Online fraud offending within an Australian jurisdiction

Author:Ioannis A. Bolimos, Kim-Kwang Raymond Choo
Position:School of Information Technology & Mathematical Sciences, University of South Australia, Adelaide, Australia
Pages:277-308
SUMMARY

Purpose This paper aims to determine the level of online fraud offending within an Australian jurisdiction and how to best apply resources to combat it. Design/methodology/approach Empirical data were provided by an Australian law enforcement agency, and qualitative responses were obtained from the parties involved in the crimes themselves (the victims, the offenders and the... (see full summary)

 
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Online fraud offending within an
Australian jurisdiction
Ioannis A. Bolimos and Kim-Kwang Raymond Choo
School of Information Technology & Mathematical Sciences,
University of South Australia, Adelaide, Australia
Abstract
Purpose This paper aims to determine the level of online fraud offending within an Australian jurisdiction
and how to best apply resources to combat it.
Design/methodology/approach Empirical data were provided by an Australian law enforcement
agency, and qualitative responses were obtained from the parties involved in the crimes themselves (the
victims, the offenders and the nominated law enforcement agency).
Findings Although there was variance between the ages of the online fraud victims, there was a slightly
higher chance of an older member of the population falling victim to an offender than that of a younger person.
The number of a particular gender reporting an instance of cybercrime in a given area can be higher if the total
number of participants in that area was also high. Older victims were more likely to lose larger amounts of
money to online fraud. Furthermore, it was found that when the non-gender identiable data were removed,
this increased to over 80 per cent.
Originality/value Existing literature on online fraud and criminal offending generally focused on the
quantitative aspects of measuring offending, which does not give an indication into the “why” component of
the study: why are these offences being committed; why do these offenders pick particular victims; and why
do the victims fall for such ruses? In this paper, the authors combined the qualitative responses obtained from
those parties involved in the crimes themselves (the victims, the offenders and the nominated law enforcement
agency) with a quantitative examination of the crime gures provided by an Australian law enforcement
agency.
Keywords Advanced fee fraud, Cyber offending, Cyber policing, Cyber victimology,
Online fraud offending
Paper type Case study
1. Introduction
Since the creation of money and the collection of goods, there have always been those who
wished to obtain theirs by nefarious means; thus, frauds (“scams”) evolved. In the beginning,
a number of basic frauds were devised, including the “get rich quick” type of fraud, fake
cheque and chain letter. Consequently, as people became aware of these tactics, more
advanced frauds where developed including the black money scam, sales scams and the
pyramid or Ponzi-style fraud. All these had the objective to separate people from their
money.
In the past, the success or failure of a scam (in this paper, scam and fraud are used
interchangeably) was related to the skills and abilities of the fraudsters involved. Central to
the strategies used by the fraudsters is the necessity to interact with a large range of people
on a one-to-one basis and the use of social skills (cunning, conversation, guile and
manipulation). They have to be able to instil trust and condence in their victims (hence, the
name of condence scammers). Scamming was very resource-intensive and required a lot of
time and effort, with a strong possibility that their swindle will not produce any results.
However, the improvement in technologies and the advent of the internet has allowed the
fraudster to trade quality for quantity and, yet, has increased the chance of success. Instead
The current issue and full text archive of this journal is available on Emerald Insight at:
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Online fraud
277
Journalof Financial Crime
Vol.24 No. 2, 2017
pp.277-308
©Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2016-0029
of knocking door-to-door or cold-calling potential victims one by one, the fraudster is now
able to communicate via the Internet, targeting a larger number of people and with a better
chance of connecting with a vulnerable target, statistically speaking.
Online (or technologically enabled) frauds can fall into a number of categories, including
email fraud, online dating fraud and sales fraud. Email frauds can include phishing (fake
emails from banks, credit societies and other companies seeking personal information) and
advance fee fraud, also known as Nigerian/419 scam (where the victim is promised large
amounts of monies after paying a transaction fee). Online dating frauds are those when
victims are targeted via dating sites or other means and lured into a “relationship” which
involves the victim sending the scammer more and more money to “help” them achieve a goal
(medical, transport, hospital, travel, etc.). Sales frauds involve people selling (or buying)
goods, either at prices which are too good to be true, or via escrow companies, which appear
legitimate but have been setup directly by the scammer themselves, using self-centred
manipulative strategies.
The rise of online fraud offending across the globe using electronic means over the past
decade has been well documented. In Australia, for example, the increase in online offending
has lagged when compared to the rest of the world, partly due to delays in the
implementation of high-speed connections to the internet (Grosso, 2006). However, we are not
immune to the trend, as indicated by the Australian Government. The Australian
(Government) Institute of Criminology (AIC) survey of online consumer fraud indicated that
during the 12 months in 2013 that a) 97 per cent of respondents reported having received at
least one scam invitation in the 12 months preceding the survey; and b) 34 per cent of the
participants responded in some way to a scam invitation in the 12 months preceding the
survey (Jorna, 2015). The Online Retail Sales Index, published by the National Australia
Bank, reported that in July 2013, “online retail sales rose to $14.1 billion in the year to July
2013, a level which is equivalent to 6.3 per cent of traditional retail spending” (Ouster, 2013).
This increasing trend of online spending as well as the ever-increasing accessibility to
“high-speed” internet, both at home/work and on a mobile platform (Belson, 2013), has
allowed more and more people to access e-commerce sites. The downside to this is that it has
allowed a multitude of offenders to enter into criminal enterprises to defraud people of their
money. As the online footprint of individual users increases due to the ever-growing number
of social media platforms, there is an increased likelihood that users are “cross pollinating”
their personal identiers Saridakis et al. (2016), for example, reported that:
Social networks enable data accumulation on a previously unimaginable scale, yielding both
benets and undesirable consequences for their users. Among such inadvertent outcomes of social
networking use are breaches of personal information security.
After investigating the levels of internet-related fraud offending, we found that the topic has
received a large amount of attention in various areas, especially over the past couple of years.
These areas included books, journals and other print media as well as socially based
information sources such as websites, forums and bulletin boards. Within this body of
knowledge, there exist a variety of different viewpoints with regard to the cause and means
of cybercrime. These include a focus of the use of “data mining” social platforms for user
particulars, the impacts of online fraud offences on the victim (Saridakis et al., 2016) and
attempts to map and rationalise online offending (Yar, 2005).
A large number of these studies have used statistical analysis to determine the levels of
offending, such as Jorna (2015),Vahdati and Yasini (2015),Stabek et al. (2010) and Anderson et al.
(2013). However, there is a lack of research (both qualitative and quantitative) in which actual
empirical data have been obtained from law enforcement agencies within Australia. Without this
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research, we are unable to answer a number of questions involving victimisation in Australia due
to online offending.
In this paper, we seek to test a number of hypotheses relating to victimisation in
Australia. They are:
H1. Older people are more prone to being victims of online fraud.
H2. Males are far more likely to be victims of online fraud.
H3. Older victims are more likely to lose larger amounts of money to online fraud.
While there are large repositories of information on various aspects for this research, there
does not appear to be a product that ts completely into the aspects outlined in the
hypotheses above. There are many sources of information which address the generalities of
internet fraud, including Choo (2011,p.3)andClough (2010). Both studies explain the means
and methods involved in the commission of cybercrime with the Clough text highlighting
how the growth of cybercrime has come to be:
[T]he proliferation of digital technology […] has transformed the way in which we socialise and do
business. While overwhelmingly positive, there has also been a dark side to these developments.
Proving the maxim that crime follows opportunity, virtually every advance has been accompanied
by a corresponding niche to be exploited for criminal purposes. (Clough, 2010,p.3).
There are a large number of texts indicating the level of criminal offending in Australia, with
fraud offending as a subset. These include various annual reports and other seasonal texts
from the Australian Institute of Criminology, 2011 (AIC), Australian Bureau of Statistics
(ABS), ABS Data Quality Framework (May 2009, 2009) and the Australian Crime
Commission, 2012 (ACC). These reports indicate that the levels of offending are rising across
Australia; however, they do not provide any in-depth analysis of state-level offenses that
would be benecial for law enforcement ofcials. These reports also do not offer insight on
the impact of these events.
Other sources of information include the Australia Competition and Consumer
Commission’s (ACCC) publication “The Little Black Book of Scams” (Australian Competition
and Consumer Commission, 2008), which provides a comprehensive outline of the different
types of online frauds which the public can fall foul to. These include both the traditional
(bogus door-to-door sales, chain letters and charity scams) as well as online frauds (e.g.
advance fee fraud, banking and credit card scams). This publication has been distributed to
various law enforcement agencies around Australia and other government departments, and
it provides a general understanding of the types of offending but not an analysis of the
growth and levels of offending in different areas and states. Reports such as Rege (2009)
provide a more in-depth analysis into the means and methodologies employed in online
dating and identity fraud. This article reported that fraud offending related to online dating
was expected to generate $1.9bn by 2012 and identies a key foundation to why online fraud
is becoming more and more prevalent in today’s society – that the “three dimensions of
technology, cyberspace, and inadequate countermeasures collectively inuence criminal
organization and operation in cyberspace” (Rege, 2009, p. 494).
The nominated jurisdiction’s law enforcement agency offers an online indication into the
level of offending on their website, and these gures indicate that over the past 12 months
alone, fraud offending has increased by 3 per cent, but these are all frauds in general, not
computer-related. The gures pertaining to computer-related/online fraud are not published
and are not available to the general public. The law enforcement agency’s website does have
a number of webpages dedicated to cybercrime and safe internet usage. These pages give the
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Online fraud

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