Cyber Fraud

Cyber fraud refers to any type of intentional deception for improper or unlawful gain that occurs online. The most common form of this is online credit card theft. Other common forms of monetary cyber fraud include non-delivery of paid products purchased through online auctions and non-delivery of goods or software purchased online. Criminal activity involving fraud through the use of computers or the Internet can take many different forms. One common form involves “hacking,” in which the criminal uses sophisticated technological equipment to remotely access a secure computer or Internet location. Another common criminal activity involves illegally intercepting electronic transmissions that are not intended for the interceptor. This can result in the interception of private information such as passwords, credit card information, or other types of so-called identity theft.

Table of Contents

What is computer crime

There is a lot of talk about “computer fraud” today but there is no such thing as computer fraud. It usually means fraud committed using a computer’s mouse rather than the traditional methods of pen and paper. Computer is only a mechanism to execute fraud. Credit card fraud is done in India. Who says Indian cyber crime is still in its infancy? It is a person who entered e-commerce to a great extent for his personal benefit. Prevalence of ATM card in India. ATM card is a useful tool in the age of computerization. All the banks are running behind ATM network but are they really aware of the devils of ATM card?

Cyber Extortion: An executive of Gujarat Ambuja Cement Limited played mischief by posing himself as a girl and several other entities and duped an Abu-Dhabi resident for a huge sum of money. Cyber Stalking This is a new concept that is arising on the Indian horizon. The first case was registered for cyber stalking but not under the Information Technology Act. India’s first Nigerian 419 scam: Advance fee fraud also known as Nigerian scam in which chain letters are sent seeking help and citizens of different countries are duped. Hackers send unsolicited e-mails to customers of ICICI Bank and CITI Bank and sensitive and personal information is collected by simple techniques. Cyber fraud and other cyber crimes are the most complex challenges faced by the government and law enforcement agencies since the 1960s in cyberspace. This may be because the business world, financial sector etc. were the most popular users of computers and the Internet since the early times of new multimedia technology.

Cyberspace becomes the media for fraudsters, where the victims are usually unable to identify the accused. Therefore, cyber fraud has become the most widespread form of white collar crime worldwide. On 7 April 1999, ‘Yahoo! Inc.’ posted ‘buyout news’ that ‘Pair Profit’ was being acquired by an Israeli company. Immediately after this news, the company’s stock was down by more than 30% in the promotional business. After this, the false story was revealed publicly. But by that time the company had suffered huge financial losses and many investors also suffered financial losses due to this incident. This is an example of online fraud. The accused Raleigh, North Carolina was arrested by the Federal Bureau of Investigation (FBI) through an Internet Protocol address that the accused had used. Thus the accused was charged with securities fraud.

On 5 March 2000, about 19 people were charged with chat room fraud, which caused a loss of about 8.4 million dollars in New York. In India, Pune based Business Process Organization (BPO) fraud case came to light in April 2005, Karan Bahris cyber fraud case in June 2005. These are the examples where cyber fraud is increasing day by day and there is an urgent need to prevent and control this complex problem across the world. Another important problem in cyberspace is unspecified and undefined jurisdiction. Hence, the application of laws, rules and regulations in the world today is in shambles.

Definition of Cyber Fraud

The term “cyber fraud” is not defined in the Information Technology Act 2000 in India. However, according to D. Bainbridge, the phrase ‘computer fraud’ is used to mean ‘stealing money or property by means of a computer, that is using a computer to dishonestly obtain money and property including cheques, credit card services or to dishonestly avoid some debt or liability. It may include dishonestly instructing a computer to transfer funds to a bank account or obtaining money from a cash dispenser i.e. automatic teller machine using a forged bank card’.

Section 25 of the Indian Penal Code 1860 defines the term ‘fraudulently’ as if a person does any act with the intent to defraud then he is said to act fraudulently but not otherwise. Therefore, the intention to defraud is very important i.e. mens rea or guilty mind and doing something is actus reus or human conduct. The following figure explains identity theft, refund fraud and employment fraud.

Different methods of cyber fraud

Cyber fraud due to victim’s enthusiasm: Victim’s enthusiasm is an easy way to commit cyber fraud. Mostly victims are attracted and motivated to facilitate schemes in cyberspace, such as cyber marketing, e-banking, e-shopping, etc. These schemes are mostly deceptive and victims are excited by them.
Personal identity and password fraud in cyberspace: Cybercriminals have learned that stealing money through identity theft is easier, less risky and more profitable than committing traditional crimes like robbing a bank in an armed manner. Internet users should be fully aware of the real dangers they face from cybercriminals who lurk when you open innocent-looking emails, do online banking, shop online, or even use social media networks.

Identity theft involves the theft of personal information which enables cybercriminals to impersonate someone else. The more personal information a cybercriminal collects about his victim, the more likely the victim is to be misled by the criminal. The criminals in cyberspace pretend that they are good friends of the victims and try to convince the victims with the intention of giving them access to their personal information, so that the accused can use these to commit cyber frauds, such as credit card withdrawals, fraudulent money transactions, bank account frauds, ATM frauds, etc.

Cyber fraud by false representation: The criminals in cyberspace also falsely represent that they have authority to do something for or on behalf of the victim/victims or that they are government officials. This way they gain access to personal identities and commit cyber frauds.
Cyber fraud using urgency: “Urgent” is the word that fraudsters often use with some advertisement or statement that shows the scope of winning prizes if the potential victim or victims invest.
Cyber Lottery Fraud: A cyber lottery scheme is a method of committing cyber fraud that requires an investment in tickets for a chance to win a prize. It may also be referred to as cyber gambling.
Credit Scheme Fraud in Cyberspace: There is currently no common system for identity in cyberspace. It is not possible to fully identify an entity or to accurately state whether an entity has a specific characteristic. The digital environment has inherent differences from real space that cause this discrepancy, and when implementing an identity system for cyberspace one needs to consider more than just the architectural nature of the system — any system chosen will have social consequences that also need to be taken into account. Identity is a unique piece of information associated with an entity. Identity itself is simply a collection of characteristics that are either inherent or assigned by someone else. The color of a person’s hair and whether someone else considers him or her attractive are part of the person’s identity.

Interaction in real space naturally carries the identity of the person initiating the transaction. Generally, transactions also carry physical attributes — for example, when a person buys a book from a bookstore, the book seller remembers the face or appearance of the buyer. Credit schemes of extending loans in exchange for fees, interest, taxes, service charges, etc. are a way of committing cyber fraud.

Travel schemes: Cyber shopping, telefunding, telemarketing, etc. are also ways of committing fraud in the cyber world.
Electronic-mail fraud and Internet fraud: In January 2005, a mass e-mail was posted to help the tsunami disaster victims, but in reality it was a way of spreading a computer virus in order to launch a denial-of-service attack against a German website. It appears that the worm was “Tsunami donations! Please help!” which also invited recipients to open an attachment named “Tsunami.esec”. If someone opens it, it will forward the virus to other internet users. Innocent users believed they were helping in the tsunami disaster. Don’t fall prey to a scam. If it sounds too good to be true, it probably is. The consequences of these scams can include: identity theft, fraud, theft from your bank account or credit card, and computer viruses.

Cyber Frauds in India

In the contemporary era of communication convergence, online money transactions, e-banking, e-shopping, internet auctions, internet lotteries, data conversations, data transfers to online ticket bookings and in almost all aspects of our lives, we have to travel on the superhighway. Therefore, we have to go through cyberspace.

Due to liberalization and globalization, India is now well equipped to face e-commerce and e-governance as well. Like the natural world, in the cyber world too we are facing challenges from criminals and that is why India has adopted many security measures, implemented Information Technology Act 2000 and Rules 2000; also formed many bodies like NASSCOM and Cyber Crime Cells in many states like Delhi, Kolkata, Mumbai, Bangalore, Pune and Hyderabad. Like other crimes cyber fraud is also increasing day by day. It is not safe anywhere, whether UK, USA, Russia, Canada, Israel, Australia, Pakistan, Bangladesh or India. Although we have our own laws, jurisdiction in cyberspace cannot be defined or specified and this has become a cause of major problems in the cyber world.

Socio-legal impact of cyber fraud in India

Impact of Cyber Laws in India: Cyber law is a term that encompasses legal issues relating to the use of communication, transaction and distribution aspects of networked information tools and technologies. It is not a separate area of law like property or contracts, as it is a domain covering many areas of law and regulation. Some of the key topics include intellectual property, privacy, freedom of expression and jurisdiction. In Indian law, cyber crime should be a voluntary and intentional act or omission that adversely affects a person or property. The IT Act provides the basis for e-commerce and India’s approach has been to view e-governance and e-commerce primarily from promotional aspects, with a focus on the need to sensitize the public to the vast opportunities and possibilities of the information age. Security aspects need to be considered.

Conclusion and Suggestions

Communication convergence and new multimedia technology have become very popular in the contemporary globalized and liberalized society. In the 1960s, the US Department of Defense began using computer networks; Thereafter computer networks were used by academic and research institutions and finally the United States invented ICANN and protocol system. Gradually the cyber world became blurred and complex due to its misuse and abuse by criminals. Business world is the most popular user of modern day computers, computer networks, computer software and other information processing tools. Detection and investigation of cyber crimes is emerging as a problem due to unspecified and undefined jurisdiction in cyberspace. Instead of filing complaints employers and industries are keen to compromise. They have to understand their responsibility to file complaints before the police administration, cyber crime cell, CBI or other appropriate authorities to prevent and control the serious crimes which are the black spots in cyberspace. In India, industries and individuals should adopt world standard security systems with antivirus measures to protect themselves from financial loss as well as loss of reputation in the era of liberalization, globalization and communication convergence. These crimes not only cause financial loss but also affect our social progress. The Financial Services Authority (FSA) should be more proactive in assessing the security system standards of Indian call centres.

However Mr. Tim Pullan from London said that Indian call centres are very keen to follow and maintain strict measures for data protection with the same standard as European Union and United Kingdom. Call centres have agreed to follow high contractual terms and conditions, such as taking immediate action, shutting down systems immediately etc. Along with Indian Prime Minister Dr. Manmohan Singh, we must admit that “Indian professionals have built an enviable global reputation for themselves through hard work, dedication and commitment and occasional misguided acts of a few individuals should not be allowed to harm the high reputation of all professionals.” He also asked NASSCOM to take necessary steps to increase penalties for cyber crimes and amend the law and adopt data protection and security systems to compete with world standards. However, many suspect that Bahri’s case is a sting operation to suppress Indian industries with poor reputation in the growing competition worldwide. So, to protect the reputation of Indian industries and to move ahead for global competition, we have to adopt great standards of rules and regulations with data protection, security standards, privacy etc. to prevent incidents like Bahri in future.

If we want to prevent and control cyber fraud then people of India along with government policies and law have to play a vital role. For example, at the time of e-business, e-shopping or e-banking when personal information along with credit card number is required or asked; we should use our mind. Sometimes, we also give money as processing charges for all our information but actually we never get home delivery or otherwise from those fraudsters rather often they use our credit card and other identities to fulfill their purpose.

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