Micro-Frauds: Virtual Robberies, Stings and Scams in the Information Age

Micro-Frauds: Virtual Robberies, Stings and Scams in the Information Age

David. S. Wall (Criminology, School of Applied Social Sciences, University of Durham, UK)
DOI: 10.4018/978-1-61692-805-6.ch004
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Abstract

During the past two decades, network technologies have shaped just about every aspect of our lives, not least the ways by which we are now victimized. From the criminal’s point of view, networked technologies are a gift. The technologies act as a force multiplier of grand proportions, providing individual criminals with personal access to an entirely new field of ‘distanciated’ victims across a global span. So effective is this multiplier effect, there is no longer the compulsion to commit highly visible and risky multi-million-dollar robberies when new technologies enable offenders to commit multi-million-dollar thefts from the comfort of their own home, with a relatively high yield and little risk to themselves. From a Criminological perspective, network technologies have effectively democratized fraud. Once a ‘crime of the powerful (Sutherland, 1949; Pearce, 1976; Weisburd, et al., 1991; Tombs and Whyte, 2003) that was committed by offenders who abused their privileged position in society, fraud can now be committed by all with access to the internet. This illustration highlights the way that computers can now be used to commit crimes, and this chapter will specifically focus upon the different ways that offenders can use networked computers to assist them in performing deceptions upon individual or corporate victims in to obtain an informational or pecuniary advantage.
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Part One: The Virtual Bank Robbery

As the Internet has become a popular means by which individuals and organizations manage their financial affairs, financial and billing systems have increasingly become exploited as targets for criminal opportunity. Fraudsters have for some time used the Internet to defraud banks, build up false identities, open accounts, and then run them to build up credit ratings to obtain personal loans that are subsequently defaulted upon. Electronic banking is also used to launder money and to turn dirty money’ into clean money by obscuring its origins through quick transfer from one bank to another and across jurisdictions. Although easy in principal, it is nevertheless quite hard in practice to deceive banking security checks, so offenders will weigh-up the risks of being caught (or prevented) against opportunities. However, “criminals will go to wherever the easiest target is” (Cards International, 2003), so fraudsters will seek out system weaknesses, which tend to lie at the input and output stages. Although not always easy to separate in practice, input fraud, or identity theft, is where fraudsters obtain personal or financial information that can give them illegal access to finance [Note: input frauds are discussed elsewhere; see, for example, Wall, 2007; Finch, 2002; Finch & Fafinski, 2010)]. Output frauds are where access to credit, usually credit cards, is used to fraudulently obtain goods, services or money.

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