Fighting Fraud: Real live scams

In 1999, MBI launched its website. It confirmed the company was founded by three Swiss business leaders and was just about to set up offices in Canberra, Sydney and Melbourne to complement its offices in Europe and the United States. MBI was offering insurance to companies and government departments to cover them for risks associated with the millennium bug. The website proudly proclaimed: "It is confidently expected that investors will triple their money between the time of the investment and 30 September 2000. Yes, you should expect to make a return of 200 per cent on your investment in just over 15 months."

More than 100,000 potential investors visited this website. Of those only 11 people complained that the company was possibly fraudulent. Another 1,212 potential investors asked the company for more information. Two hundred and thirty three people pledged investments in excess of four million Australian dollars.

Perhaps all of the site's visitors should have paid more attention to the fact that it was launched on 1 April.

In May 1999, the Australian Securities and Investments Commission (ASIC) put its hands up and admitted the MBI website, and all of the details of the company and the investment opportunities it promised, was an elaborate April Fools Day joke - highlighting the danger of fraudulent investment schemes on the internet. The ASIC chairman hit the nail on the head when he said: "Investors should be wary of fraud and not believe that the internet offers some sense of instant authority."

Fast forward to 2001. During the past week - more by accident than design - I have visited at least 10 different websites that are almost certainly fraudulent. Three of them, for example, have soundalike names to real institutions - a bank, a European chamber of commerce and (almost unbelievably) what appears at first sight to be a governmental department. All three sites are offering business loans - for incredibly large amounts - if you enrol in the program by paying an annual subscription by credit card. Thus the innocent investor is not only being ripped off with a phony annual subscription but also hands over his or her credit card details.

Why do I support silicom.com's Fighting Fraud campaign? If the examples above are not justification enough then it is the simple fact that clever criminals operate at the cutting edge of technology. Regrettably law enforcement bodies, regulators and government departments do not.

The internet is a wonderful mechanism for criminals because in cyberspace everyone is equal. If a web page says the company behind it is a well-regarded, long established concern, who are you to doubt them? The internet abounds not only in porn sites but fraud of all shades and varieties: rip off cyber-shopping, fraudulent online auctions, genuine online auctions selling fraudulent goods, scam pyramid schemes, phony investments, fake offshore banks. You name it, you'll be able to find it on the web. Here I can only mention in passing other strands of digital crime such as hacking, identity theft, theft of credit card details, and virus attacks.

While supporting silicon.com's campaign I also think it worth repeating (ad nauseam) that every internet user should have at the forefront of their mind the P T Barnum motto of "There's a sucker born every minute". More attention to the caveat emptor principle would in itself reduce online scams.

While the creation of one central body in the UK to deal with online crime is a much-needed step, even this won't be enough. It won't be enough because of the nature of the internet itself. In 1993, science fiction writer Bruce Sterling saw the internet as "a true, modern, functioning anarchy" - a borderless community with very few, if any, rules and regulations. So the scam website that an investor has just lost money to may quote an address in New York but in fact the crooks behind it are in Russia using a first stage bank account in the Caribbean. Multi jurisdictional crime such as this is difficult to prevent, investigate and prosecute, if only because of the immense problems encountered where different country laws, official bodies and - it must be said - turf guardianship abound.

Certainly we desperately need a central body in the UK to deal with every aspect of digital crime - as opposed to the hopelessly incompetent piecemeal approach we have now - but just as importantly we need a UK body that will embrace the spirit of the internet and see as a main priority ongoing and real-time co-operation with other similar governmental (and non-governmental) bodies across the world.

The current UK response to e-crime is naive, embarrassing and ineffective. If we want to be at the forefront of digital business it is about time we changed our wholly inadequate response to this ever growing and serious problem.