E‐Fraud: Current Trends and International Developments
| Date | 01 April 2002 |
| Published date | 01 April 2002 |
| Pages | 347-354 |
| DOI | https://doi.org/10.1108/eb026034 |
| Author | Harry S.K. Tan |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 9 No. 4
E-Fraud: Current Trends and International
Developments
Harry S. K. Tan
'Unlawful activity is not unique to the Internet —
but the Internet has a way of magnifying both the
good and the bad in our society . . . What we need
to do is find new answers to old crimes.' A1 Gore,
US Vice President, 5th August, 1999.
When Peter Steiner published his famous cartoon in
The New Yorker in July 1993 with the renowned
caption 'On the Internet, nobody knows you are a
dog', he succeeded in coining within a single cartoon
strip the core cause of a multitude of problems that e-
businesses face today. The new communications tech-
nologies allow almost anyone to have the ability to
deceitfully pass oneself off as someone worthy of
trust and reliability for the purpose of personal
gain. Conversely, proving or disproving one's
trustworthiness to strangers online without specific
technologies like public key infrastructure and digital
signatures is a near fruitless exercise. While such
security technologies are able to resolve identity
issues, it has proven to be both difficult and expensive
to implement them successfully.
In a relatively short time since the introduction of
user-friendly Web technologies, the Internet has suc-
ceeded in positively altering or having some effect on
how people live, study, teach, communicate, spend
their money and carry on business. As a result,
there is a growing reliance on these online products
and services by users while businesses are going
online in response to the market demand. The
growth of business online with the increasing sophis-
tication of technology coupled with the general low
level of user understanding and knowledge of secur-
ity procedures provides an optimum alternative
environment for the commission of fraud.
As more business transactions are now conducted
online, the opportunities for fraud to be committed
have escalated correspondingly. The growing
number of reports of cybercrime and fraud under-
mines the trust needed for commerce to grow on
the Internet. In a survey of 160 companies, it was
found that fraud on e-businesses is 12 times higher
than traditional retailer sales.2 For example in the
USA, government officials reported in May 2001
that Internet fraud schemes affected thousands of
people who had lost a total of about $117m.3
Criminals in general commit crimes for all kinds
of reasons or motives. Their continued involve-
ment in criminal activity is probably due to their
belief that they will be able to get away without
being suspected, apprehended or even identified.
While criminals may have their reasons for being
deluded as to their abilities for crimes in real
space, many have found that crimes committed
in cyberspace or the virtual world are much
harder to prevent or detect. Cybercrime allows
the perpetrator to be in a location some distance
away from the act
itself,
which gives rise to the diffi-
culty of conclusively identifying and apprehending
the criminal.
The growth of online fraud and crime can be
attributed generally to the following sorts of factor.
Technology — the easy availability of new technol-
ogies with high operational speeds, capacity and
connectivity make unlawful activities easier to
escape detection. Conversely, a majority of cyber-
crime victims are not technologically sophisticated
or equipped enough to prevent, detect or deal with
computer crime.
Education — the lack of awareness of how to maintain
a minimum level of security with regard to
personal information or electronic property.
Laws — most law enforcement agencies lack the
technical expertise as well as sufficient regulatory
powers and equipment to investigate and
prosecute fraudulent digital transactions.
Fear of
adverse
publicity — in some cases when a crime
is detected, businesses have been reluctant to report
criminal activity because of their concern as to how
the publicity can cause embarrassment, loss of
public confidence, investor loss or economic
4
repercussion.
The method of communication used to perpetrate the
fraud covers all Internet technologies. Internet Fraud
Watch reported that in the year 2000, 82 per cent of
the solicitation method was by way of websites,
Journal of Financial Crime
Vol 9. No 4 2002. pp 347-354
C. Henry Stewart Publications
ISSN 1359-0790
Page 347
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