What is internet fraud?
Internet fraud is a type of crime where scammers use digital tools like emails or social media, to trick people into giving away money or valuable personal information. These scams are often disguised as legitimate requests but are designed to exploit trust and ultimately defraud an individual.
Internet fraud covers a wide range of deceptive tactics, all centered around tricking users online. It’s not limited to one platform, and fraudsters operate through emails, messaging apps, fake websites, and even seemingly trustworthy online ads. The goal is often financial, such as stealing important details or accessing bank accounts. In some cases, scammers target personal data that can be sold or used for identity theft.
What makes internet fraud particularly dangerous is its scale—millions of attempts happen daily—and how hard it can be to spot. Even tech-savvy users can fall victim to sophisticated schemes.
Common types of internet fraud
Here are some of the most common forms of internet fraud, and how they tend to work.
Phishing scams
Phishing scams use fake emails or text messages that look like they come from trusted companies, such as banks or online platforms. These messages try to lure victims into clicking a link or providing sensitive details like passwords or card numbers.
They might claim that you’ve won something or try to create a sense of urgency, a classic tactic for fraudsters to get victims to make quick decisions.
Phishing messages are crafted to look real using known brands’ logos and even fake sender addresses. Links might lead to a fake login page or install malware on your device. More advanced phishing techniques like spear phishing target specific individuals or companies with personalized info, making them easier to fall for.
Scams like this are getting more sophisticated, too. AI is giving scammers more advanced tactics and making their emails and other scams look more legitimate. More than 3 in 4 Americans are now concerned about the use of AI to create more convincing phishing scams.
Online shopping scams
Online shopping scams trick people into paying for items that either never arrive or aren’t what was promised. Fake online stores may look convincing but are set up purely to collect payment information or personal details.
Some scams involve fake e-commerce sites offering high-demand items like electronics or jewelry, at prices too good to be true. These stores might send low-quality knockoffs , or even disappear after a few days. Scammers may also use social media ads or hijack legitimate marketplaces to set up fake seller profiles.
E-commerce fraud could come at an annual cost of over $100 billion in the US alone by 2029, according to Juniper Research.
Credit card fraud
Credit card fraud happens when someone uses your card details without permission to make purchases or withdraw funds. This can occur after a data breach where your details have been stolen, or on unsafe websites where your payment information is intercepted.
Credit card fraud can strike without warning. You might not even realize your card has been compromised until strange charges start appearing. One common method involves stealing card numbers during online transactions, especially if the site isn’t secure (look for “https” or the padlock in the URL) or has been compromised with card skimming malware.
Card data can also be skimmed from public Wi-Fi networks or stolen in large-scale data breaches. Once fraudsters have your information, they may use it directly or sell it on the dark web. Monitoring your statements and using virtual cards and digital wallets when possible can help reduce your risk. Online dating scams
Online dating scams
Romance scams are emotionally devastating as well as financially damaging. A scammer might create a fake profile on dating sites or social media and spend weeks or months creating a bond with their victim. The stories they tell often involve them living or working overseas to explain why they can’t meet in person.
Eventually, the emotional bond is used to justify asking for money. They might claim there’s been a medical emergency or a legal problem they need help with. Once money is sent, they may keep asking for more or disappear entirely. These scams prey on loneliness and trust, making them especially cruel.
Lottery or prize scams
Prize scams tell people they’ve won something valuable like a vacation, or games console, but to claim it they‘ll need to pay a “processing” or “delivery” fee first. Real competitions never ask winners to pay to collect their prize.
These scams often arrive through emails or phone calls and may include official-looking logos or documents to appear legitimate. Sometimes, cybercriminals say you’ve won a foreign lottery or a sweepstake you don’t remember entering. Just like other scams, the message will often create urgency, saying you need to act quickly or risk losing the prize.
The “small fee” may be framed as a customs charge or admin cost. But once it’s paid, either the prize never arrives or more fees are requested. In some cases, personal information is also collected during the “claim” process, leading to further fraud or identity theft. With AI, it’s possible for them to sound more convincing.
Inheritance or “Nigerian prince” scams
These scams promise a share of a huge inheritance or fortune in exchange for help transferring the funds. Victims are asked to pay legal fees or taxes upfront, but the money (and the wealthy relative) does not exist.
This type of scam has been around for decades, but it keeps evolving. Traditionally known as the “Nigerian prince” scam, the format typically involves an email from someone claiming to be a government official, lawyer, or member of a royal family. They say they need help moving a large sum of money and offer the victim a generous cut for assisting. The catch? They ask for upfront costs to “process the transaction,” often in the form of bank transfers or prepaid cards.
Some scammers even use fake legal documents to boost credibility. But in the end there’s no inheritance, just lost money .
Against online fraud: Take action immediately
Knowing how to prevent online fraud is the best-case scenario but if the worst happens, you need a plan. If fraud is suspected, act quickly. Check financial accounts for strange activity, review credit reports for signs of identity theft, and keep an eye out for tax-related notices from the IRS or other local tax authorities.
Catching fraud early can limit the damage. The first step is to review recent transactions on bank accounts and credit cards. Watch for small, unfamiliar charges as fraudsters often test the waters before making bigger withdrawals. Next, check your credit report with the major credit bureaus to spot unauthorized accounts or loans taken out in your name. These may be signs of identity theft.
Also, be alert for letters or emails from the IRS about tax returns you didn’t file. If someone’s stolen your identity to commit tax fraud, you might hear from the IRS first. Time is critical, so don’t delay if anything looks suspicious.
Secure your accounts and credit
Change passwords on your online accounts, report internet fraud to banks, and follow our 2FA advice regarding credit card fraud. These steps can stop fraud in its tracks and prevent future problems.
When online fraud strikes or is suspected, locking down your digital life should be a top priority. Start by changing passwords for all accounts, especially your email and those involving money, or shopping. Use strong, unique passwords, and consider a password manager to keep them secure.
Freezing and closing accounts
It is crucial to request a fraud alert on your credit profile. You will want to freeze your credit if needed and make sure all fraudulent accounts are officially closed – with written confirmation that can prevent it coming back to bite you.
For those who’ve been targeted, putting a fraud alert on your credit report is a strong move. It tells lenders to take extra steps to verify your identity before opening new accounts. Contacting one credit bureau (Equifax, Experian, or TransUnion) is enough as they’ll notify the others.
In more serious cases, a credit freeze might be the better option. This stops any new credit accounts from being opened in your name at all, making it nearly impossible for scammers to do further damage. Always keep your paper trail and evidence of communication.
If fraudsters have already opened accounts using your identity, work with the lenders to shut them down. Request written proof that each account has been closed due to fraud, and make sure the credit bureaus are notified so the damage doesn’t follow you around.
Report identity theft
If identity theft is suspected, contact the Federal Trade Commission and alert other key agencies. Taking quick action helps limit the damage and supports any legal steps needed.
Start by reporting the identity theft to the FTC at IdentityTheft.gov. This step generates a recovery plan tailored to the situation and creates an official identity theft report.
If the fraud involves tax issues, like someone filing a return in your name, notify the IRS right away. Employment-related identity theft where someone uses your Social Security number to work, should be reported to the Social Security Administration. These agencies have protocols for resolving fraud and restoring your identity.
When to file a police report
Police reports are crucial in serious or complex identity theft cases. If there’s a big financial loss, ongoing fraud, or stolen government documents involved, report it locally.
Not every instance of fraud needs a police report, but there are clear signs when it’s necessary. If the identity theft caused major financial damage, if the fraud is still happening, or if official documents like a driver’s license or passport were used, always report it to the police.
Law enforcement may also help if your identity was used in a crime or if creditors or companies require a police report before clearing fraudulent activity from your record. Keep a copy of the report and case number as it may be useful when dealing with credit bureaus or financial institutions.
Prevent internet fraud before it happens
Online fraud prevention starts with small, smart habits. Don’t trust unexpected messages, and be sure to guard personal information and protect passwords.
Prevention is the best defense against internet scams. Be cautious with emails or texts that come out of nowhere, especially if they ask you to click a link or provide sensitive information. Legitimate companies rarely ask for personal details via email or SMS.
Never give out your financial details or passwords to strangers online, even if the request sounds urgent or emotional. Scammers use pressure and emotional manipulation to bypass your better judgment. As already discussed, good password health is one of the main steps to prevent fraud.
Keep your devices and network safe
Good security software and a secure network are vital lines of defense. Always stay updated and avoid risky connections and unverified networks.
Devices without protection are easy targets for hackers. Install reliable antivirus and anti-spyware tools to block threats before they cause trouble. These programs should be kept active and up to date.
Your devices and apps should all be regularly updated too. Updates often patch security flaws that scammers try to exploit.
At home, use Wi-Fi with a strong password and modern encryption (WPA2 or the new-generation WPA3).