Web of deceit: How to beat the online bad guys

Even to a discerning eye, the proposal looks real enough. The e-mail has been sent to you from an address that ends in the name of your bank plus ".com." The message includes your bank's ornate logo and letterhead, icons that can't easily be reconstructed.

Upon reading the message, the request sounds reasonable. The bank is upgrading its systems and wants to ensure that information on each account is accurate. To do so, it is asking you to verify your name and account number. Simple.

But in the minute it takes you to reply, you might as well write a check to the crook on the other end of the exchange. You have been taken in by a popular Internet scam known as "phishing."

It is one of a slew of Internet scams inundating computer users everywhere at an ever-increasing rate. They masquerade as legitimate inquiries from, for example, African government officials, auction houses like eBay or others, then lure their victims into divulging sensitive information or forking over money.

Because these schemes are constantly evolving, experts say it is critical to understand what they are and how they work so new incarnations can be recognized under the layers of deception. They also say doctors need to be especially cautious because they may be singled out by swindlers.

"The goal is to get money, and people go where the money is," said Tricia Gibbs, a supervisory special agent for the FBI's cyber division. "Doctors are fairly well-compensated, so people want what they have. They could be targeted for any of these schemes."

For those who think they are too smart to be taken in by such tricks, statistics tell a different tale. Last year, 207,449 complaints were made to the Internet Fraud Complaint Center, a partnership of the FBI and the National White Collar Crime Center. That's a 66% increase over 2003, when 124,509 complaints were received. And those are just the complaints made to the IFCC.

Physicians have not been immune from this plague. Earlier this year, London police said it was investigating a case in which at least two American physicians had lost $100,000 collectively in an advance-fee scheme. The scam artists solicited bank account information and fees under the pretense that a deceased foreign relative had left money to the victims.

In January, the Office of the Inspector General for the Dept. of Health and Human Services said it was investigating reports that scam artists were targeting minority and foreign physicians and demanding sensitive identity information, perhaps with the goal of defrauding Medicare or bilking victims of personal holdings.

Gibbs warned that not only are physicians seen as desirable targets, they may be more vulnerable because they have public personas. "Many medical personnel have their names listed in a number of places, like directories. It might put them more at risk because there is more information about them out there," she said.

Also, the onslaught of information that is thrown at physicians may increase their risk for being conned. "If they get a bunch of e-mails, they could miss the signal that this might not be something they want to do," said Gibbs.

Nearly everyone with an e-mail address is likely to have received some form of these dubious solicitations -- messages purporting to be from a reputable source like Barclays Bank or eBay, a request for a money transfer to Sierra Leone, or a mysterious inquiry with the subject line "re: your bill."

Though many of these messages raise red flags instantly among the computer-savvy, experts emphasize that anyone who travels in cyberspace needs to be aware of common scams to avoid getting burned by one that has been disguised to resemble something legitimate.

"Certainly the fact that somebody is very educated does not mean they cannot fall victim to fraud," said John Reed Stark, chief of Internet enforcement for the Securities and Exchange Commission. "When people put together a pitch online or otherwise, they can be very slick. They make it their profession to hone these skills."

The advent of the Internet has made life much easier for the scam artists. They used to have to dial their way through phone books or send out mailers. Now, with the touch of a button, they can reach millions of people.

"We have a saying: Any scamster who does not use the Internet is probably committing malpractice," said Borg.

Many of the ploys currently circulating online stem from recent news events, including the death of Pope John Paul II and last winter's tsunami disaster in southeast Asia. One scam lures victims to a Web site purporting to offer free books about the former pope and then directs visitors to a new site with alleged money-making secrets. In the tsunami plots, victims are enticed to donate to fraudulent relief funds posted online.

"The best frauds are ripped right out of the headlines," said Joseph Borg, director of the Alabama Securities Commission and a board member of the North American Securities Administrators Assn. "But it's just an old book with new covers."

One age-old scam with a new twist involves foreign currency transactions. Victims are told they can make money by trading foreign currencies. The swindlers move the money to an offshore trust allegedly for that purpose, but then the money disappears.

"There are legitimate businesses that do this, but they generally don't go after main-street investors," said Borg.

In recent years when the dollar was falling against the euro, foreign currency scams heated up, said Borg. With the dollar recovering somewhat in recent months, those scams died down, though he expects they will resurface again as currency values shift.

Meanwhile, there are plenty of other scams to avoid. Nigerian letter scams, also known as 419 scams named for a section of the Nigerian criminal code, typically target people by e-mail asking for help with financial transactions involving overseas bank accounts.

Borg said the scam artists might ask for personal bank account numbers and other sensitive information to either steal their victims' identities or drain their accounts.

He said some may also solicit money up front, then falsely promise a return on the investment.

"These are cheap to do. When they were new, people were falling for it because they were greedy. Also, when most folks read it they know there's something illegal about it so they probably don't complain," he said.

These scams are now starting to come from countries other than Nigeria, such as China, he said.

Some of these plots and others target specific groups of people based on ethnicity, religion, race or other factors. This so-called "affinity fraud" can be particularly persuasive because the perpetrator has an inherent trustworthiness to the victim. "It's a compelling sell," said Borg. "People have a tendency to trust those who are one of them."

Another common scam is known as the "pump and dump," in which victims are tricked into buying loads of worthless stock so con artists can fraudulently hike up the price and then ditch their holdings.

These schemes claim to have information about a new or unknown company that is on the verge of something great. Perhaps it has developed a medical breakthrough or new technology. Either way, victims are told the stock is about to go through the roof. Ultimately, they are left with stock of little or no value.

The plot has been around for many years, perpetuated through newspaper advertisements and cold-calling, though only recently it migrated to the Internet, said Borg. Sometimes the companies are real and also have been victimized by the swindlers.

Auction house companies like eBay also are being dragged into these schemes by shysters pretending to represent them, then engaging in "phishing" scams for sensitive information or selling phony goods and engaging in related bogus financial transactions.

Gibbs said both eBay and PayPal, a service used to transfer money in these transactions, have "aggressive" security departments to prevent their users from being defrauded. Still, she said, users should use common sense and avoid conducting transactions outside of normal channels.

Scam artists also are using the Internet to pitch fraudulent prime bank notes and promissory notes, which entice victims to fork over money for investments with supposed large yields. The prime bank notes are meant to provide a way into the money-lending business between banks, and the promissory notes allegedly back new companies.

In recent months, several of the hot, new companies being touted by shysters have been connected to the oil and gas industry. Borg said that's because high gas prices and potential oil shortages are news, which makes the schemes sound more timely, important and legitimate. For example, the scam might promote a company with new technology to reclaim old oil or new technology for equipment. Borg said those plots sound reasonable because people know there is a lot of new drilling in this country.

"There are legitimate companies, but there are a lot of phonies out there," he said. "The simplest thing to do is to call a state securities regulator" to see if the business and the promoter of the business are licensed as required by law with any investment. If the business or promoter is not licensed, "he has no business doing business with you."

Borg also said that potential investors should avoid deals that sound too good to be true or would mean that they are much luckier than others.

"Also ask, 'Do I understand what they are selling me?' If you do not understand the product or why it makes profit, chances are this is not something you should get involved in," he said. At the very least, have a financial professional review the proposal, he said.

Stark said every investment decision should be made with care.

"Never invest just based on information that you read on the Internet or based on some message board or e-mail you read," he said. "You should treat it like a flier put on your windshield."