What is an online scam?
An online scam refers to a form of deceit conducted via the internet with the intent of tricking individuals into revealing personal, financial, or sensitive information, or directly stealing their money. These scams can appear in various forms, including phishing emails, counterfeit e-commerce websites, fraudulent dating profiles, and overly enticing investment offers. A common thread among online scams is their reliance on social engineering techniques to manipulate and exploit victims.
A 2023 report from the FTC highlights that, since 2021, one in four individuals who reported financial losses from scams said the deception started on social media. However, scammers operate across a wide range of digital platforms, including email, text messages, and websites, to carry out their schemes.
Types Of Online Scam
Cybercriminals employ diverse methods and strategies to perpetrate fraud online, leveraging tools such as malicious software, deceptive emails, and fake websites to mislead and harm victims. The primary categories of online scams include:
- Phishing and Spoofing: Using fake emails and messages to trick individuals into sharing sensitive information, such as login credentials and financial details.
- Data Breaches: Gaining unauthorized access to confidential data and exposing it to untrusted environments, impacting both individuals and organizations.
- Denial of Service (DoS) Attacks: Disrupting the normal flow of traffic to websites or networks to achieve malicious goals.
- Malware: Deploying harmful software to damage devices or steal sensitive information.
- Ransomware: A specific type of malware that locks users out of their data and demands a ransom for restoration, often delivered via phishing tactics.
- Business Email Compromise (BEC): A sophisticated scam targeting businesses that frequently conduct wire transfers, involving the takeover of legitimate email accounts to authorize unauthorized payments.
Awareness of these methods can help users identify and avoid falling victim to internet fraud.
How do online scams work?
Online scams manipulate human emotions—such as trust or urgency—to coerce victims into divulging personal data or money. Here’s how these scams typically unfold:
- Scammers impersonate trusted entities or businesses through emails, social media, SMS, or dating platforms to gain the victim’s confidence.
- Once trust is established, they trick victims into sharing sensitive details like passwords, financial information, or personal identifiers.
- Cybercriminals then exploit this information for harmful purposes, including identity theft or financial fraud.
The Federal Trade Commission reported record losses of $10 billion from scams in 2023, marking the highest level of financial damage ever documented. With financial instability on the rise, these deceptive practices are unlikely to wane anytime soon.
How to spot an online scam
Personal Information Collection
Scammers often seek to obtain your personal details, which can lead to identity theft. They employ various tactics, such as requesting your banking information under the guise of transferring a ‘prize’ from a contest you never entered. Alternatively, they may threaten to suspend your account unless you provide personal information for ‘verification.’ Some may recruit you as a money mule, asking you to hold funds in your account, or they might offer products or services that are never delivered, commonly seen in credit card and money transfer scams.
These fraudsters frequently create professional-looking emails, and websites, or utilize convincing call center personnel to make their schemes appear legitimate. They often mimic real institutions, including banks or well-known online retailers, and may impersonate organizations like Centrelink or Australia Post.
Unexpected Financial Windfalls
In this scenario, scammers will attempt to persuade you that you have won or inherited money and require your banking details or other personal information to access these funds. This claim is fraudulent; their true aim is to steal your money. If you haven’t entered any competition, there’s no legitimate prize awaiting you. Never share your banking information over the phone, via email, or through SMS unless you initiate the contact. Discard any suspicious emails or messages and hang up on calls claiming you’ve won something.
In some instances, scammers might send actual prizes like trips or luggage containing illicit substances for unsuspecting recipients to transport.
You’re One of the Lucky Ones
Scammers may also attempt to convince you that you are among the fortunate few selected for an investment opportunity or a supposed inheritance. These claims are fabricated; their goal is simply to extract your banking details for theft.
Fraudulent Charities
Scammers can easily create websites, send emails, or make calls that appear to represent legitimate charities, soliciting donations or banking information. Their sole intention is financial theft. Avoid responding to monetary requests via email, phone calls, or SMS. If you wish to donate to a charity, research their contact information independently and ensure they are genuine before contributing.
When making donations online, verify the legitimacy of the site by checking for ‘https’ in the URL, indicating secure data transmission. Also scrutinize the domain name; it should follow formats like charityname.org or charityname.org.au rather than something suspiciously similar. Look out for misspellings and low-quality images as potential signs of a scam website.
Dating and Romance Scams
Romantic scams are prevalent online. Scammers often cultivate relationships over weeks, months, or even years, professing love early on and showering their targets with attention and affection. They may claim to be living abroad or traveling within Australia and provide numerous excuses for not meeting in person. Emotional manipulation is common; they might claim medical emergencies or lack of funds for travel expenses to solicit money from their victims.
Be cautious with any online romantic interest. If sharing photos, avoid sending anything you wouldn’t want to make public; scammers may resort to blackmail using intimate images. Conduct a reverse image search using tools like Google Images or TinEye to check if their profile picture is authentic. If planning an in-person meeting, inform someone of your whereabouts and consider bringing a friend along.
Common Tactics Used by Scammers
Familiarizing yourself with common scam tactics can help protect you from falling victim:
- Sense of Urgency: Legitimate organizations rarely impose urgent demands; a pushy tone often indicates a scam.
- Cliché Language: Scams tend to use repetitive phrases such as “Congratulations! You’ve won!”
- Too Good to Be True: If an offer seems unbelievable, it likely is.
- Unsolicited Contact: Be wary of unexpected emails, social media messages, or phone calls.
- Requests for Personal Information: Scammers commonly ask for sensitive data under false pretenses.
- Phony Websites: Watch for unusual URLs when shopping online.
- False Endorsements: Some scams falsely claim support from celebrities; don’t be misled by appearances.
Scams vs. Frauds vs. Phishing
There is no clear boundary separating scams from frauds. Generally, the terms are used interchangeably to refer to similar activities, meaning that online scams and online fraud can be defined in the same way. However, interpretations may vary by country, industry, or individual perspective. Even within the same nation or culture, definitions of scams and fraud can differ. For instance, some people restrict the impact of scams and frauds to financial losses, excluding intellectual property theft (such as login credentials, credit card details, or personal contact information).
In South Korea, the term “scam” is specifically associated with certain crimes like “romance scams” and “coin scams,” while “fraud” refers to crimes resulting in financial asset loss, such as cash theft. Terms like phishing and smishing are sometimes misused in discussions about these topics. During the Global Anti-Scam Summit 2024 held in Singapore, it was highlighted that there are no universally accepted definitions for scams and fraud.
Scam vs. Fraud
- Definition: Both terms describe criminal activities aimed at achieving financial gain, stealing intellectual property, or unlawfully accessing victims’ assets through deceptive means.
- Distinctions:
- Scam: Scammers (criminals or threat actors) utilize direct communication methods such as phone calls, messages, emails, social media, and websites to manipulate victims into willingly taking actions that benefit the criminals.
- Fraud: This term emphasizes financial losses and encompasses criminal acts where victims are unaware of the illegitimate transactions or identity theft occurring.
Phishing
- Definition: Phishing involves impersonating trusted organizations or individuals to steal confidential information or gain access to victims’ assets (e.g., login credentials, credit card information, or deploying malware). These acts are referred to as phishing scams due to their reliance on social engineering tactics; however, they are commonly known simply as phishing. Phishing can be categorized into several subtypes based on the methods used:
- Smishing (SMS Phishing): A phishing attack conducted through mobile text messages targeting victims.
- Voice Phishing (Vishing): A phishing attempt that uses voice calls to reach potential victims.
- Spear Phishing: A targeted form of phishing that focuses on specific individuals or organizations, increasing the likelihood of success.
- Business Email Compromise (BEC): A type of spear phishing where attackers impersonate trusted individuals or organizations to deceive finance managers or decision-makers into divulging money or sensitive information.
Spam
- Definition: Spam refers to unsolicited emails, calls, or messages sent indiscriminately for advertising purposes.
How to prevent falling victim to an online scam
To safeguard yourself against online scams:
- Utilize free threat-detection tools like Scamio—an AI chatbot that analyzes messages and links for potential scams.
- Approach emails, texts, or calls from unknown sources with skepticism; always verify legitimacy before responding.
- Stay updated on current scams and educate friends and family members about them. Establish a ‘safe word’ known only among trusted individuals.
- Install robust security measures including a VPN, firewall, and reputable antivirus software like Bitdefender.
- Use a password manager for complex passwords and avoid reusing them across different sites.
- Keep all software updated to protect against vulnerabilities.
- Change your router’s default password and enable WPA3 encryption for Wi-Fi security.
Things to do and not do if you think you’re being scammed
What You Should Do:
- Use platforms that feature seller feedback whenever possible.
- Investigate purchase details thoroughly.
- Compare prices with similar listings.
- Attempt to meet the seller in person; scammers typically avoid face-to-face encounters.
- Copy the ad text into Google search to find its origins—many scams recycle content from other ads.
- For rental inquiries, contact rental associations to verify property ownership.
- Request the address and check it on Google Maps for legitimacy.
- Research landlords/sellers online to confirm their credibility.
What Not To Do:
- Avoid wiring money or using Western Union transfers; these methods are often exploited by scammers due to their difficulty in tracking.
- Don’t share personal information until you’re certain of the other party’s authenticity; even if no money changes hands, personal data can still lead to identity theft.
- Don’t pay more than necessary; familiarize yourself with rental laws—landlords typically won’t request more than 50% of monthly rent as a deposit.
By staying informed and cautious, you can significantly reduce your risk of falling victim to scams while navigating online interactions.
