Article Title: Cyberwatch: Online Get-Rich-Quick Schemes

Edition: March 2002
Category: Horizons
Author: M. E. Kabay, Ph.D.
Article:

The author is a Certified Information System Security Professional (C.I.S.S.P.) and an Associate Professor of Computer Information Systems at Norwich University, Northfield, Vermont

This is another in a continuing series devoted to how ordinary people can protect themselves when using the Internet.

Get-rich schemes on the 'Net play on the victims' wishful thinking, lack of skepticism and usually lack of plain common sense. There have been claims that you can earn a quarter of a million dollars a year -- grooming poodles in your home. Become a millionaire -- working four hours a week -- sending out promotional literature for products you don't even have to sell. Some such schemes are promulgated by dangerous people; for example, some extremist militia groups have been charging people hundreds of dollars to learn how to defraud the government by claiming liens on government property and then claiming the nonsensical liens as collateral for loans. Other criminals circulate programs for generating fraudulent credit-card numbers and using them to steal goods for fun and profit (they never mention jail).

To illustrate the kind of trouble kids can get into using these techniques, consider the case of Drew Henry Madden. In 1996, this 16-year-old Australian boy from Brisbane started defrauding businesses using stolen and forged credit-card numbers just after leaving school. He stole $18,000 of goods and in February 1997, pled guilty to 104 counts of fraud and was sentenced to a year in jail. However, further frauds were discovered and it turned out that he had stolen an additional $100,000 in goods and services. In October 1997, he pleaded guilty to an additional 294 counts of fraud. He was given an additional suspended sentence. His defense attorney blamed poor security for the losses: " Madden started with very minor credit card fraud, but it escalated alarmingly, because the safeguards were so inadequate." Despite the youngster's unusual revenue stream, his mother appeared to have accepted his globe-trotting ways and massive purchases of lottery tickets without comment. At one point, she told reporters, ""If we were a wealthy family he'd be at a private school, where his talents could be directed properly."

Some people have bad luck or bad judgement and develop bad credit histories or end up in bankruptcy. They can be susceptible to criminals who charge money to teach victims how to falsify their rotten credit records so they can obtain yet more fraudulent credit, all they while claiming that their illegal methods are 100% legal. On the contrary, such "File Segregation" by creating new identities is definitely illegal and may result in fines or even jail sentences.

A relatively new kind of fraud on the Internet is the diploma mill. These organizations pretend to be educational institutions; actually, they are fraudulent people (often one individual) who sell bogus documents purporting to represent degrees or certificates and which fool no one but the purchaser.

Practical Guidelines:

Get your kids started quickly on the road to common sense: earning lots of money with little or no effort usually marks something impossible or illegal.

Teach them the mantra of the skeptic: "If it sounds too good to be true, it usually is."

Discuss Internet-mediated theft in the same terms as you discuss shoplifting. Explain how commerce works; point out that everyone suffers from all kinds of theft, including electronic shoplifting. Talk about the victims of such fraud: everyone who pays higher interest rates on unpaid credit-card bills -- and sometimes also innocent shop-keepers who lose merchandise to e-commerce crooks.

Explain how dangerous it is to get involved with criminal schemes like using stolen or falsified credit cards.

Resources:

"A New Credit Identity: A New Credit Repair Scam" from the 'Lectric Law Library
www.lectlaw.com/files/cos21.htm

"Credit Repair" from the Better Business Bureau
www.bosbbb.org/lit/0105.htm

"Credit Repair: Self-Help May Be Best" US Federal Trade Commission
www.ftc.gov/bcp/conline/pubs/credit/repair.htm

"Credit Repair Scam Could Lead You to Commit Fraud"
www.quicken.com/cms/viewers/article/banking/39349

"File Segregation: New ID is a Bad Idea" from the US Federal Trade Commission
www.ftc.gov/bcp/conline/pubs/credit/creditid.htm

"How to Spot Credit Repair Scams And Correct Your Credit History Yourself" from the US Federal Trade Commission
www.cslib.org/attygenl/credhelp.htm

"Is the Internet Becoming a Haven for Diploma Mills?" from the Better Business Bureau
www.bbb.org/library/diplomamills.asp

Tips for Consumers: Internet-Related Business Opportunities Don't Let Them Fool You!
www.bbb.org/library/internetbus.asp

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