people into doing things that will benefit the scammer (e.g. sending money to the scammers) (Ononuju, 2013). A scammer will typically establish an online relationship with a person over a few weeks, several months or even years. They will claim to be in love, even at the very early stages of the relationship and show a lot of interest in the individual that they are ‘in love’ with. They will for instance make calls, send emails or send phone text messages often to express their love. They will shower the potential target with a lot of praise and sometimes go the extent of sending them gifts (Office of the Children’s eSafety Commissioner, n.d.). Many scammers will claim to be living overseas. Further, even if a scammer is an Australian and targeting another Australian, he or she will claim to be travelling overseas (Scamwatch, n.d.). The scammer will often come up with many reasons for not being in a position to meet their ‘lover’ in person (Office of the Children’s eSafety Commissioner, n.d.). They may even arrange visits and cancel them at the last minute due to ‘unavoidable circumstances’. But over time, they will directly or subtly ask the targeted person to send some money or even share their bank information. The unsuspecting person may send money or share personal details because of the trust they will have established with the scammer over time. To get money from the target, the scammer may create a scenario such as having a family member who is severely ill and needs urgent medical attention (Competition Bureau Canada, 2012). As well, the scammer may request for money to buy a ticket to visit the target, which they promise to refund after sorting some issues (Scamwatch, n.d). In all these cases, the scammer is using the rapport that has been built over time to get money from their ‘lover’. Some dating and romance scammers work by creating a dating site where people pay for each message or email that they receive and send. The scammer will try to hook people by continuing to send messages that appear vague but are filled with talk of desire or love (Competition Bureau Canada, 2012). The aim of the scammer in such a case is to get as much money as possible through the conversations with the targeted person. There are many real-life cases of dating and romance scams in Australia. According to ABC News, Scamwatch data shows that Australians lost $1.8 million to scammers involved in dating and romance in January 2017 (Hill, 2017). The scammers operate on many Internet platforms, including dating sites and Facebook, and usually groom their potential targets and gain their trust before conning them of their money (Hill, 2017). 4. Jobs and Investment Scams Scammers target people who are looking for fast ways of making money. The scammers come up with all sorts of opportunities for people to make money and lure uninformed individuals into schemes in which they end up losing their money to the scammers (Scamwatch, n.d.). Some of the schemes through which scammers steal money from people include betting and sports investments, investment schemes, pyramid schemes, as well as the promise of job opportunities in which people are required to pay some fee to get a high-paying job (Scamwatch, n.d.). Sports and betting venture scams try to persuade people to invest in foolproof software and systems that can ‘guarantee’ a return on a sporting event (Scamwatch, n.d.). Such scams are just a type of gambling that is disguised as legitimate investments. Many of such programmes do not work as they are said to, and buyers do not get their money back. In most cases, the seller of such ideas disappears once the buyers lose their money on the services (Scamwatch, n.d.). Shadowy investment schemes are designed to steal money from people or businesses on the promise that the individuals or businesses will get a rewarding financial opportunity. Examples of investment scams include investment cold calls, share promotions and hot tips, investment seminars, and superannuation. In many of these schemes, potential targets are advised to invest in portfolios that are said to be rewarding or earning high interest in a very short time. Such investments include mortgages, real estate high-return schemes, shares or financial plans. Once a person has made an investment, he or she will realise that the much-touted high interest accruing from the investment was overrated or does not even exist. Investment seminars involve organising seminars that are addressed by motivational speakers, self-made millionaires or investment experts. In such gatherings, people are lured by tips on how to grow rich quickly, and the promoters make money by selling overpriced books or reports, charging an attendance fee, and convincing people to buy certain investments without prior consultation (Scamwatch, n.d.). Pyramid or Ponzi schemes are set up by suspicious financial institutions and promise to pay huge profits on certain investments or high interest rates on deposits (Ononuju, 2013). Initially, investors earn good returns, but as the number of investors increases and interest to be paid also increases, the scheme collapses or the management of the scheme disappears with investors’ money. In Australia, jobs and investment scams are high given that Australians lost $3,627,390 in February 2017 alone. One of the most common forms of investment scams is the Ponzi scheme (Scamwatch, n.d.). In February 2016, ABC News reported that a number of Australians had lost a sum of $7 million in an investment scheme that collapsed (Stewart, 2016). The investment scheme was being managed by a financial trader who had not been licensed. The scheme, run by Gunter Lang, attracted many investors who were guaranteed high returns on their investments, but in the end, it became a Ponzi scheme and collapsed with the investors’ money. 5. Attempts to Gain your Personal Information Scammers will use all possible methods to steal people’s identity or money. Attempts to gain people’s personal information occur in various forms. Examples of these include identity theft, phishing and hacking (Scamwatch, n.d.). Identity theft is a fraud that involves a person obtaining the personal details of a victim (the targeted person) (Streff, 2007). The personal details that are obtained fraudulently are then used to steal the victim’s possessions such as money or to gain access to other benefits. The various methods that scammers can use to steal the identities of other people include phishing, hacking, remote access scams, the use of malware and ransomware, document theft (where the scammer gets access to personal information through discarded documents such as utility bills, unlocked mailboxes, ATM receipts and so forth) and the use of fake online profiles (Scamwatch, n.d.). A phishing scam is an attempt to trick an individual into giving personal details such as bank account information, credit card details and passwords (Scamwatch, n.d.). A scammer will contact a targeted person unexpectedly and pretend to be from a genuine organisation such as an Internet or telephone service provider or a bank. The scammer can contact the targeted individual by social media, a text message, a phone call or using email. The scammer will ask the targeted person to confirm or provide their personal details. For instance, the scammer may indicate that the bank or any other organisation is confirming customer information due to a technical hitch that led to loss of customers’ data (Scamwatch, n.d.). As well, the scammer may ask the targeted person to complete a customer survey and provide a prize for participation. Another form of phishing may involve the scammer alerting a targeted person about “unauthorised or suspicious activity on your account” and asking the target to provide personal information such as card verification value (Scamwatch, n.d.). In all these cases, the aim of the scammer is to get a person’s personal information, which the scammer can then use to perform fraudulent activities, such as using a credit card to steal money (Scamwatch, n.d.). Hacking is the process by which a scammer gets access to a person’s personal information through the use of technology to break into a system such as a mobile device, a computer or a network (Scamwatch, n.d.). Through hacking, a person can get an unauthorized access to a system and steal information such as passwords, or manipulate the information in the system in a way that suits their objectives. A scammer can for instance trick the a user to install malware on his or her computer, which will then allow the scammer to access the user’ s files and monitor what the user is doing on their computer. The scammer can then have access to personal details, modify passwords and restrict the user from accessing the system. The scammer will then use the stolen details to perform fraudulent activities (Scamwatch, n.d.). It has been reported that 770,000 people in Australia were victims of identity theft between 2014 and 2015, and that on average, each victim lost about $4,000 (Edwards, 2015).  References Atlantic Publishing Company. (2008). The online identity theft prevention kit: Stop scammers, hackers, and identity theft from ruining your life. Ocala, FL: Atlantic Publishing Group, Inc. Christensen, B. M. 2013. Several Nigerian scam examples. Hoax Slayer. Retrieved from http://www.hoax-slayer.com/nigerian-scam-examples.html Competition Bureau Canada. (2012). The little black book of scams: Your guide to protection against fraud. Gatineau, QC, Canada: Author. Edwards, M. (2015, April 14). Identity theft: More than 770,000 Australians victims in past year. ABC News. Retrieved from http://www.abc.net.au/news/2015-04-14/identity-theft-hits-australians-veda/6390570 Hill, A. (2017, March 2). 'The cruellest of scams': Victims of dating scams not reporting incidents, ACCC says. ABC News. Retrieved from http://www.abc.net.au/news/2017-03-02/victims-of-dating-scams-not-reporting-incidents-accc-says/8318036 Office of the Children’s eSafety Commissioner. (n.d.). Scams. Retrieved from https://esafety.gov.au/women/lifestyle/shopping-and-banking/scams Ononuju, K. (2013). Unknown transactions: Avoiding scams through understanding. Bloomington, IN: AuthorHouse. Sadri, S. T., & Frakes, R. (2016). #Obsession: Freeing yourself from social media disorder. Pittsburgh, Pennsylvania. Scamwatch. (n.d.). Unexpected money. Retrieved from https://www.scamwatch.gov.au/types-of-scams/unexpected-money Scott, R. (2015, October 5). Charity scams put the 'disaster' in disaster relief. Forbes. Retrieved from https://www.forbes.com/sites/causeintegration/2015/10/05/charity-scams-put-the-disaster-in-disaster-relief/#a515f32c6fa2 Stewart, E. (2016, February 11).Unlicensed financial trader scorches small investors in collapsed Ponzi scheme. Retrieved from http://www.abc.net.au/news/2016-02-11/investors-scorched-in-gunter-lang-ponzi-scheme/7160566 Streff, K. (2007). Information security in banking. In H.R.Rao, M. Gupta & S. J. Upadhyaya (Eds.), Managing information assurance in financial services (pp. 59-91). Hershey, PA: IGI Publishing. Read More