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Internet Fraud Costs Europe Millions

DW staff (jb)
October 30, 2005

Although Internet fraud is costing consumer millions in Europe, Europeans still remain less guarded and informed about online theft than people elsewhere.

Beware of Internet pirates when shopping onlineImage: AP

Everyone has read the horror stories. Someone innocuously uses the Internet to make a purchase. Later, money begins disappearing from the customer's bank account unbeknownst to them.

Thousands of such cases land on desks of prosecutors everywhere.

But according to a recent survey, Europeans, from whom millions are stolen annually via the form of Internet theft known as phishing, still remain ignorant about online security, especially in comparison to American consumers.

"The cases we have seen in our office are just the tip of the iceberg," Andreas Kingbeil, who works with police to combat computer fraud in Berlin, told Focus newsmagazine.

Shopping away

According to a survey by US-based Momentum Research Group, online shopping is influenced by fears of Internet theft more often in the US than in Europe, particularly in Germany and France.

About 16 percent of the US customers surveyed said they had started spending less online because they feared theft. But only 6 percent of German and 9 percent of French consumers said they had changed their habits.

DENIC Online Registrierung von Domainnamen
Hijacked Web sites threaten consumersImage: dpa

Meanwhile, 90 percent of Americans surveyed understood what Internet theft is, while only a third in France and Germany did. A majority of respondents did not understand Internet fraud methods such as phishing. Still, the survey showed, consumers are spending more online today than ever before at the same time as some are cutting back.

More education needed

Internet security experts say phishing is one of the most common methods of Internet fraud. In phishing, customers are lured away from a company's official Web site to a fake Web site which closely replicates the original. Usually, the fake site is missing specific elements of the original or the name is slightly different. Sometimes customers will indeed enter the official Web site, but then be redirected to a fake site. Only by taking the time to explore the entire site can customers figure out whether it's a fraud. But most don't take the time.

Internetcafé in Moskau
Let the buyer bewareImage: AP

Online charities, lotteries and auctions are often other sources of fraud. Consumers click on links to donate money or claim prizes, and by doing so, give their credit card and other important information to thieves.

Pharming is an even more serious problem for Internet consumers. In this method, Web pirates hijack a site and use sensitive data entered there for their own purposes. Security experts say it's very difficult to detect when a Web site has been taken over by thieves.

Millions lost

In the US, experts say that phishing and other Internet fraud costs customers 1 billion euros ($1.2 million) annually. In Germany, officials estimate that phishing has cost consumers more than 4.5 million euros -- and that is just cases that police have investigated.

In some cases, retailers and banks compensate customers and investigate themselves. Most respondents to the Momentum Research survey said they believe that should be the case and knowing so would make them feel more secure about online shopping.

"For consumers, the key to online confidence lies at the door of the business community -- meaning that it is imperative for online vendors to be seen taking appropriate measures to protect their customers' interests," said Art Coviello, president and CEO of RSA Security which commissioned the study, in a prepared statement.

"The survey clearly demonstrates that, once their trust is earned, users will return -- and spend -- again and again. But that trust is a fragile commodity."

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