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RealTime IT News

Auctions Are Favorite Defrauding Grounds

The ePrivacy and Security report released on Tuesday by eMarketer states that 87 percent Internet fraud in 2000 occurred through online Auction Sites.

According to the report, 34 percent of Internet-users have been victims of Internet Fraud, with the average loss per victim estimated at US$600 -- more than most estimates of the amount spent by online shoppers.

The Internet Fraud Watch puts those figures slightly lower, stating that 79 percent of Internet Fraud is through online auctions, with average losses put at US$412; however, their report currently only includes the first 9 months of 2000. For 1999 they put the average loss at US$310, showing the increasing trend for fraud on the Internet.

According to the Internet Fraud Watch, the next most popular fraud is fictitious or misrepresented merchandise sales, for example the now defunct www.ps2storeusa.com. This site offered the Playstation 2 to a public desperate to buy the machines as a gift in the holiday season without actually having any in stock.

They put the 3rd most popular fraud as work-from-home schemes.

The most common way payment method used by fraudsters to extract the cash from victims is the money order, 44 percent overall for the first 9 months of 2000. However, the credit card is the method most used in fraudulent merchandise sales and its overall percentage as method used to pay fraudsters rose from 5 percent in 1999 to 14 percent for the first 9 months of 2000. Most payments to fraudsters are still made offline.

Websites are the most common way con-artists solicit victims, with 84 percent of victims acquired in this manner; however, that's down from the 90 percent of 1999, with email solicitations rising from 9 to 10 percent and the use of newsgroups to make initial contact rising from 0.5 to 4 percent.

As the total amount spent online increases -- holiday sales doubling in 2000 to US$8,7 Billion from 1999 figure of US$4,2 Billion- the average amount lost by victims of fraud is also rising. Where the money is, there the criminals will go.