Top 10 Scams of 2010 and 2011

Phishing and identity theft hold top slot on our Top 10 Scams list but social networking changes the game: Internet Scambusters #420

The 10th anniversary of our annual countdown of the Top 10 scams for the past year and the New Year offers no cause for celebration.

The growth of Internet usage over that decade and, most recently, the surging membership of social networking sites like Facebook and Twitter, have fueled more online scams and hack attacks than ever, while offline cons — in the mail or at your doorstep — continue apace.

But Scambusters subscribers and readers can keep a step ahead of the crooks by knowing their favorite tricks and what they’re likely to be up to next, as we show here.

Let’s check out today’s…

Top 10 Scams of 2010 and 2011

Ten years have passed since we started our Top 10 scams list and it’s amazing, looking back, how many of the scams we predicted a decade ago continue to plague victims, as you’ll see if you check out that original list, Herbal Viagra and the other 9 top scams for 2001.

Those were relatively early days of the Internet, of course. Users were fewer and so were the number of crooks using the web to hook their victims.

Since then, the rapid change in the shape and operation of the Internet, notably the huge growth of social networking, has introduced new techniques for delivering scams, and the number of victims has gone up by leaps and bounds.

Reporting recently on the 10-year trend, Internet security outfit PandaLabs noted the high incidence of the Nigerian fee scam, which was Number 3 in our charts 10 years ago, Number 4 last year, and, we predict, will hold the same position in 2011.

Check out our earlier reports for more about Nigerian scams.

Nigerian Scam

3 New Nigerian Scams Uncovered — Plus a Personal Family Identity Theft Scare

8 Cunning New Nigerian Scams Aim to Convince You They’re Real

Lottery and advance fee scams and bogus jobs — both work-from-home and outside employment — have remained consistently high in the charts.

PandaLabs also mentions the high incidence of hijacking of Hotmail and Facebook accounts by hackers who then claim to be the account holder in urgent need of cash.

But, surprisingly, the security specialist didn’t specifically single out one of the root causes of this offense: phishing — the crime of stealing personal information for identity theft — which is by far the biggest scam and remains firmly at the head of our Top 10 scams list for 2011.

Results for 2010

Let’s now take a look at the Scambusters top scams chart, which is based on the feedback we get from many thousands of subscribers and readers, plus our own in-depth research and monitoring of crime reports.

For 2010, our Top 10 scams predictions again proved to be fairly accurate, with just a couple of switches at the lower end.

Here’s how the outturn looks, against our forecasts.

10. Travel and vacations (Predicted as #9). As forecast, the Soccer World Cup in South Africa drew in thousands of ticket scam victims, while an increasing flow of travelers to China found themselves at the center of numerous tourist con tricks. However, the economic recovery we expected to see wasn’t as strong as everyone hoped and many Americans decided to vacation more safely at home.

9. Investment scams (Predicted as #10). In the wake of the Madoff scandal, more incredible Ponzi schemes were exposed and crashed, while art investment frauds targeted celebrities. Rock bottom interest rates lured more people into phony real estate and “green” investment projects (including the BP Gulf disaster clean-up) and foreign exchange funds promising unrealistically high returns.

8. Work from home schemes (Predicted as #7). Still a major source of crime, bogus home-working schemes received a lot of publicity throughout the year, so, although there were just as many crooks pushing these scams, slightly fewer victims may have fallen for them than we expected. One bit of good news!

7. Auctions and classified ad scams (Predicted as #8) move up one more place in our Top 10 scams list, as they did in the prior year. As much as anything, this reflects the growing use of the Internet for buying stuff, so we included bogus retail websites in our research this year, which, as you’ll see below, is likely to push the crime even higher up the charts in 2011.

6. Doorstep scams (Predicted as #6). We forecast that the 2010 Census back in April would attract scammers, mainly “phishing” (see #1 below) for information they could use for identity theft. And we were right. The annual crop of disasters, including floods and, this year, the San Francisco gas explosion, also brought out the bogus contractors in force.

5. Lottery scams (Predicted as #5). Sadly, as we reported a year ago, this crime targets the elderly. There’s apparently still no shortage of victims willing to pay up to hundreds of thousands of dollars in bogus fees to collect non-existent winnings.

4. Nigerian scams (Predicted as #4). The continuing efforts by the Nigerian government to clamp down on this scam seem to be having little effect. A TV documentary broadcast a few months ago showed how whole towns in that country have become dependent on the proceeds of scams.

3. Economy-related scams (Predicted as #3). Foreclosure and loan modification scams, together with bogus job offers — usually a prelude to identify theft or simply a means for charging an upfront fee — were the most common crimes in this category. The BP Gulf disaster added significantly to the number of phony job schemes.

2. Malware (Predicted as #2). This is the broad term for harmful software that installs on home and business computers to steal information, wreck hard drives, disrupt business activities and recruit computers into “zombie botnets” for sending out spam. Internet security specialists McAfee say they’ve identified 14 million unique malware programs, up by 1 million over the year as a whole.

1. Phishing and identify theft (Predicted as #1). The invasion by scammers of social networking sites, such as Facebook and Twitter, together with malware downloads (see above) kept this crime firmly in the top slot.

Changes for 2011

We don’t see much change in the running order of our Top 10 forecast for 2011, only, sadly, an overall rise in the number of incidents, especially those relating to social networking which are now used by around 30% of the global population, and a significantly higher percentage of Americans.

However, for the New Year, we’re merging work-from-home jobs with our economy-related scams to make way for a newcomer that we expect to grow significantly in the coming months.

This is “skimming,” which embraces a whole clutch of crimes including thefts from ATM machines and capturing of credit card information at restaurants, gas stations and other retail outlets.

We’ve previously reported on some types of this crime in ATM Theft: 8 Tips to Protect Yourself From the 5 Most Common ATM Scams.

Look out for more information in future Scambusters issues.

So, with that in mind, here’s our 2011 forecast of Top 10 Scams.

Predictions for the Top 10 Scams of 2011

10. Travel and vacations. Americans are still vacationing at home in the weak economy and amid safety fears about traveling to Mexico. But with the world economy still unsteady, scammers are more desperate than ever to catch out those who do journey abroad. Watch out especially for a huge ticket scam for the forthcoming London Olympics 2012.

9. Investment scams. Investors have become more cautious about Ponzi schemes, which draw in new money to pay earlier investors until the whole scheme collapses. But low interest rates will continue to push investors into high-risk and shaky projects. Expect also to see more computer trading programs with dubious claims that they can “beat the market.”

8. Doorstep scams. With the Census out of the way, this crime drops two places, but bogus contractors, charity collectors, utility workers and others who knock at your front door bent on crime keep it strongly in the charts. And, of course, a major natural disaster, such as hurricane, earthquake or floods, could push this higher.

7. Skimming. European banks report a huge increase in debit and credit card information theft, especially at ATMs that have been rigged either to collect card details or to trap the card so the crook can use it. Expect to see a similar trend in the US during 2011.

6. Bogus and fraudulent Internet sales. As mentioned above, this category now embraces bogus retail sites selling nothing but thin air, as well as online auctions and classified ads. We think this will be more than enough to push this category up one further place in our Top 10 scams list.

5. Lottery and gaming scams. We’ve also broadened this category to include online gaming scams, featured in an earlier Scambusters report. We expect to see significant growth in bogus gambling-related sites, and a continuing stream of phony lottery schemes.

4. Nigerian scams. In their report referred to earlier, PandaLabs points out that the latest version of the Nigerian scam claims that a compensation fund has been set up and invites previous victims to put in a claim. Then, of course, the scammer requests a fee before the supposed compensation can be released.

Nigerian crooks are also muscling in on the bogus girlfriend scam previously dominated by the Russians. Victims, befriended online, end up paying supposedly for airfares and other expenses for their new but non-existent sweetheart.

3. Economy related scams. The economy is taking much longer to recover than hoped, so expect to see foreclosure and load modification scams to continue. Plus, as mentioned above, we now include work-from-home scams in this category.

2. Malware. As many as 60,000 new pieces of malicious software appear every day, says McAfee. The growing use of USB drives to store and transfer data may also contribute to the spread of malware.

1. Phishing and identify theft. The growth of malware mentioned above, coupled with hijacking of social networking accounts and more sophisticated hacking technology, means that identity theft will remain the Number One Internet crime for the foreseeable future.

Compiling our annual forecast of the Top 10 scams is not a pleasant task. Nor is being proved right about our predictions for the past year.

However, it does reinforce our determination to do everything we possibly can to reduce the impact of these despicable crimes. By highlighting the risks and publishing this top scams list, which we invite you to pass on to friends and relatives, perhaps we can do just that.

That’s all for today — we’ll see you next week.