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The Honolulu Advertiser
Posted on: Monday, December 8, 2003

Online scams thrive during holiday season

By Deborah Adamson
Advertiser Staff Writer

Your holiday cheer could turn into holiday blues if you're not careful about sidestepping scams that proliferate at this time of the year.

Not all Web sites are what they seem. Consumer advocates say some scams involve e-mailed offers that provide a link to a Web site that looks like a major retailer's, but is actually designed to steal money or personal information.

Bruce Asato • The Honolulu Advertiser

Internet deals that are more virtual than real, e-mail solicitations or calls with the intent to steal personal information, and phony charities preying on your generosity or guilt — all are designed to take advantage of the busy season to part you from your money.

"The crooks know this is the time to put the pressure on," said Anne Deschene, president of the Better Business Bureau of Hawaii.

"Everything we do on fraud prevention gets lost when people are under pressure," especially during the holidays.

It's easy to drop your guard when your workload doubles because you have to cover for a colleague on vacation, or prepare for family members visiting from the Mainland, plus run a household and shop for two dozen people in time for Christmas.

You lose credit card receipts hurrying from one store to another. Or you respond to an e-mail ad from a Web site you've never heard of, simply because it's an easy way to shop — things you might not do otherwise.

"If people are stressed and they want to buy something, they might not do their homework compared to other times," said Steve Levins, state consumer protector at the Hawai'i Department of Commerce and Consumer Affairs.

Most vulnerable are the less educated, poor speakers of English who might not look askance at a badly worded e-mail offer, Internet newcomers, kids and seniors, some of whom are plagued with memory problems or loneliness, said

Audri Lanford, founder of Internet ScamBusters, a public service Web site based in Boone, N.C.

What's tragic is that most people never get their money back, she said.

"It's a tremendous problem. The trick is to be forewarned, and you're forearmed," said Ken Abbe, consumer protection attorney for the Federal Trade Commission's Western region, which covers Hawai'i.


• To report a consumer complaint, contact the state Department of Commerce and Consumer Affairs at 586-2653.

He said the scope of the losses is hard to quantify, but industry observers believe U.S. consumers lose at least hundreds of millions of dollars every year to scams. For businesses and financial institutions, identity theft alone cost $48 billion in 2002.

This year, the number of complaints about online fraud have risen by 40 percent from 2002, to more than 106,000, according to the Internet Fraud Complaint Center, a joint venture of the FBI and National White Collar Crime Center.

Here are some of the most common holiday scams, their latest variations, and how to protect yourself against them:

• Spam e-mail deal

How it works: An e-mail offers 50 percent off a computer system. You've never heard of the company, but you're intrigued. You click on the link and see a normal-looking Web site. You enter your credit card information to buy the product. The computer never arrives — but you discover weeks later that your credit card has been charged without authorization.

Latest variation: Scamsters have started using the names of well-known retailers such as Best Buy, eBay and Bank of America to lull you into a false sense of security, Lanford said. But when you click on the link they provide, it takes you to a fake Web site that mimics that of a major retailer.

Even if the e-mail gives you a link with a recognizable name — such as "www.bestbuy.com/holidays/deals ..." — don't assume it's a page on the Web site for Best Buy, said Paul Robertson, director of risk assessment at TruSecure, an online security company based in Herndon, Va. What's important is the information to the right of the Internet address, not the left. Even if "bestbuy.com" appears, you could still be routed to a rogue site.

Scam prevention: Major retailers won't ask for your Social Security number for purchases, so be skeptical of anyone that asks for it. Also, if you get an e-mail purportedly from a well-known store, find the Web site on your own to check if the promotion is real, rather than using the links provided. Or call the company's customer service to ask.

Be sure to spell the name of the retailer correctly or type in the right Internet address, Robertson said. Some fraudsters count on people mistyping to reach them.

Using your credit card adds a layer of protection, Abbe said. Your liability is limited to $50 in case of fraud, and many credit card companies will waive that as long as you report the incident as soon as it's discovered. With debit cards, you could be liable for more, depending on how soon you report the fraud, he said. Don't use cash or a cashier's check — most likely you'll never see your money again.

"Well over 95 percent of spams are scams," Lanford said.

• Identity theft

How it works: Your personal information — name, birth date, Social Security number, other data — is stolen online, through phone calls or from financial documents lost or thrown out. Using your name, scamsters go on a shopping spree, withdraw money from your bank, apply for services and generally wreak havoc. It takes an average of 600 hours to fix the damage done to your credit and mop up the mess, according to the FTC.

Last year, Hawai'i had the 15th highest rate of identity and account theft in the country, according to BBB of Hawaii.

Latest variation: Scamsters send e-mail pretending to be from your bank or a major retailer, Lanford said. The message says a fraud has been detected and your account has been frozen. To fix it, the e-mail instructs you to click on a link and enter your personal information, perhaps as "verification." This tactic, used to extract personal information, is known as "phishing," Lanford said.

Scam prevention: Never respond to an e-mail that you didn't solicit without checking it out first. If the e-mail claim to be from your bank, contact the financial institution directly to verify. To help minimize the risk that your credit card information will be stolen online, shop at secure Web sites.

How do you know? Look at the Internet address. Instead of the usual "http://" you'll see "https://", Robertson said. Also, check your browser for the graphic of a lock — one sign the site is secure. Third, check for third-party support of the site, such as verification by Verisign, eTrust, Visa and others. While there's no foolproof guarantee that your information won't be hacked, a secure site gives you an added layer of protection.

Check the privacy policy of the Web site where you're shopping, and find out if they will keep your information to themselves or plan to share it with marketers or other companies.

• Phony charity

How it works: A charity calls you at home to solicit money, which is common during the holidays since people tend to be in a more generous mood, Levins said. They'll take your credit card information or ask you to send cash or a check. Basically, they've just stolen your money. Sometimes they'll give themselves a name similar to well-known charities such as the American Red Cross to fool people. Or they might say they work for the charity, even if they don't.

Latest variation: After Sept. 11, police and firefighter fund-raisers became a more popular ploy with scamsters. Sometimes they'll call and say your spouse forgot to provide a credit card number when they spoke — so could you help?

Scam prevention: Ask for written information about the charity. Don't be lulled into a false sense of security if callers ask for you by name, Abbe said. They could have gotten it from a phone book or by purchasing a mailing list.

• Online auction fraud

How it works: After winning a bid for an item online, the seller, whether a company or an individual, never ships the product and disappears. The goods tend to be high-priced items, such as computers, Abbe said.

Latest variation: Sometimes scamsters set up a fake online escrow company to give a false sense of security. Online escrow companies act as mediators between the buyer and seller. For a fee, you send your money to them and the seller ships the goods to you. Once you receive the product, the online escrow firm sends your money to the seller. The service is designed to make consumers feel more comfortable about buying online. But some scamsters set up fake escrow companies, and buyers to their "preferred" escrow firms.

Scam prevention: Buy only from reputable companies checked out by eBay and other major auction sites. Check out the company's Web site. If there's no contact information or address, be wary.

If you wish to use an escrow firm, get one recommended by the auction site. If you're dealing with an individual, check out customer feedback on the seller. If there's little information available — the seller is new — be careful. Contact the seller to find out more.

• Street hawkers offering to sell high-end goods at low cost

How it works: Individuals hang out at malls, on the street or go door to door trying to sell expensive goods at a steep discount. The products might have been stolen, according to BBB of Hawaii.

Scam prevention: Follow the old adage: If it's too good to be true, it probably is.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.