Introduction
While e-mail serves as the method of initial contact
in only 9 percent of reported Internet scams,
the Federal Trade Commission has identified a
full "Dirty Dozen" of scams "most
likely to arrive via bulk e-mail in your e-mail
box." Online auctions, which are the Internet
activity that accounted for the most fraud --
89 percent -- last year, don't appear on this
FTC list because most don't actively solicit bidders
via e-mail. Most people find the auction sites
by themselves. However, some individuals offering
merchandise at auction, especially those running
a scam, do make e-mail solicitations, usually
via bulk e-mail.
Some most common web hoaxes are given below:
Business Opportunity Hoaxes
These are offers that claim you can start a business
or earn piles of money without really working
hard, making lots of sales, or risking any cash.
Most are illegal pyramid schemes, sometimes masquerading
as multilevel marketing (MLM) organizations. In
a true multilevel marketing company, you make
your money by selling products or services. In
a pyramid scheme, people pay money for the right
to sell a product/service and for the right to
benefit by recruiting others into the organization. Pyramid schemes usually have the following characteristics:
• Claims that you can make thousands of
dollars in a very limited amount of time.
• A significant commitment on your part
to bring other people into the organization.
• An emphasis on continued recruiting vs.
selling a product/service.
• A requirement to buy substantial amounts
of inventory for membership or promotion -- usually
with no clear "buy back" policy!
Often short on details and long on promises, many
e-mails touting business opportunities contain
a telephone number to call for more information.
This opens the door to two additional scams, one
where the call-back number is actually in a pay-per-call
area code. The call charges are then "crammed"
onto your existing phone bill, and you may not
even know you've been scammed. Modems can even
be induced to dial back for dollars. Some e-mails
include a link to a "better" viewer
or "better" soundcard that you can download
for free. But the downloaded software hijacks
your modem, disconnects the PC speaker, hangs
up the local ISP connection, and dials a high-price
international modem connection, which stays open
even after the user leaves the site. Again, the
charges come through on your phone bill.
A second scam occurs when you call the number
as requested and leave your name and phone number,
which the holder then sells to telemarketing firms.
The call you get back is from a salesperson with
a pitch. The perpetrators of these "business
opportunities" obviously think you're a business
opportunity
yourself.
Make Money By Sending Bulk E-Mail
These good people want to sell you millions of
e-mail addresses, along with either the spamming
software or services to send spam on your own
behalf to those millions. Even if you have a legitimate
product to sell and think your target market's
inbox is the best place to sell it, you should
know that sending bulk e-mail violates the terms
of service of most Internet service providers,
so your ISP may shut you down.
Some spamming programs allow you to insert a false
return address into your solicitations, which
can land you in legal hot water with the owner
of the address's domain name. Finally, several
states have laws regulating the sending of unsolicited
commercial e-mail that sending bulk e-mail of
any kind may violate. In general, advertising
via e-mail is illegal unless the recipient specifically
asks for information. The perpetrators of this
scam think you're a techno-geek who's happy using
technology most people hate just to further your
business.
Chain Letters
Perhaps the most famous scam of all, and ready
for another Millennium, thanks to e-mail. All
you do is send a small amount of money, or some
item, to four or five names at the top of a list,
with a message urging the recipients to forward
the message on -- sometimes via bulk e-mail --making
sure your name appears at the bottom. Nearly all
these letters include an impassioned claim that
they are legal, but they're not. Here's what the
Post Office has to say about chain letters: "Chain
letters are a form of gambling, and sending them
through the mail (or delivering them in person
or by computer, but mailing [payments or items]
to participate) violates Title 18, United States
Code, Section 1302, the Postal Lottery Statute."
Chain letters are illegal if they request money
or items of value and promise a substantial return
to participants -- even if a product, like a report
on Internet businesses -- is involved.
According to the FTC, nearly everyone who participates
in a chain letter involving cash or merchandise
loses money. Actually, the whole premise of chain
letters, the promise of ever-growing returns that
makes it sound so workable, is mathematically
flawed. If you've got a head for numbers and understand
exponential calculations, you'll find that if
you start by sending money or merchandise to five
people, counting on each of them to send money
or merchandise to five other people, it takes
just 15 interactions for the total number of participants
needed to keep the scheme going to reach 6 billion.
The earth's entire population didn't hit that
number until last November. In short, only the
first names on the list stand a chance of making
anything off such a scheme. And who's to say that
the first four, or 10, or 12 people ahead of you
aren't all the same person? People who send you
a chain letter, even via high-tech e-mail, must
think you were born yesterday -- or they were
born yesterday themselves.Work-At-Home-Schemes
Work-at-home schemes have proliferated on and
off the Internet. They are fourth in the National
Consumer's League's list of the Top Five scams
in America and the fifth most prevalent Web scam.
The most common scheme, of course, is earning
money for stuffing envelopes. You can earn as
much as $2.00 (!) per envelope, according to some
e-mails. Except what happens is that you pay the
sender for the right to stuff the envelopes, at
which point you're instructed to send the same
envelope-stuffing ad -- frequently via bulk e-mail
-- to others, who will also be asked to pay for
the privilege.
By my calculations, in order to make $1,000, you'd
have to stuff 500 envelopes. If you figure 30
seconds an envelope, it would take you four hours.
Hey! That's $250 an hour -- for doing mindless
work that goes for below minimum wage in the real
world? Who'd believe that? Plus, if you're like
me, you couldn't sit still that long for the money
AND a Marx Brothers marathon. These people think
you're not only stupid, but a couch potato as
well.
Craft or assembly work schemes are another popular
work-at-home offer. These usually require an investment
of hundreds of dollars in equipment or supplies.
According to the FTC, if you actually do work
for one of these outfits, they will refuse to
pay, claiming that your work isn't up to their
standards of quality. You should also know that
it is illegal to do certain types of work at home
and the Department of Labor strictly enforces
its prohibitions on those activities. The people
who send you these offers believe you haven't
heard the news about the dramatic improvements
in today's labor market.
Health And Diet Scams
Like business opportunities that claim you can
make money without working, these people claim
you can lose weight without eating less or exercising
more, that you can cure yourself by paying them,
not your doctor, for their expertise. Almost always
pitching "scientific breakthroughs"
or "secret formulas," they offer cures
for everything from hair loss to acne to obesity.
Some even offer $99 "ultimate cures"
for cancer or AIDS -- not to mention home abortion
and self-sterilization kits. In June of 1999,
the Food and Drug Administration issued a warning
against buying such products because they "pose
significant, possibly life-threatening health
risks." Duh. The perpetrators of these scams
must think you and your computer are stuck in
the HMO-from-hell and desperate for any help you
can get.All kidding aside, while not all health and diet
products sold over the Web are scams, many of
the product sales sites may be dangerous in themselves.
Even if you order something relatively harmless
from a site that also carries the above-mentioned
life-threatening products or a site that flogs
medications not approved by the FDA for sale in
this country, you're consciously supporting a
commercial activity that obviously doesn't care
about the long-term well-being of its patrons.
Remember, just by making themselves available
on the Web, these companies belittle the role
of trained medical professionals in diagnosing
medical problems and prescribing treatments. Certainly
not all doctors are good; after all, some doctors
participate in these scams. Still, medical care
from the hands of a cost-cutting HMO is bad enough,
but medical care from the hands of a profit-hungry
sales organization is far worse.
Effortless Income
Not exactly a "business opportunity,"
this new get-rich-quick scheme offers unlimited
profits exchanging money on the world currency
markets. You put up the seed money, the perpetrators
put up the expertise. If they're such experts,
why ain't they rich? What do they need your money
for? These people assume you're an addicted gambler,
and a stupid one, at that.
Free Goods
Pay a modest amount of dues to belong to a buying
club, bring in a certain number of other dues-paying
members, and you'll get expensive items, such
as computers, for "free." These are
disguised pyramid schemes. The "free"
merchandise is just a come-on for you to drag
in more friends. It seldom materializes, and you
and your buddies are out the cash for the dues,
usually with no recourse to get it back. These
people assume you're stupid, too -- but at least
they think you're affable, or how would you get
all those friends?Investment Opportunities
Sky-high returns at "no risk." Most
investment scams, on- or off-line, are Ponzi schemes
that pay early investors with money from later
investors, fooling the early investors into believing
that the system works and encouraging them to
invest more money -- money they eventually lose.
Sales pitches in these e-mails tout high-level
financial connections, inside information, and
iron-clad "guarantees." In 1999, in
their second annual list of "Top 10 Scams,"
the North American Securities Administrators Association
cited bad Internet deals as one of the most dangerous,
singling out "Internet fraud involving small
stocks whose value is being inflated," along
with bogus offshore "prime bank" notes
and the ever-popular pyramid schemes. People who
send you these e-mails assume you're stupid, a
gambler, and probably already a crook.
Cable De-Scrambler Kits
Again, you're offered something for nothing --
cable transmissions without paying any subscription
fees. Ignore the fact that it's illegal to steal
service from cable companies and that most cable
companies aggressively prosecute theft of service.
The kits offered in the e-mails don't actually
work. These people are positive you're a crook,
not to mention a couch potato and a fool.
Guaranteed Loans Or Credit, Or Easy Terms Hoaxes
These run the gamut from home equity loans that
don't require any equity, to extending credit
in the form of a loan or a credit card regardless
of your credit history, to offshore bank loans.
Sometimes they're combined with pyramid schemes
that pay you for attracting other participants.
You pay a "small" advance to qualify
for the services --and then the loan doesn't come
through, or the credit cards don't arrive. Surprise,
surprise. These people know you're desperate.
Credit Repair HoaxesThese scams promise to erase accurate negative
information from your credit file so you can illegally
qualify for loans, mortgages, or credit cards.
Many of them make their money by charging you
for an explanation of how to commit fraud and
violate federal laws by lying on loan or credit
applications, misrepresenting your Social Security
number, or getting an Employer Identification
number from the Internal Revenue Service under
false pretenses. These people probably hope you're
part of the militia movement, actively out to
undermine the government and anything else around.
Vacation Prize Promotions
Congratulations! You've "won" a fabulous
vacation! You've been "specially selected"
for a great opportunity! Send money to cover administrative
expenses. And then wait -- and wait -- and wait
for your tickets. Or else pay for an upgrade to
your "free" cruise, and arrive to find
that Tugboat Annie is the chef, the berths are
full of fleas, and the ports of call are all on
the State Department's Travel Advisory list. Travel
scams are second on America's Top Five list, but
rank thirteenth as Internet scams. These people
think you're a prize yahoo.
So Who’s Left On Our Side?
The good news is that the FTC is much busier in
this area than just collecting stats for its Web
site. It regularly holds "surf days,"
during which the staff of the FTC, state attorneys
general offices, and other regulatory agencies
across the country scan the Net for potential
scams. In March 1999, the FTC sponsored "Business
Opportunity Surf Day," turning the e-mail
tables on the scammers by sending 200 warnings
via the Web to businesses carrying exaggerated
claims on their Web sites or in their e-mails.
A month later, nearly a quarter of the offenders
had removed the advertisements or modified their
claims.
In fact, officials from 27 countries and 45 states
participated in one massive sweep of the Internet,
searching for "get-rich-quick"
schemes and scams. This "Get-Rich-Quick.Con"
program uncovered more than 1,600 sites that made
promises like "surf the Net and earn $100
an hour," or that touted pyramid schemes,
made outrageous product claims, or were otherwise
fraudulent.The FTC employs the power of the Web to lure the
gullible into giving up their hard earned cash,
but actually educating the potential suckers.
It runs at least five "sting" pages
in cyberspace -- sites that provide a typical
come-on, only instead of taking the potential
victims' money, the sites carry a warning on their
last screen explaining just why these people are
exactly that -- potential victims.
And the FTC's hot on the trail of new ploys that
have surfaced in the last 9 months to a year,
particularly the bulk e-mail scams designed to
collect e-mail addresses and other information
about individuals for resale to spammers. The
offers include phony Microsoft giveaways, free
pre-initial public offering (IPO) stock in Internet
companies, e-mail gift certificates, calls for
political action, and bogus surveys. The most
common address-collecting trick seems to be an
e-mail tracking system giveaway, purporting to
be from Microsoft and Disney, and promising people
money for each e-mail address they add to a circulating
list. E-mail addresses are also collected by scammers
claiming to lobby for specific legislation or
circulating surveys or polls on "hot"
social issues.
You yourself may have put the nail in your own
coffin if you responded to an instruction common
to spammed messages. "If you no longer wish
to receive messages on this topic, just send a
blank reply." If you do, you've just confirmed
that the spammers have a valid e-mail address
in their list, making the list even more valuable
when they go to sell it to other spammers.
In addition to its database of consumer fraud
complaints, the FTC has just built an Internet
fraud lab that scans the Internetfor deceptive
business practices. Most importantly, the lab
is equipped to electronically "secure"
any evidence discovered on the Web; this can help
the agency in future prosecutions. In the past,
the ability to change, destroy, or disguise digital
data has made most evidence ephemeral, and the
agency has only brought 100 legal actions against
online scam artists in the last 5 years. That
number will no doubt grow over the next several
years as we become more and more wired and more
and more scammers move in for the kill.
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