Consumers Lost $4.3 Million to Internet Fraud in First Ten Months of 2001, NCL’s Internet Fraud Watch Reports

Avoid Shopping Scams and Mishaps this Holiday Season with Six Simple Tips

            WASHINGTON, DC—Consumers reported losses totaling $4.3 million, or $636 per person in Internet fraud to the National Consumers League’s (NCL) Internet Fraud Watch (IFW) during the first ten months of 2001, up from $3.3 million and $427 per person for all of 2000.

“Increases in loss coupled with predictions of less travel and more online shopping this holiday season make it more important than ever for consumers to understand how to avoid online scams and shopping mishaps,” said Susan Grant, director of the National Consumers League's Internet Fraud Watch.

            Though consumers are using their credit cards more online, money orders are still the most common way Internet fraud victims paid for their products or services.

“Credit cards are the safest way to pay because you can dispute the charges if something goes wrong, Grant said. “And new technologies like substitute or single-use credit card numbers add an extra measure of protection against someone else fraudulently using your account.”

NCL has released Six Tips for Shopping Safely Online to help consumers avoid scams and mishaps this holiday season.

1.   Get the scoop on the seller. Check complaint records at your state or local consumer protection agency and Better Business Bureau. Get the physical address and phone number to contact the seller offline. Look for sellers belonging to programs that encourage good business practices and help resolve complaints.

2.   Use a credit card. It’s the safest way to pay because you have the legal right to dispute charges for goods or services that were never ordered, never received, or misrepresented.

3.   Ask your credit card issuer about “substitute” or “single-use” credit card numbers. This new technology allows you to use your credit card without putting your real account number online, protecting it from abuse by “hackers” or dishonest employees of the seller.

4.   Look for clues about security. When you provide payment information, the “http” at the beginning of the address bar should change to “https” or “shttp.” Your browser may show whether the information is being encrypted, or scrambled, as it is being sent. See what Web sites say about how they safeguard your information in transmission and storage. Don’t provide sensitive information by email.

5.   Know the real deal. Get all details before you buy: a complete description of items; total price, including shipping; delivery time; warranty information; return policy; and what to do if you have problems.

6.   Keep proof handy. Print and file the information in case you need proof later.

Top Internet Fraud Scams

As expected, online auction sales remained the number one Internet fraud for the first ten months of 2001, though decreasing from 78 percent of the frauds reported to the IFW in 2000 to 63 percent in 2001. Other top frauds for 2001, in order, are non-auction sales of general merchandise, Nigerian money offers, Internet access services, Internet adult services, computer equipment/software, work-at-home plans, advance fee loans, credit card issuing, and business opportunities.

            “While auction complaints are the most numerous, consumers lose more money in some of the other top ten Internet frauds such as, general merchandise and computer hardware or software purchases.” said Grant. Consumers lost an average of $845 per person to general merchandise sales (anything from jewelry to T-shirts that were not purchased on an online auction) and $1102 to online purchases of computer equipment or software. The average loss per consumer to online auction sales was $478.

New Shopping Online Campaign      

            NCL recently launched an educational campaign, made possible with an unrestricted educational grant from Orbiscom (www.Orbiscom.com), to help consumers shop safely online. The campaign includes a new Web page, www.nclnet.org/shoppingonline with “Six Tips for Shopping Safely Online,” results of a new online shopping survey, information about privacy, security and safety on the Web, facts about Internet fraud, and new Internet Fraud Watch statistics.

The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to identify, protect, represent, and advance the economic and social interests of consumers and workers. NCL is a private, nonprofit membership organization. For more information, visit www.nclnet.org.

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