Online auction transactions, while still the majority of Internet fraud complaints, are decreasing. But other categories of Internet fraud, such as work-at-home scams, are rising. As with telemarketing fraud, Nigerian money offers have made the top ten. Rankings and percentage of total complaints are shown below:
| 1999 Top 10 Frauds | Jan.-Sept. 2000 Top 10 Frauds | ||
| Online Auctions | 87% | Online Auctions | 79% |
| General Merchandise Sales | 7% | General Merchandise Sales | 9% |
| Internet Access Services | 2% | Work-At-Home | 2% |
| Computer Equipment/Soft. | 1% | Internet Access Services | 2% |
| Work-At-Home | 1% | Advance Fee Loans | 2% |
| Advance Fee Loans | .2% | Computer Equipment/Soft. | 1% |
| Magazine Sales | .2% | Nigerian Money Offers | .7% |
| Information Adult Services | .2% | Information Adult Services | .6% |
| Travel/Vacations | .1% | Credit Card Offers | .3% |
| Multilevel Market/Pyramids | .1% | Travel/Vacations | .3% |
Methods of Contact
Web sites are the most common way that consumers are solicited for fraudulent Internet offers, but the statistics reveal an increase in the number of initial contacts made by con artists in newsgroups:
| 1999 Solicitation Method | Jan.-Sept. 2000 Solicitation Method | ||
| Web Sites | 90% | Web Sites | 84% |
| 9% | 10% | ||
| Newsgroups | .5% | Newsgroups | 4% |
Ages of Consumers
Victims of Internet fraud are younger than those of telemarketing fraud, but the number of older Internet victims is rising, from 5 percent age 60 and older in 1999 to 6 percent in the first nine months of 2000.
Money Lost
The amount of money consumers are losing to Internet fraud, like telemarketing fraud, is increasing. The average loss per person rose from $310 in 1999 to $412 in the first nine months of 2000. Most victims of Internet fraud are still paying offline, by check or money order. But the number of payments by credit card is increasing, especially as online auction sites make it easier for buyers to pay the sellers who offer goods and services through their sites by credit card. As with telemarketing, it is safer for consumers to pay with credit cards than with checks or money orders because of their legal rights to dispute charges in cases of fraud. However, financial institutions may become concerned if their own losses increase due to disputed charges:
| 1999 Top 5 Payment | Jan.-Sept. 2000 Top 5 Payment | ||
| Money Order | 46% | Money Order | 44% |
| Check | 39% | Check | 31% |
| Credit Card | 5% | Credit Card | 14% |
| Cashier's Check | 5% | Cashier's Check | 6% |
| Cash | 1% | Cash | 2% |
There are dramatic differences in methods of payment for each of the top Internet fraud categories. Again, Nigerian money offers are not included because no actual payments have been made.
| Internet Fraud | Method of Payment | |
| Online Auctions | Money Order | 49% |
| Check | 32% | |
| Cashier's Check | 7% | |
| Credit Card | 7% | |
| Cash | 2% | |
| General Merchandise Sales | Credit Card | 27% |
| Check | 25% | |
| Money Order | 25% | |
| Cashier's Check | 6% | |
| Trade | 5% | |
| Work-At-Home | Check | 38% |
| Money Order | 25% | |
| Credit Card | 14% | |
| Bank Account Debit | 9% | |
| Debit Card | 3% | |
| Internet Access Services | Credit Card | 37% |
| Bank Account Debit | 13% | |
| Check | 13% | |
| Telephone Bill | 3% | |
| Debit Card | 1% | |
| Advance Fee Loans | Money Order | 40% |
| Cash | 22% | |
| Wire | 21% | |
| Cashier's Check | 7% | |
| Check | 4% | |
| Computer Equipment Software | Money Order | 26% |
| Credit Card | 24% | |
| Check | 23% | |
| Wire | 14% | |
| Cashier's Check | 8% | |
| Information/Adult Services | Credit Card | 46% |
| Telephone Bill | 24% | |
| Bank Account Debit | 16% | |
| Check | 5% | |
| Debit Card | 5% | |
| Credit Card Offers | Bank Account Debit | 64% |
| Money Order | 12% | |
| Credit Card | 12% | |
| Cashier's Check | 6% | |
| Debit Card | 6% | |
| Travel/Vacations | Credit Card | 47% |
| Bank Account Debit | 26% | |
| Checks | 21% | |
| Cash | 5% | |
Withdrawals from consumers' bank accounts are by far the most common methods of payment in both fraudulent telemarketing and online offers for credit cards. It makes sense that credit cards would not rank high in this category, since most bogus credit card offers are targeted to consumers with bad credit who have not been able to obtain credit cards through legitimate issuers.
In other categories that appear in both the top telemarketing and Internet frauds, work-at-home scams and advance fee loans, the payment methods are fairly similar, but an astounding 22 percent of online advance fee loan offers involve payment by cash.
Location of Companies
Because the Internet has no geographic boundaries, cross-border fraud has the potential to explode, especially if more consumers pay online rather than by sending checks or money orders. While the number of Internet fraud complaints against Canadian companies has held steady at 3 percent in 1999 and the first nine months of 2000, complaints against companies in other foreign countries have risen from 1 percent in 1999 to 2 percent so far in 2000.
For additional information, check out press material at the National Consumers League website.
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