What is an Online Scam? The Top 5 Types

SoftwareLab Blog

BY: Tibor Moes / Updated: FEbruary, 2019

What is an Online Scam?

An online scam is a dishonest scheme carried out over the internet. The goal is to defraud potential victims and generate financial gain for the perpetrator. Most scammers are after your bank account details, though some might also install malware on your computer. Read on to learn about the most common types of scams and the ways to protect yourself.

What you will find out in this article: 

  1. What Is an Online Scam?
  2. What Types of Online Scams Exist?
  3. Examples of Online Scams
  4. How to Protect Your Computer from Botnet Malware

Online scammers may try to install malicious software on your computer, which is why you should never take your online security for granted. Take a look at our comparison of the best antivirus software to stay safe on the internet.

Tibor Moes

Founder, SoftwareLab

Online Scam

Winning a lottery that you never entered, receiving a greeting card from someone you haven’t talked to in years, or being randomly chosen by a rich person from an exotic country to receive 20% of their fortune – if it’s too good to be true, it is more than likely a scam. If you become a victim of an online scam, not only will you not win anything but you may, in fact, lose everything.

What Is an Online Scam?

An online scam is any use of internet technology to defraud people. Internet scams are carried out by cybercriminals for some type of personal gain, financial or otherwise. Scammers use deceptive methods like phishing emails, fake websites, and malicious software to gain access to their victims’ data, files, and personal information. They may steal their victims’ credit card data and Social Security numbers, access their bank accounts and medical records, or even trick them into willingly giving them their money.

For as long as there has been the internet, there have also been scammers hoping to trick inexperienced users into sharing their sensitive information. The concept of internet fraud first caught public attention in the mid-1990s, when reports about the use of stolen credit cards with celebrity names emerged. With the subsequent boom in e-commerce, online scammers became craftier and started setting up fake shopping and auction websites that looked just like the real thing to target unsuspecting shoppers.

Despite some major cybersecurity advancements in recent years, online fraud has experienced a sharp rise in the social media age. According to statistics, internet scams have reached a record high in 2017, with more than 45,000 reported cases in the United States alone. Similarly, almost 7,000 Australians were victims of online shopping scams in 2017, which has cost them just under $1 million (A$ 1.38 million). Globally, online scams have so far cost businesses and individuals more than $100 billion.

Online scams and internet fraud in general have long been part of the U.S. Criminal Code. This legal document prescribes a maximum sentence of 20 years for fraud in relation to computers, access devices, and personal documents. Email fraudsters can get a maximum sentence of five years, whereas the owners of misleading or deceptive websites with inappropriate content can get up to 10 years in prison.

What Types of Online Scams Exist?

There are numerous types of online scams, ranging from the impersonation of others on social media to fake crowdfunding campaigns. Some of the most common types of scams include the following:

  1. Spear Phishing

Spear phishing is the act of sending deceptive emails to individuals, groups, and organizations in an effort to gain access to their private information. Instead of just randomly sending out these emails to millions of addresses, hackers send them only to specific targets whose addresses they have acquired via social media or stolen email records. To make the scam seem more realistic, hackers will often pretend that they are the victim’s business partner and address them by their name rather than using a generic intro.

To acquire the victim’s personal information, scammers will ask them to fill out an urgent invoice or respond to a false query. They may also attach a file to the mail and claim that it contains a very important document that needs to be revised. Unsuspecting victims will download the attachment to their computer, only to have malicious software installed on their computer. This, in turn, will allow the scammer to monitor not just the victim’s PC but all other devices connected to the same network, too.

  1. Lottery Scams

There’s probably not an internet user that hasn’t received at least one lottery scam email in their lifetime. Many inexperienced users have fallen victim to this scam over years and sent money to the scammers. These messages inform potential victims that they have won a large sum of money, but that they have to pay a small fee in order to claim their prize. In some cases, scammers may even set up their own fake online payment terminal that will also give them access to the victims’ credit card info.

  1. Greeting Card Scams

Usually sent out around big holidays, greeting card scam emails inform you that you have received an animated greeting card from a friend or a family member, but there’s a catch. Namely, to view your greeting card, you must click on the link included in the mail and download a piece of software, usually Flash Player. However, instead of Flash Player, you will download a piece of malicious software that will allow hackers to track your activity, access your files and documents, and even record your keystrokes.

  1. Advance Fee Scams

Also known as a Nigerian scam, an advance fee scam usually starts with a poorly written emotional email allegedly sent by someone from a war-torn country whose parent has left them a large sum of money. They will ask you to let them transfer the funds to your bank account in exchange for 20% of the sum.

If you respond to the email, the scammer might start a long chain of correspondence, asking you to pay various fees and taxes to help them transfer the money. They will even send you forged documents to make the scam more believable. Alternatively, they may ask you to provide your bank account info so they can transfer all the funds at once. If you do, they will instead use the info to empty the account.

  1. Killer Scams

Killer scams involve an email sent by an alleged assassin who has been hired by an unnamed person to murder you. In this email, they will tell you that the only way to avoid death is to pay them thousands of dollars within a small timeframe, typically no more than 48 hours. These emails may contain personal information collected from your social media profiles to make the threat seem more real.

Thought by many to be a thing of the past, new killer scam cases recently made the news in the United States. This time, however, scammers were seeking ransom in cryptocurrency rather than physical money. That way, if the target fell for their scam, the authorities would have no way to catch them.

    Examples of Scams

    While some online scammers manage to stay anonymous and escape the law, many end up arrested and tried for their cybercrimes. Some of the largest online scams uncovered by law enforcement in recent years include the following:

    • In 2016, the Nigerian police arrested a 40-year-old man responsible for thousands of successful online scams around the world. Known only as “Mike”, the man used spear phishing emails to install malware on his victims’ computers and gather their personal data, earning more than $60 million in the process.
    • In June 2018, 74 people were arrested in the United States, Nigeria, Poland, Mauritius, and Canada for their involvement in spear phishing and advanced fee scams. The arrested scammers have stolen millions of dollars, with $16 million successfully recovered by the US authorities.
    • Also in June 2018, 95 professional scammers were arrested by Europol for carrying out more than 20,000 transactions using stolen or otherwise compromised credit cards. In doing so, they have obtained more than $9 million (8 million euros).

      How to Protect Yourself from Scams

      The easiest way to stay safe online is to use the best antivirus software to keep your information and your files secure. When it comes to online scams, however, it is also important to be very careful about what you do and how you behave on the internet. For one, you should never share your credit card details or any other personal information in emails or private messages on social media. Only purchase products from trusted e-commerce sites with HTTPS certificates and data encryption for added safety.

      Don’t ever respond to emails sent to you from unknown addresses, and don’t click on any links or attachments they may contain. If you receive emails with disturbing content (i.e. killer scam and advance fee scam emails), you should report them either to the Federal Trade Commission or the FBI.

      While some scammers may only be after your credit card or bank account info, others could infect your computer with spyware or some other type of malicious software to monitor your activity and steal your personal information. It is thus important to use the best antivirus software to stay safe on the internet. For extra protection, make sure to update your antivirus program and virus definitions on a regular basis.