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Web of Deceit

The Internet has opened up a whole new world for scam artists. Experts warn that anyone going online is a potential target.

By DAVE GUSSOW Times Technology Editor

© St. Petersburg Times, published April 26, 1999

Richard Frank considers himself a streetwise New Yorker who "can normally detect a scam at 100 yards." The case of the phony AOL query proved him wrong.

What seemed like a real message from America Online about a problem with his credit card almost tricked Frank into giving out personal information and even his credit card number. The message popped up while he was signed on to AOL.

"It was immensely credible," said Frank, a Clearwater retiree. "Everything was logical. I had no concept that it wasn't AOL doing it, and I'm pretty good at scams."

Frank avoided becoming a victim because he grew irritated while filling in the fake form. He called AOL, which told him his computer had picked up a Trojan horse program, probably through an e-mail attachment, though Frank wasn't sure how it could have entered his computer.

Had Frank filled out the form, the program likely would have sent the information to whomever created it. "They'd have everything they need to prove that they were me," Frank said.

Little scams, big scams. It seems as if the Internet is a breeding ground for all sorts of trickery and thievery: credit card schemes, such as the one Frank encountered; rumors and fake news items that can affect businesses; misrepresenting (or not delivering) items in online auctions; bogus business offers -- the list is long.

Of course, schemes to separate people from their money have been around a long time. The Internet offers those seeking to swindle a vast new field to work, with potential victims numbering in the millions and high-tech tools to make their pitches seem legitimate to the unwary.

This month, a Web page designed to look like a Bloomberg News site had a "news" item about a takeover of PairGain Technologies Inc. The company's stock soared, even though the item wasn't true. A 25-year-old employee of the company was arrested. The company said it had no role in the scam.

"The Web is the megaphone that exaggerates all that," said James Adams, author of The Next World War: Computers Are the Weapons and the Front Line Is Everywhere.

Adams, who is chief executive of Infrastructure Defense Inc. (www.idefense.com), a high-tech security company, says those behind the scams have evolved from "the kind of cartoonish version of the hacker -- the long-haired geek who is alone and isolated from society and is having fun at society's expense -- to a much more sophisticated player."

Now, online criminals include foreign governments spying on other governments or attempting to obtain economic information, organized crime trying to steal technology secrets and companies engaging in corporate espionage.

It may only get worse. As Web commerce grows from millions to billions of dollars, Adams said, "we will see huge scams because there's money to be made."


But authorities and regulators will have a difficult time keeping up because of limited resources, Adams said. Traditional crime-fighting methods won't work in the borderless world of the Internet. It largely will be up to the private sector and individuals, working with authorities, to protect themselves, their information and their pocketbooks

Special Agent Jeff Herig of the Florida Department of Law Enforcement, one of the first agents in the country to tackle high-tech crime, notes it is "new to everyone."

FDLE is expanding its high-tech crime-fighting efforts by creating the Florida Computer Crime Center in Tallahassee, which Herig will coordinate. The number of agents and staff handling high-tech crime investigations will increase to 20, up from about a half-dozen a year ago. FDLE hopes the Legislature approves another 27 positions this session.

Herig calls the center "a great first step" -- one that other states are looking at as a model -- but one that will require frequent updating to keep up with both the volume of crime and the con artists' schemes.

"We have a huge emphasis on fraud and financial crimes at FDLE," Herig said. "You won't see a financial crime these days that doesn't involve computers, whether online or not."

Identity theft -- using the type of personal information that Richard Frank almost gave up -- particularly concerns Herig.

"It's so simple to commit, and it's so difficult to undo," Herig said. It can take victims years to overcome the damage, he said.

Internet Fraud Watch, a division of the National Consumers League (www.natlconsumersleague.org), received 7,752 complaints about online fraud in 1998, up from 1,280 the previous year. But those numbers probably don't begin to reflect the true scope of the problem.

"A lot of people don't report when they are victims of fraud because they feel stupid," said Cleo Manuel, the consumer organization's vice president for public affairs. "They shouldn't feel stupid. You've been taken advantage of by someone who does this for a living."

As fast as schemes are uncovered and publicized, new ones crop up, which makes tracking the culprits difficult.

"Con artists always know if they're going to stay in business, they have to be on the cutting edge of technology," Manuel said. "They take advantage of what consumers don't know."

Part of the problem is that consumers trust technology. They have a mistaken sense that going online is like being in their own neighborhood, a safe haven.

"We don't associate computers with risk," said Adams of Infrastructure Defense. People see computers as tools that carry out tasks and improve their lives.

Anyone with a computer, Web design software and an Internet service provider can concoct a Web page that appears, at first glance, to be as authoritative a source of information as CNN.com or as reliable an online merchant as Amazon.com.

"If it's on the Web, you check it out," Adams said. "It's a very, very unreliable source of information."


The case, the first felony conviction linked to an online auction, focused attention on auction companies, some of which have taken steps to ensure consumer safety and satisfaction

Online auction company eBay (www.eBay.com) and the New York Department of Consumer Affairs reached an agreement last month to increase consumer protection.

It set up what it calls "SafeHarbor" to give consumers an overview of the site and steps to take if they have problems. It includes a free insurance plan, an escrow account system where a third party holds the money until a buyer is satisfied with the purchase and improved verification about the sellers.

"If you take those steps and pay attention to them, the chances are you're going to end up having a positive, safe and fun bidding experience," said Kevin Pursglove, senior director of corporate communications for eBay. He said the company gets about 20 complaints for every 1-million transactions.

In Hare's case, he set up fake e-mail identities that could misdirect people. Pursglove would not disclose details but said the company is working on that problem.

"We're improving our ability to use the technology to keep an eye on patterns and practices individuals may apply when changing e-mail addresses on a frequent basis," Pursglove said.

Another company that has been targeted by scam artists is the largest online service, America Online. It has 16-million members, many of them new to the Internet. AOL posts a warning on its mail site that its staff will never ask for passwords or billing information, the kind of information that Richard Frank almost turned over to a scam artist.

AOL tries to educate its users about safety through its Neighborhood Watch program, which lists recent scams, online security measures and where to forward e-mail and complaints.

"We suggest a combination of common sense and use (of) the materials we provide online," AOL spokesman Rich D'Amato said.

The service works with authorities, helping train law enforcement about the online world, and will prosecute those responsible for scams when they are identified. "We realize that we need to act on behalf of our members," D'Amato said.

But Frank says he almost became a victim even though he had seen AOL's warnings.

"I know the story," he said. "I know AOL tells you any time anyone asks for a credit card it's not legitimate. I didn't think (the scam) would be at the AOL site."

The lesson he learned?

"Although I'm paranoid, I should be twice as paranoid," he said.

-- Information from Times wires was used in this report.

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