Don't be reeled in by phishing con artists and other Internet swindlers

PERSONAL FINANCE

Your Money

October 10, 2004|By EILEEN AMBROSE

THERE'S NO question that the Internet is a great resource tool, putting a world of information at the fingertips of students and workers.

Unfortunately, it has made con artists' jobs easier, too.

Today's imposters still rely on old schemes, but with slight variation and the Internet, they can do far more damage far more quickly. With a few keystrokes, identities are stolen, bank accounts emptied. And it's often difficult for authorities to track down online culprits.

"Any con artist that doesn't use the Internet ought to be sued for malpractice because that's the best way to do it," said Joseph Borg, director of the Alabama Securities Commission and former president of the North American Securities Administrators Association.

Of course, businesses have installed security measures to protect their customers' information. The number of fraud investigations launched by state securities regulators for 2003-2004 is expected to exceed 15,000, more than double the cases in the mid-1990s. Still, when it comes to protecting against fraud, the first line of defense remains the consumer, experts said.

"No matter how good [a company's] security is, somebody is going to find a way around it," Borg said. "We have to educate people."

Borg and other fraud experts discussed the latest schemes during a business journalists' conference in Atlanta last week. Here are some swindles to watch out for:

Gone phishing. This scheme arrives by e-mail, appearing as a genuine message from a bank or other company you do business with. It tries to get you to divulge your password, Social Security and credit-card numbers by claiming the information is needed to protect your account from identity thieves. Called phishing, this hoax has been perpetrated using Citibank's and other well-known companies' names.

The phony e-mail also contains a link or "hot button" that is supposed to direct you to the bank's security center. You could end up at the con artist's site, or software might be secretly installed on your system to record your activities.

If you want to contact the business, go to a separate screen and type in the company's address, Borg said.

Recording keystrokes. Con artists in these cases install software in public computers on college campuses, Internet cafes or business centers at hotels and airports. The software captures all transactions made during the day, and the information is either downloaded later or e-mailed to the thief.

"What they basically pick up is all the traffic of the student sitting in the library, accessing dad's bank account or using a credit card to book a reservation home," said James H. Vaules, a former FBI agent and now a vice president with LexisNexis. "They build a large deposit of identity information which can be used."

Mail from far away. If you've got e-mail, you likely get bombarded with messages asking for help to secretly transfer millions of dollars out of Nigeria or another country.

"They send out hundreds of millions of these. If they get one-tenth of 1 percent to respond, they make money," Borg said.

And don't expect a foreign government to help. An Indiana man bilked out of about $15,000 went to Nigeria to complain to authorities, Borg said. Instead, he got arrested for trying to defraud the Nigerian government, which claimed he took part in a plot to move money illegally out of the country, and ended up having to pay another $15,000, Borg said.

Going, going, gone. Internet auction fraud is on the increase, with consumers discovering they never receive the item paid for or they get defective merchandise, said William Sorrell, Vermont's attorney general and president of the National Association of Attorneys General.

And it's not only the sellers: Buyers, too, can be con artists. A buyer sometimes sends a counterfeit cashier's check that can be so authentic-looking that it fools banks, Sorrell said. The check is made out for more than the purchase price and the buyer makes off with thousands of dollars in real money when the seller returns the amount of overpayment, he said.

Wrong number. Thousands of consumers recently discovered a message left on their home answering machines that seems to be from someone calling a friend but instead dialed the wrong number. The chatty message describes a hot stock tip and suggests the friend buy it. The imposters hope the consumer bites and buys the stock. When the stock price rises, the frauds sell their shares for a profit.

Affinity fraud. Beware of the swindler selling investments and claiming to be a member of your church, ethnic group or community, Borg said. Because of this shared background, investors are likely to suspend their healthy skepticism.

"When I prosecute these cases, I have a hard time getting victims to come forward because it's a person they trusted," Borg said.

Ripped from the headlines. Many of the best swindles play off the news, Borg said. "It has the ring of truth," he said.

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