How Online Fraud Alerts Work

The Internet: Thieves' Playground

The Internet has become a great source of information for everyone -- including identity thieves and fraud artists. You can find anything on the Web, and that includes consumers willing to be conned and unknowingly share private information. Anyone who uses the Internet is susceptible. The IC3 has received complaints from victims ages 10 to 100, including men and women in every state.

Fraud means misrepresenting the truth or concealing important facts to encourage victims to do something that will harm them or cost them money. IC3's Web site for consumers lists these common types of Internet fraud:

Online pharmacy fraud: consumers respond to e-mails by buying drugs from Internet pharmacies that may not meet industry standards.The danger is that consumers may receive counterfeit, tainted and diluted drugs.

Auction fraud: an item is purchased but never delivered.

Sweepstakes or lottery fraud: participants pay to play or to receive their winnings.

Identity fraud: Internet thieves steal money through identify theft -- by pretending to be the victim and using their name, Social Security number, account numbers or other information. The thieves may access the information by:

  • Hacking into industry or individual computer databases.
  • Phishing, or sending e-mail or pop-up messages that deceive consumers into disclosing personal or financial information.
  • Spoofing, or directing consumers to a "spoofed" or fake Web site that looks just like one they know, such as their bank's, to type in personal information.
  • Downloading spyware from the Internet onto a computer to collect its owner's personal information.

Financial fraud: the promise of a guaranteed loan if a fee is paid in advance, appeals from fraudulent charities, work-at-home jobs that require large upfront payments and requests for financial assistance that will pay off with more money later.

Financial institutions and credit card issuers are well aware of the magnitude of online fraud. Most offer a variety of services to help their customers avoid fraud and reduce financial loss. One of those services is usually some form of online fraud alert.

Next, let's look at how online fraud alerts work to help reduce financial losses and the possibility of a damaged credit rating.