The internet has brought unparalleled convenience, but it has also opened the door to a growing number of online scams. Cybercriminals are constantly devising new tactics to steal financial information, personal data, and more. According to a report by the Federal Trade Commission (FTC), Americans lost over $10 billion to fraud in 2023, marking a 10% increase from the previous year.
With these numbers rising, online users need to recognize suspicious activity and account fraud to be able to take proactive steps and protect themselves. Fraud schemes come in many forms, but some are more common than others.
The 5 Most Common Types of Online Fraud
Online fraud takes many forms, but understanding the most common types of fraud can significantly reduce your risk of falling victim.
Account Takeover Fraud
Account takeover fraud occurs when cybercriminals gain unauthorized access to your online accounts, such as email, banking, or shopping platforms. This type of fraud can lead to financial losses, identity theft, and even reputational damage.
How it Works
Account takeover fraud begins with cybercriminals obtaining your login credentials through phishing emails, social engineering, or purchasing stolen data on the dark web. Often, this stolen data comes from large-scale breaches where hackers sell vast quantities of usernames and passwords to the highest bidder.
Once they gain access, fraudsters might change your account’s password to lock you out entirely. From there, they can exploit your account to make unauthorized purchases, steal sensitive information, or even commit additional fraud under your name, such as opening new credit accounts or filing for loans.
Real-Life Example
In 2020, hackers exploited stolen credentials to access the Twitter accounts of high-profile individuals, including Elon Musk and Barack Obama. The attackers used these accounts to promote a Bitcoin scam, convincing victims to send over $120,000 worth of cryptocurrency to a fraudulent address in a matter of hours.
How to Spot It Early
To identify account takeover attempts before they cause damage, keep a close eye on your accounts and strengthen their security with these steps:
- Monitor your accounts for unauthorized login attempts or changes.
- Enable multi-factor authentication (MFA) on all sensitive accounts.
- Use unique, strong passwords and avoid reusing them across sites.
Payment Fraud
Payment fraud involves unauthorized transactions made using stolen payment details, such as credit card numbers or bank account numbers. It is one of the most common forms of online fraud, especially during high-traffic shopping periods like the holidays.
How it Works
Payment fraud is a multi-layered attack where scammers use stolen payment details, like bank account information or debit card numbers, to make unauthorized transactions. Scammers often acquire this data by deploying skimming devices on ATMs and payment terminals or by installing malware on devices that capture payment information during online transactions.
Some fraudsters create fake e-commerce sites to collect your payment details during what seems like a normal purchase. This data is then sold on the dark web or used to commit identity theft, promoting further fraudulent activity like taking over bank accounts or applying for credit cards in your name.
Real-Life Example
In December 2024, the Federal Bureau of Investigation issued a warning about a rise in holiday online shopping scams. Fraudsters created fake websites and spoofed legitimate retailers to steal payment details from urgent shoppers. Victims lost money and were left without the products they had purchased, with some reporting unauthorized charges on their credit cards.
How to Spot It Early
Detecting payment fraud early can help you minimize losses. Pay attention to unusual activity on your financial accounts by following these tips:
- Regularly review your bank and credit card statements for unauthorized financial transactions.
- Only shop on secure sites (look for HTTPS and a tune symbol). Note that some browsers now display a tune icon instead of a padlock, as the padlock is no longer a reliable indicator of a site’s safety.
- Avoid sharing payment details over email or unsecured platforms.
Fraudulent Ads (Scam Ads)
Fraudulent ads are deceptive online advertisements designed to lure consumers into scams, such as purchasing counterfeit products or sharing sensitive information. These ads often target individuals looking for deals or rare items.
How it Works
Fraudulent ads are crafted to mimic legitimate online promotions, often appearing on popular platforms like Facebook or Google. These ads promise unbelievable discounts on high-demand products, such as electronics or designer clothing.
Once you click on these ads, you may be redirected to a fake website designed to look like a well-known retailer. Your payment details or personal information can be stolen on these counterfeit sites. In some cases, clicking on the ad alone can download malware to your device, enabling further attacks.
Real-Life Example
In 2023, numerous shoppers were scammed by fake ads on Facebook Marketplace. These ads featured attractive deals on high-demand items like electronics and furniture. Victims were redirected to fraudulent sellers or phishing sites and lost their money without receiving the advertised products.
How to Spot It Early
Spotting fraudulent ads requires vigilance and skepticism. Protect yourself by considering these precautions:
- Be wary of deals that seem too good to be true.
- Avoid clicking on ads from unfamiliar sources. Instead, visit the retailer’s official site directly.
- Use ad-blocking software to minimize exposure to scam ads.
Phishing Schemes
Phishing scams are fraudulent attempts to obtain sensitive information, such as login credentials or credit card numbers, by pretending to be a trustworthy entity. These attacks often play on urgency or fear, making victims act quickly without questioning the source.
How it Works
Phishing schemes work by tricking individuals into sharing their sensitive information, such as passwords or bank details. Fraudsters send emails, text messages, or even social media messages that appear to come from reputable entities, like banks, government agencies, or popular companies.
The messages typically include urgent language, such as “Your account will be locked unless you verify your details,” and a link to a spoofed website. These websites look nearly identical to the legitimate ones but are designed to harvest any information you enter.
Real-Life Example
In 2023, a viral phishing scheme targeted JPMorgan Chase customers, tricking them into depositing fraudulent checks and wire transfer funds. Victims received emails and text messages urging them to resolve fake account issues, leading them to malicious links where login credentials were stolen. The scam cost individuals thousands of dollars and highlighted the dangers of responding to unsolicited messages.
How to Spot It Early
Phishing schemes can be sophisticated, but there are often subtle clues that can help you identify them. Watch for these warning signs:
- Look for generic greetings (“Dear Customer”) and urgent language (“Act now to avoid suspension”).
- Hover over links to see the actual URL before clicking.
- Verify communications by contacting the company directly through official channels.
Gift Card Scams
Gift card scams exploit victims by convincing them to pay for goods or services using gift cards, which are difficult to trace and recover once used. This type of fraud often preys on trust and fear, as scammers impersonate legitimate organizations to manipulate victims.
How it Works
Gift card scams exploit the anonymity and untraceability of gift cards. Scammers often impersonate authority figures—such as IRS agents, tech support representatives, or even company executives—claiming the victim owes money or needs to make an urgent payment.
Victims are instructed to purchase gift cards from stores and then share the card numbers and PINs over the phone or via email. Once the scammer has this information, the funds are immediately drained and used or sold, leaving the victim with little recourse for recovering their money.
Real-Life Example
Scammers have long exploited gift cards as a payment method. In one high-profile incident reported by CNBC, fraudsters posed as IRS agents and demanded victims pay back taxes using iTunes gift cards. Victims were instructed to share the card numbers and PINs over the phone, making it nearly impossible to recover the funds. This scam typically targets older adults, costing these unsuspecting Americans millions each year.
How to Spot It Early
Gift card scams rely on urgency and intimidation to succeed. Protect yourself by keeping these red flags in mind:
- Be suspicious of anyone requesting payment via gift cards.
- Verify claims of owed money by contacting the organization directly.
- Never share gift card details with unknown parties.
Find More Resources to Protect Yourself With StreamSafely
Online fraud is a growing concern, but staying informed is your best defense. At StreamSafely, we offer a wealth of resources to help you navigate the digital world securely. From understanding phishing attacks to learning how scammers lure consumers, our articles are designed to keep you ahead of cybercriminals.
Arm yourself with the knowledge and tools needed to identify scams and protect your digital presence. Stay vigilant, stay informed, and always StreamSafely.
