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National Crime Victim Law Institute

What is “online fraud”?

July 27, 2010

Fraud that is committed using the internet is “online fraud.”  Online fraud can involve financial fraud and identity theft.

Online fraud comes in many forms.  It ranges from viruses that attack computers with the goal of retrieving personal information, to email schemes that lure victims into wiring money to fraudulent sources, to “phishing” emails that purport to be from official entities (such as banks or the Internal Revenue Service) that solicit personal information from victims to be used to commit identity theft, to fraud on online auction sites (such as Ebay) where perpetrators sell fictional goods.  The methods used by perpetrators of online fraud are constantly evolving.

On this page, “Online Fraud” is used as an umbrella term to encompass both financial fraud and identity theft.  Financial fraud and identity theft can be separate or related crimes.  Identity theft happens when a person’s identity is used to commit, aid, or abet any unlawful activity.  Often financial fraud can lead to identity theft.  For example, an offender may send an email to a victim, pretending to be from a bank and ask for the victim’s bank account information.  If the victim releases that information and the offender drains the victim’s bank account, a financial fraud has been committed.  The offender may then also use the victim’s personal information to create additional bank accounts through which money is laundered, or to open additional credit cards.  This second piece is identity theft.  It is important to recognize that the crimes of financial fraud and identity theft are distinct crimes, but that at times they may be interrelated.  You should follow steps to protect yourself against both types. 

Resources that can help you learn more about the different types of online fraud include:

The Internet Crime Complaint Center (IC3) is a joint program of the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NWC3), with the intent of receiving complaints regarding internet-related crimes, including financial fraud.  The IC3 website provides an in-depth discussion of various online fraud schemes and trends identified by the IC3.

lookstoogoodtobetrue.com is an educational site for consumers to learn about protection against online fraud.  The website outlines many of the different schemes used to commit online fraud and provides online fraud victims’ stories. 

For updates on the most recent scams see the Federal Trade Commission’s Consumer Information page.