Profiling the characteristics, tools and dimensions of internet fraud

1. Internet Fraud
Dr. Elijah Ezendu
FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,
PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr

2. Learning Objectives
At the end of this course, participants should be
able to do the following:
• Identify the nature of internet fraud
• List the tools used for internet fraud
• Categorise internet fraudulent practices

3. “Internet fraud is a form of fraud which
uses any component of the Internet to
accomplish the intended fraudulent
activity.”
- National White Collar Crime Center, USA

4. “The term ‘Internet fraud’ refers generally to any
type of fraud scheme that uses one or more
components of the Internet - such as chat
rooms, e-mail, message boards, or Web sites -
to present fraudulent solicitations to
prospective victims, to conduct fraudulent
transactions, or to transmit the proceeds of
fraud to financial institutions or to other
connected with the scheme.”
Source: US Department of Justice

5. “Internet auction fraud was by far the most
reported offense, comprising 44.9% of referred
complaints. Non-delivered merchandise
and/or payment accounted for 19.0% of
complaints. Check fraud made up 4.9% of
complaints. Credit/debit card fraud, computer
fraud, confidence fraud, and financial
institutions fraud round out the top seven
categories of complaints referred to law
enforcement during the year.”
Source: Internet Crime Complaints Center

6. Tools Used for Internet Fraud
• Email
• Chat rooms
• Websites
• Message Boards
• Portals
• Web Application

7. Types of Internet Fraud 1
• Credit/Debit Card Fraud
• Business Deceit
• Recruitment Deceit
• Freight Forwarding Scam
• Counterfeit Cheque Scam
• Advance Fee Fraud
• Non-Delivery of Goods/Service Fraud

8. Types of Internet Fraud 2
• Fake Escrow Scam
• Spoofing/Phishing Scam
• Investment Rip-Off
• Identity Theft
• Ponzi/Pyramid Fraud
• Auction Fraud

9. Credit/Debit Card Fraud
This involves the use of credit/debit card to
obtain money or acquire properties without
appropriate authorization.
Fraudsters obtain credit/debit card numbers of
victims from unsecured web media.

10. Business Deceit
In this case, fraudsters masquerade themselves
as genuine business people and attempt to
collect personal information such as social
security number and date of birth from
respondents, in order to use the data for
purchasing goods which would most likely be
transferred or shipped out of the country.

11. Recruitment Deceit
Generic public or private portals can be used for
advertising spurious job openings with the
intention to collect vital information from
applicants, and deploy them for purchasing
goods.

12. Freight Forwarding Scam
This is an internet fraud that entails the
movement of merchandise from one party to
another until it gets to the major perpetrator,
who must have enlisted the other participants
without informing them that the goods were
bought with fake credit cards.

13. Counterfeit Cheque Scam
This entails the use of counterfeit cheque to pay
for goods, such that the face value of the
cheque would be far higher than the
requirement; thus the seller would be
instructed to return the overage amount to a
foreign account because it’s needed for an
ancillary purpose.

14. Advance Fee Fraud
This is popularly known as 4-1-9. It refers to the
type of fraud in which a substantial amount
would be demanded for payment of
processing fees that stand as requirement for
release of non-existing merchandise or large
amount of money.

15. Non-Delivery of Goods/Service Fraud
This refers to scam in which people are
encouraged to pay for goods and or service
via a web portal, and thereafter nothing
would be delivered to the buyers.

16. Fake Escrow Scam
This involves presentation of a spoofed website
of a third party as a medium for payment ,
claiming that when the merchandise is
successfully shipped to a buyer only then
would the money be transferred to the seller;
even when the supposed escrow service is a
falsification and simply an account of the
same seller.

17. Spoofing/Phishing Scam
Spoofing is a type of fraud in which a fraudster
masquerades as another person by using
another person’s email identity or header to
transact business and obtain vital information
such as bank account numbers, credit card
numbers and associated passwords. While
Phishing is a form of spoofing in which the
webpage of a particular entity can be
duplicated and positioned with url for the
purpose of luring people to divulge vital
financial information.

18. Typical Webpage Used for Phishing

19. Investment Rip-Off
This refers to a system of trading on
counterfeit securities or using fraudulent
claims to solicit for loan or investment.

20. Identity Theft
This entails the use of another’s personal
information without appropriate consent, for
the purpose of fraudulent practices.

21. Ponzi/Pyramid Fraud
This is a system of luring investors to invest in a
scheme in which the investment firm
promises abnormally high returns, meanwhile
the early investors shall be paid with
investment capital obtained from successive
investors. The payment chain would continue
till the point of collapse.

22. Auction Fraud
In this case, people are encouraged to
participate in online auction and when money
must have been paid for specific items, the
fraudster would send either a lower standard
item or counterfeit.

23. Exercise
1. Identify the key relationship between
business deceit and phishing.
2. List two examples of Ponzi Pyramid Fraud

24. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise
in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround
Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e-
Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business
Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova
Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of
GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training),
Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management
Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead
Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited;
Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles),
Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping;
Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria;
Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic
Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria;
Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa;
Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost
Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of
Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business
Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of
Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting
intangible contributions of host communities and ecological environment: A model celebrated globally
as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host
communities. He had served as Examiner to Professional Institutes and Universities. He had been a
member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.

25. Thank You