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The Different Types of Internet Scams

Credit Card Industry

If you frequently surf the Net, you’ll probably have stumbled upon countless ads and pages promising you will earn incredible sums with no or very low effort in exchange for paying a small sum to join their programs. Maybe some of them were so promising that you actually ended up paying their affiliation fee, only to find out, hours or months later, they’d never give you the return they promised.

Spotting an internet scam can be hard at first, but once you’ve understood the mechanisms, you’ll see the schemes used by scammers are always the same, only with small occasional differences. In this article I will try to list the main types of Internet scam, to make it easier for you to spot them and immediately avoid them when you come across one.


The term ‘identity theft’ commonly refers to the act of acquiring personal information about you, which can be later be used without your permission. Identity theft schemes include:

a) Stolen Credit Card

Credit card information can be obtained in many ways, the simplest being copying information from retailers, either online or offline. There have been many cases of crackers obtaining huge quantities of credit card information from companies’ databases. Despite the claims of the credit card industry and various merchants, using credit cards for online purchases can be insecure and carry a certain risk. Even so called “secure transactions” are not fully secure, since the information needs to be decrypted to plain text in order to process it. This is one of the points where credit card information is typically stolen.

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b) Getting Wire Transfer Info

Some fraudsters approach merchants asking them for large quotes. After they quickly accept the merchant’s quote, they ask for wire transfer information to send payment. Immediately, they use online check issuing systems as Qchex that require nothing but a working email, to produce checks that they use to pay other merchants or simply send associates to cash them.


This type of Fraud consists of an employment offer to help transfer money to a foreign company, supposedly because it costs too much to do it through other methods (which is usually not the case). Other times, you are sent an e-mail from a total stranger stating he received a check in a foreign value he can’t cash, offering you to cash ‘1000’ at his place and send him back ‘400’ in advance, keeping the rest — where the check is obviously a fake. Such schemes are easy to spot because they’re highly unlikely in real life, but unluckily some still fall for them.


The term ‘phishing’ refers to the act of trying to acquire sensitive information like passwords or credit card numbers, often via email. A typical phishing scheme is to send an e-mail pretending to be the bank or money-related service used by you, trying to get the user to log in. The links in the email doesn’t actually bring to the original vendor site, but to a clone site owner by the scammer, who is recording all fields entered when logging in the site. One of the most common types of phising involves e-Bay related messages.

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Ponzi, pyramid and matrix schemes are all very similar unsustainable business models that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service actually being delivered. When the cycle involves enough people who have invested in the program (or when the program itself has ‘saturated’), the scammers will disappear with all the money of the latest investors. Some people look at such schemes as a form of gambling (trying to invest on them even if they know they are scams, betting on the fact the system won’t ‘saturate’ while their money is invested), however this behavior is often considered barely legal, and in many occasions explicitly forbidden by law.

A final rule of thumb to spot scams: if it sounds too good to be true… then it’s too good to be true!

What should you do when you find out about a scam site, or you get scammed yourself? Your first resort should be to alert local police. But the fastest and most effective way to prevent the scammers from fooling someone else is probably to alert their payment system provider (e.g. PayPal) asking to suspend all transactions from and to the account you sent the money to. Every online payment system will take such inquiries with a great deal of seriousness (they don’t want to be associated with scammers) and soon the scammers will be out of business.