Electronic Commerce Fraud: Towards an Understanding of the Phenomenon

The objective of this paper is to determine the factors that contribute to electronic commerce fraud. We present a model that identifies five causes: the incentives of criminals, the characteristics of victims, the role of technology, the role of enforcement, and system related factors. The Internet has lowered the barriers to entry for criminal enterprises. Victims are unable to determine which sites are real and which ones are fraudulent and lack of reporting further facilitates this type of crime. The lack of enforcement, resulting from inadequate resources and laws, contributes to the lowering of entry barriers to fraudulent businesses. An analysis of FTC cases shows that most crimes are not technologically sophisticated and that greater awareness and experience with this type of schemes people will avoid being victimized.