INTERNET

FRAUD AND

IT’S EFFECT ON

THE ECONOMY
(A CASE STUDY OF BANKING INSTITUTION IN NIGERIA)

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 BY

............................
COLLEGE OF ACCOUNTANCY AND COMPUTER TECHNOLOGY
(AKP/WRR/ASC/CSC/ND2007/0008)

A RESEARCH PROJECT WRITTEN IN THE DEPARTMENT

OF COMPUTER SCIENCE, IN PARTIAL FULFILMENT FOR

THE AWARD OF NATIONAL DIPLOMA (ND) IN

COMPUTER SCIENCE.

NOVEMBER 2009

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 APPROVAL

We the undersigned hereby certify that this project was carried

out by EBIMIENE TIMI EPRE in the department of Computer

Science. We also certify that the work is adequate in scope and

quality in partial fulfilment for the award of National Diploma

(ND) in Computer Science.

Date
Project Supervisor

Center co-ordinator Date

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 DEDICATION

This project work is dedicated to the Almighty God who gives

wisdom for academic excellent, and to my beloved parent who

did not deprive me from benefiting and having the light of

education.

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 ACKNOWLEDGMENT

I am most grateful to the Almighty God for giving me life,

strength and courage to sail through my educational career

despite all odds and obstacles.

In writing this project, I am indebted to my people for their

contributions; support and encouragement in making this

project work a success.

I will like to use this opportunity to express my sincere thanks

to my parents, brothers and sisters, relatives, friends and loved

ones for their prayers, moral and financial support through this

program.

My profound gratitude goes to my Supervisor Mr Kolade

Oluwo who despite his crowded schedule, sacrificed time to

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read through the manuscript without which this project would

not have seen the light of the day.

My special thanks also goes to Mrs Juilet Sunday, Miss

Onupecheke Oghogho, Miss Okirie Grace, Mr George Obode, Mr

Peter Iniobong, Miss Okuwa Stephanie, Mr Ipidei Clifford for

their advice, encouragement and assistance.

In like manner, I wish to acknowledge the effort of all my

lecturers in computer science department for their principal

knowledge imparted on me during my period of study.

With special thanks to my Mother for her endless love shown to

me during the course of my studies.

Finally, thanks to others I cannot remember during the course

of the write up, may God reward every effort of kindness and

love shown during my academic pursuit.

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 ABSTRACT

The Internet offers a global marketplace for consumers and businesses.

But crooks also recognize the potentials of cyberspace. The same

scams that have been conducted by mail and phone can now be

found on the World Wide Web and in email, and new cyberscams are

emerging. It's sometimes hard to tell the difference between

reputable online sellers and criminals who use the Internet to rob

people.

In this research work, the researcher is focusing on

internet fraud and it financial effect on the economy. A case

study of banking institution in Nigeria. The researcher will consider

in chapter one….the introduction of the study which will in turn considers

the following topics. The background of the study, the statement of

research problem, the objective of the study, significance of the study,

the hypothesis and the structure of the work.

Chapter two focuses on the literature review; this chapter

is where the researcher extract materials from various books,

magazines, news papers and internet resources. In chapter

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 three, the researcher deals on research methodology while

chapter four is data analysis and interpretation. The finding,

summary and conclusion is in chapter five.

7 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The Internet has become a useful instrument that has fostered the process of

making the world a global town.

It’s actually a fact rather than a farce as its relevance cannot be over

emphasised. Internet as one of the greatest recent advancement in the world of

information Technology (IT) has brought tremendous changes to the society

and the world at large. It has impacts on various aspects of human endeavour

and even becoming a more reliable method of business communication and

data transfer in the global market place

The role of Internet in the global market place is a sure-free medium, which has

given businesses, unbridled accesses. There is no longer the need to get visa

before taking your product abroad or working permits to do business overseas.

Some capabilities of the Internet includes:

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(1) Instant access to information

(2) Education (e-learning)

(3) Business transactions

(4) Shopping (e-commerce)

If there is one industry that has the stigma of being old and boring, it would

have to be banking; however, a global trend of deregulation has opened up

many new businesses to the banks. Coupling that with technological

developments like internet banking and ATMs, the banking industry is

obviously trying its hardest to shed its lackluster image.

The Internet offers a global marketplace for consumers and businesses, but

crooks also recognize the potentials of cyberspace. The same scams that have

been conducted by mail and phone can now be found on the World Wide Web

and in email, and new cyberscams are emerging. It's sometimes hard to tell the

difference between reputable online sellers and criminals who use the Internet

to rob people. You can protect yourself by learning how to recognize the danger

signs of fraud.

To fight this growing threat, the National Consumers League founded the

National Fraud Information Center in 1992. NFIC was designed to fight

telemarketing fraud through prevention and by improving the enforcement

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capabilities of federal and state agencies. Consumers from all across the US and

Canada can easily call NFIC before sending their money. From our research

findings, the centre handles on average of 350 calls a day at the NFIC phone

center. Of these, approximately 35% are consumers who have already lost

money to scam artists, but there is always a way out to help them. The

telephone counsellors can assist English and Spanish speaking consumers by

taking a full report of what happened, including all the information a law

enforcement agency would need. This report is entered into the computer

system and shared with the Federal Trade Commission. It is also faxed out on a

real time basis to any of more than 160 law enforcement agencies whose

interests match the report. NFIC works closely with authorities in both the US

and Canada to ensure that all cases of fraud reported to it are referred to the

appropriate agents.

1.2 STATEMENT OF THE PROBLEM

In this research project, effort will be made:

1. To determine the effect of internet fraud on the economy.

2. To investigate the effort of the experts and government as well as

business organisations towards combating internet fraud.

3. To examine various types of online fraud

4. To examine different versions of internet fraud across the globe.

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 5. To determine ways of reducing risks from online investment

opportunities that may be fraudulent.

6. To investigate internet banking code that could limit or extricate

internet fraud.

7. To find out what are the possible and specific online fraud.

1.3 THE SCOPE OF THE STUDY

Since Internet fraud" generally refers to any type of fraud scheme that uses one

or more online services - such as chat rooms, e-mail, message boards, or Web

sites - to present fraudulent solicitations to prospective victims, the scope of the

research work boarders around various types of theft schemes/online fraud,

internet investment scam, credit card scheme and money transfer fraud.

1.4 SIGNIFICANCE OF THE STUDY

The significance of the study are many, but the following points are worthy of

mentioning.

a. the findings of the study will shed more light on combating

online/internet fraud in the banking institutions in the country.

b. the study will lead to a deeper understanding of various types of internet

fraud available.

c. the findings of the research will serve as decision variables or input for

managers, bankers and government agents.

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d. the policy makers and professionals in the relevant fields will find the

research work useful for their policy making.

e. the study will create more awareness in the minds of its readers, about the

credit card and money transfer fraud.

f. the study will serve as reference material to students of finance,

accountancy, business management, banking and economics, who may desire

an in-depth knowledge of the online business transaction and its implications.

g. it will be of a great benefit to the scholars and other researchers alike by

serving as a reference material when need arises.

1.5.0 LIMITATION OF THE STUDY

A research work of this nature cannot come to an end without limitation. The

researcher encountered numerous problems, which affected the smooth running

of the work. These problems include, difficulty in procuring materials for the

project, time factor and financial constraints

1.5.1 MATERIAL PROCUREMENT

There was a lot of constraints as to getting information and materials for the

job. The researcher made series of consultations and visit to most renowned

institutions to acquire the needed information. Most materials used were very

difficult to come by, as there is no library with the town.

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1.5.2 TIME CONSTRIANTS

Combining academic work with circular job is no doubt a thought provoking

issue, as it has to do with time. Actually, a lot of time was wasted as the

research visited the organisations and individuals together with government

agencies to obtain valuable information for the project.

1.5.3 FINANCIAL CONSTRAINTS

The researcher would have obtained more information than what is obtainable

here but due to lack of money to visit some of the firms and government

agencies located a bit further from the researcher place of resident.

1.6.0 HYPOTHESIS

A hypothesis is a conjectural or tentative statement of the relationship between

two or more variables (Agbadudu).

In this research project, two hypotheses are to be tested as follows; that the

proportion of respondents that said yes is 90% when asked.

(1) If it is possible to combat internet fraud .

(2) If it is possible for individual to avoid Internet investment scams

1.7 OBJECTIVES OF THE STUDY

The salient objectives of the research were the following among others:

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a. to carry out an investigation on internet fraud and find out the possible

solution to the problem.

b. to empirically find out the major roles played by banking institutions in

combating this societal illness.

c. to really find out the various online fraud facing innocent traders and

users of the global market.

d. To determine the benefits that business organisations, banks and

government agencies stand to gain in taking charge and in solving the

online problem of the victims.

1.8 THE STRUCTURE OF THE WORK

This research work is to be organized in five chapters as follows:

1. Introduction

2. Review of Related Literature

3. Research Methods and Procedures

4. Data presentation and Analysis and

5. Findings, Summary and Conclusion

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 CHAPTER TWO

LITERATURE REVIEW

2.1 THE PREAMBLE OF INTERNET FRAUD

The term "Internet fraud" generally refers to any type of fraud scheme that

uses one or more online services - such as chat rooms, e-mail, message boards,

or Web sites - to present fraudulent solicitations to prospective victims, to

conduct fraudulent transactions, or to transmit the proceeds of fraud to

financial institutions or to others connected with the scheme.

Internet fraud is combated in several ways. The police agency worldwide have

people assigned to combat this type of fraud; according to figures from the

FBI, U.S. companies' losses due to Internet fraud in 2003 surpassed US$500

million. In some cases, fictitious merchants advertise goods for very low prices

and never deliver. However, that type of fraud is minuscule compared to

criminals using stolen credit card information to buy goods and services.

2.1.1 Geographic targets

Europe, the U.S, and some Asia Pacific countries like Singapore and Australia

are the leading targets of this type of fraud.

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2.1.2 Geographic sources

Whilst internet fraud is widespread, companies providing fraud detection

services report higher than normal levels of fraudulent activity from countries

such as Venezuela, Ukraine, Indonesia, Yugoslavia, Lithuania, Egypt,

Romania, Bulgaria, Turkey, Russia, Pakistan, Malaysia, and Israel. Countries

with low reported levels of internet fraud include Austria, New Zealand,

Taiwan, Norway, Spain, Japan, Switzerland, South Africa, Hong Kong, the

UK, France, and Australia.

2.1.3 Popular products

Fraudsters seem to prefer small and valuable products, such as: watches,

jewelry, laptops, ink cartridges, digital cameras, and camcorders. These items

are usually commodities that are easily sellable and have a broad range of

appeal. However, fraud in hosted marketplaces such as Ebay covers a broad

range of products from cellular phones to desktop computers. The craft has

continually evolved in sophistication. In some instances, a picture of the

product is sent in place of the actual product. Other times, products are outright

never sent after the bill is charged to credit card accounts. Victims are left to

deal with credit card companies for chargebacks.

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Some Fraudsters market intangibles such as software downloads or

documentation. Pricing on such items is low in order to encourage a purchase

perceived by the consumer as low risk (in accordance with low cost.) Software

download scams are frequently targeted at high-population buying

communities such as online gaming worlds.

2.2 INTERNET FRAUD SCHEMES

Over the years, there has been a number of scams that have evolved, which are

designed to defraud consumers and investors. In the past, many of these fraud

schemes were conducted through telemarketing, mail, or in person. The global

economy available through the Internet has provided a new forum for these and

other scams. While there are new schemes appearing on the Internet, there are a

number of common ones you may come in contact with. These include:

2.2.1 Auction and E-Commerce Fraud

One of the most common Internet fraud schemes involves online auction sites,

or Web sites that sell items as retail vendors. In this scam, items are offered for

sale. The item may be an expensive watch, jewelry, computer, collectibles, or

other expensive goods. The victim purchases the item, but doesn't receive what

he or she expected. Either nothing is delivered, or the victim receives a

counterfeit or less valuable item than was promised.

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2.2.2 Credit Card Fraud

The most common method of credit card fraud on the Internet is obtaining

another person's credit card number, and then making online transactions with

it. With this scheme, the credit card is used to purchase items from other Web

sites, over the telephone, or other methods that don't require the physical card to

make a purchase. The victim may provide the information initially purchasing

something from the criminal, entering information into a form on a Web site, or

any number of other methods. The criminal may max out the credit card, but

this isn't always the case. Small purchases may be made, so that there is a good

chance it may be overlooked by the victim when he or she reads the monthly

credit statement.

Another credit card scheme involves a variation of the e-commerce or auction

fraud mentioned above. In this particular scam, the criminal poses as a

legitimate e-commerce site or auction seller. The criminal sells an item online

at a price that's lower than normal, and offers that no payment is necessary until

after the item is delivered. When a victim purchases an item, the scam goes into

action. The criminal use's the victim's real name with another person's

unlawfully obtained credit card number to buy that product from another e-

commerce site, and has it shipped to the victim. Once the victim receives the

item, he or she then authorizes the credit purchase to be completed, and the

payment is made to the criminal.

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There are multiple victims in this crime. The legitimate e-commerce site who

delivered the item has been bilked out of the product and the money for it. All

they have is the name of the person it was delivered to, and another person's

unlawfully obtained credit card number. The person who purchased the item

from the criminal believes the items paid for, but their name is now attached to

a fraudulent transaction made with the legitimate e-commerce site. While this

is being sorted out, the criminal has the money and may be victimizing other

individuals and companies in this manner.

2.2.3 Divorce Schemes

Offers of quick, uncontested divorces have been offered over the Internet,

which allow married couples to get divorces for a relatively inexpensive fee.

People are offered a divorce through a foreign country (such as the Dominican

Republic), without having to visit that country or attend the procedings.

Unfortunately, these divorces may be invalid. The victims find that they are not

divorced, and may not have even dealt with an actual legal service.

2.2.4 Fake Diplomas and Degrees

University degrees and college diplomas have been offered for a few hundred

dollars on the Internet. These offers claim that people will receive a valid

diploma, degree, or doctorate from legitimate educational institutions.

However, these diplomas and degrees aren't authentic, and don't qualify as
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actual proof of education. People who actually receive the fake diploma or

degree aren't registered with the educational institution. If used to obtain

employment, an employee may be fired for fraudulently representing

themselves, or risk criminal charges.

2.2.5 Identity Theft

In this scheme, the goal isn't to initially trick the victim, but to obtain

information about the person for future scams. Personal information (such as

the person's name, address, employment, credit card information, etc.) is

obtained about the victim through a variety of methods. The victim may enter

the information into a form on a Web site, purchase something online and

provide credit payment and delivery information, or any number of other

methods. In some cases, information about victims was stolen from the

databases of legitimate businesses or organizations, and then used by the thief

for fraudulent purposes. Using the victim's personal or credit information, the

criminal can then apply for credit cards, loans, or purchase items under the

victim's name. The victim may not become aware of this scam until months

later when the cards are "maxed out" and payments have been stopped.

2.2.6 "Nigerian" Letter Scam \ Advance Letter Scheme

This fraud involves issuing faxes or e-mails to random businesses. These faxes
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or emails claim to be from an official representing a foreign government or

agency. This scheme promises the transfer of millions of dollars into the

recipient's personal account, and claims there is no risk.

The business community is usually targeted by this fraud. The faxes or e-mails

do not target a single company, but rather are sent out en masse. The business

names are usually obtained by trade publications or mailing lists.

Although the offer appears transparent, the criminal will eventually reach

someone who, while skeptical, desperately wants the deal to be genuine. It sets

the stage for the rest of the scam. After responding to it, the criminal begins

convincing the victim to invest money for expenses, so that the millions of

dollars can be obtained. The excuses for needing the money include legal fees,

customs fees, bribes, and/or other costs that will "free up" the money. This

continues until the victim is broke.

2.2.7 "Work at Home" Schemes

This scam offers the business opportunity to make thousands of dollars by

working at home. In this scam, the victim is offered the chance to make

hundreds or thousands of dollars a month by becoming a part of a money

making opportunity. The victim pays to acquire a start-up package, but never

receives the materials or information for the business to run properly. In other

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cases, the person does receive the start-up package, but there is no possible way

for the business to make as much money as was promised initially.

2.3 IDENTITY THEFT SCHEMES

Stolen credit cards

Most Internet fraud is done through the use of stolen credit card information

which is obtained in many ways, the simplest being copying information from

retailers, either online or offline. There have been many cases of crackers

obtaining huge quantities of credit card information from companies' databases.

There have been cases of employees of companies that deal with millions of

customers in which they were selling the credit card information to criminals.

Despite the claims of the credit card industry and various merchants, using

credit cards for online purchases can be insecure and carry a certain risk. Even

so called "secure transactions" are not fully secure, since the information needs

to be decrypted to plain text in order to process it. This is one of the points

where credit card information is typically stolen.

Get wire transfer info

Some fraudsters approach merchants asking them for large quotes. After they

quickly accept the merchant's quote, they ask for wire transfer information to

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send payment. Immediately, they use online check issuing systems as Qchex

that require nothing but a working email, to produce checks that they use to

pay other merchants or simply send associates to cash them.

2.4 PURCHASE SCAMS

Direct solicitations

The most straightforward type of purchase scam is a buyer in another country

approaching many merchants through spamming them and directly asking

them if they can ship to them using credit cards to pay.

Counterfeit Postal Money Orders

According to the postal inspectors, there has been a significant surge in the use

of Counterfeit Postal Money Orders since October 2004. More than 3,700

counterfeit postal money orders (CPMOs) were intercepted by authorities

from October to December of 2004, and according to the USPS, the "quality"

of the counterfeits is so good that ordinary consumers can easily be fooled.

Online automotive fraud

There are two basic schemes in online automotive fraud:

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1. A fraudster posts a vehicle for sale on an online site, generally for luxury or

sports cars advertised for thousands less than market value. The details of the

vehicle, including photos and description, are typically lifted from sites such as

eBay Motors and re-posted elsewhere. An interested buyer, hopeful for a

bargain, emails the seller, who responds saying the car is still available but is

located overseas. He then instructs the buyer to send a deposit via wire transfer

to initiate the "shipping" process. The unwitting buyer wires the funds, and

doesn't discover until days or weeks later that they were scammed.

2. A fraudster feigns interest in an actual vehicle for sale have taken place on

the Internet. The "buyer" explains that a client of his is interested in the car, but

due to an earlier sale that fell through has a certified check for thousands more

than the asking price and requests the seller to send the balance via wire

transfer. If the seller agrees to the transaction, the buyer sends the certified

check via express courier (typically from Nigeria), the seller takes the check to

their bank, which makes the funds available immediately. Thinking the bank

has cleared the check, the seller follows through on the transaction by wiring

the balance to the buyer. Days later, the check bounces and the seller realizes

they have been scammed. But the money has long since been picked up and is

not recoverable.

In another type of fraud, a fraudster contacts the seller of an automobile, asking

for the vehicle identification number(VIN) putatively to check the accident

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record of the vehicle. However, the supposed buyer actually uses the VIN to

make fake papers for a stolen car that is then sold.

Cash the check system

In some cases, fraudsters approach merchants and ask for large orders:

N50,000 to N200,000, and agree to pay via wire transfer in advance. After brief

negotiation, the buyers gives an excuse about the impossibility of sending a

bank wire transfer. The buyer then offers to send a cheque, stating that the

merchant can wait for the cheque to clear before shipping any goods. The

cheque received, however, is a counterfeit of a cheque from a medium to large

company. If asked, the buyer will claim that the cheque is money owed from the

large company. The merchant deposits the cheque and it clears, so the goods are

sent. Only later, when the larger company notices the cheque, will the

merchant's account be debited.

Re-shippers

Re-shipping scams trick individuals or small businesses into shipping goods to

countries with weak legal systems. The goods are generally paid for with stolen

or fake credit cards.

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Nigerian version

In the Nigerian version, the fraudsters have armies of people actively recruiting

single women from western countries through chat & matchmaking sites. At

some point, the criminal promises to marry the lady and come to their home

country in the near future. Using some excuse the criminal asks permission of

his "future wife" to ship some goods he is going to buy before he comes. As

soon as the woman accepts the fraudster uses several credit cards to buy at

different Internet sites simultaneously. In many cases the correct billing address

of the cardholder is used, but the shipping address is the home of the

unsuspecting "future wife". Around the time when the packages arrive, the

criminal invents an excuse for not coming and tells his "bride" that he urgently

needs to pick up most or all the packages. Since the woman has not spent any

money, she sees nothing wrong and agrees. Soon after, she receives a package

delivery company package with pre-printed labels that she has agreed to apply

to the boxes that she already has at home. The next day, all boxes are picked up

by the package delivery company and shipped to the criminal's real address (in

Nigeria or elsewhere). After that day, the unsuspecting victim stops receiving

communications from the "future husband" because her usefulness is over. To

make matters worse, in most cases, the criminals are able to create accounts

with the package deliverer, based on the woman's name and address. So, a week

or two later, the woman receives a huge freight bill from the shipping company

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which she is supposed to pay because the goods were shipped from her home.

Unwittingly, the woman became the criminal re-shipper and helped him with

his criminal actions.

Business opportunity/"Work-at-Home" schemes

Fraudulent schemes often use the Internet to advertise purported business

opportunities that will allow individuals to earn thousands of dollars a month in

"work-at-home" ventures. These schemes typically require the individuals to

pay anywhere from $35 to several hundred of dollars or more, but fail to deliver

the materials or information that would be needed to make the work-at-home

opportunity a potentially viable business.

Often, after paying a registration fee, the applicant will be sent advice on how to

place ads similar to the one that recruited him in order to recruit others, which is

effectively a pyramid scheme.

Other types of work at home scams include home assembly kits. The applicant

pays a fee for the kit, but after assembling and returning the item, it’s rejected as

substandard, meaning the applicant is out of pocket for the materials. Similar

scams include home-working directories, medical billing, data entry (data entry

scam) at home or reading.

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Money Transfer Fraud

This type of Fraud consists of an employment offer to help transfer money to a

foreign company, supposedly because it costs too much to do it through other

methods (which is usually not the case).

Dating scams

Online dating scams and fraud are almost as old as Internet dating itself. Often

called a Sweetheart Swindle this is often a long, drawn out process in which the

con artist develops a relationship, and eventually convinces the victim to send

money. The scammer often meets the victim in chat rooms or via online dating

sites. Their object is not to get into their hearts, but get into their wallets. They

will try to earn someone’s affections and trust so that they can persuade him/her

to send money. The requests for money can either be a one time event or

repeated over an extended period of time. The details of the scammers’ stories

will vary with each case. The scenario commonly revolves around a tragedy

having befallen the scammer, and he/she desperately needs money. After

spending time communicating and building a relationship with the victim, the

scammer will ask for help in the form of money. Most online dating services

have a hard time dealing with scammers, outside of issuing warnings to their

users to be alert for anyone you've never met asking for money.

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Click fraud

The latest scam to hit the headlines is the multi-million dollar Clickfraud which

occurs when advertising network affiliates force paid views or clicks to ads on

their own websites via spyware, the affiliate is then paid a commission on the

cost-per-click that was artificially generated. Affiliate programs such as

Google's Adsense capability pay high commissions that drive the generation of

bogus clicks. With paid clicks costing as much as US$100 and an online

advertising industry worth more than US$10 billion, this form of Internet fraud

is on the increase.

International modem dialing

Customers of dial-up Internet Service Providers, such as AOL, use a modem to

dial a local connection number. Some web sites, normally containing adult

content, use international dialing to trick consumers into paying to view content

on their web site. Often these sites purport to be free and advertise that no credit

card is needed. They then prompt the user to download a "viewer" or "dialer" to

allow them to view the content. Once the program is downloaded it disconnects

the computer from the Internet and proceeds to dial an international long

distance or premium rate number, charging anything up to US$7-8 per minute.

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Internet Mass Marketing Fraud

This is an ever-growing and emerging type of fraud where the apparent

merchants are the criminals. Many of these types of scams involve marketing

campaigns for various products. The customer is tricked by the effective

marketing campaign into giving their credit card information in exchange for

what they believe to be the product. The "product" is usually a scam. The

criminal then uses the customer's credit card information.

Internet Marketing SEO Fraud

This type of fraud involves a supposed internet marketing specialist presenting a

prospective client with detailed graphs and charts that indicate that his web site

receives (x) thousands of hits per month, emphasizing that if you pay for his

services you will succeed in getting a number clicks converted to customers or

clients.

When you receive no request for more information and no clients, the fraudster

responds that it must be something your web site is not doing right.

Phishing

"Phishing" is the act of attempting to fraudulently acquire sensitive information,

such as passwords and credit card details, by “masquerading” as a trustworthy

person or business with a real need for such information in a seemingly official
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electronic notification or message (most often an email, or an instant message).

It is a form of social engineering attack.

The term was coined in the mid 1990s by crackers attempting to steal AOL

accounts. An attacker would pose as an AOL staff member and send an instant

message to a potential victim. The message would ask the victim to reveal his or

her password, for instance to "verify your account" or to "confirm billing

information". Once the victim gave over the password, the attacker could access

the victim's account and use it for criminal purposes, such as spamming.

Email Spoofing

The sender information shown in e-mails (the "From" field) can be spoofed

easily, though nowadays many domains have the Sender Policy Framework

implemented, which helps prevent the e-mail spoofing. This technique is

commonly used by Spammers to hide the origin of their e-mails and leads to

problems such as misdirected bounces (i.e. e-mail spam backscatter).

Pharming

Pharming is the exploitation of a vulnerability in the DNS server software that

allows a hacker to acquire the domain name for a site, and to redirect that

website's traffic to another web site. DNS servers are the machines responsible

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for resolving internet names into their real addresses - the "signposts" of the

internet.

Auction and retail schemes online

Fraudsters launch auctions on eBay or TradeMe with very low prices and no

reservations especially for high priced items like watches, computers or high

value collectibles. They received payment but never deliver, or deliver an item

that is less valuable than the one offered, such as counterfeit, refurbished or

used. Some fraudsters also create complete webstores that appear to be

legitimate, but they never deliver the goods. An example of such a fraudulent

site is marselle.com,jeremimora.com. They take payment but never shipped the

order. In some cases, some stores or auctioneers are legitimate but eventually

they stopped shipping after cashing the customers' payments.

Stock market manipulation schemes

These are also called investment schemes online. Criminals use these to try to

manipulate securities prices on the market, for their personal profit. According

to enforcement officials of the Securities and Exchange Commission, the 2 main

methods used by these criminals are:

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Pump-and-dump schemes

False and/or fraudulent information is disseminated in chat rooms, forums,

internet boards and via email (spamming), with the purpose of causing a

dramatic price increase in thinly traded stocks or stocks of shell companies (the

"pump"). As soon as the price reaches a certain level, criminals immediately sell

off their holdings of those stocks (the "dump"), realizing substantial profits

before the stock price falls back to its usual low level. Any buyers of the stock

who are unaware of the fraud become victims once the price falls. When they

realize the fraud, it is too late to sell. They lost a high percentage of their

money. Even if the stock value does increase, the stocks may be hard to sell

because of lack of interested buyers, leaving the shareholder with the shares for

a far longer term than desired.

Short-selling or "scalping" schemes

This scheme takes a similar approach to the "pump-and-dump" scheme, by

disseminating false or fraudulent information through chat rooms, forums,

internet boards and via email (spamming), but this time with the purpose of

causing dramatic price decreases in a specific company's stock. Once the stock

reaches a certain low level, criminals buy the stock or options on the stock, and

then reverse the false information or just wait for it to wear off with time or to

33
be disproved by the company or the media. Once the stock goes back to its

normal level, the criminal sells the stock or option at a profit.

2.5 TO AVOID BEING VICTIMIZED BY INTERNET FRAUD

Beware of "Too Good To Be True" Deals - Remember the old saying If it's

too good to be true, it probably is! Think about why they're making the offer if

it's that good a deal. After all, if there were millions of dollars to be gained,

why wouldn't the person making the offer invest in getting the millions his or

herself? If there are thousands of dollars a month to be made at a work-at-home

business, why is this person sending email to you about it. Shouldn't they be

working on the business they're pitching and making all that money? By

questioning the offer and the motives behind the offer, you will be better able to

avoid falling victim to a scam.

Just because a Web site looks professional, doesn't mean it is professional -

Web sites may look impressive and appear to be representative of a good,

legitimate company or individual. This may not be the case however. Software

packages are available to setup e-commerce sites, and Web page designers can

be hired to create a site. This allows criminals to look as professional and

authentic as the genuine e-commerce merchants.

34
Be wary of individuals who hide their identities - One of the attractions of the

Internet is that it allows anonymity to people, but you should beware of people

who refuse to disclose who they really are. Email addresses that don't provide

relevant information about the person is an indication of someone who wants to

hide their true identity. For example, a person may have an email address like

XYZ123@someprovider.ru. Another example would be someone who doesn't

give contact names and addresses, but only provides the name of the Web site.

Avoid "Advance Fee" demands - Don't pay for an item or service before you

receive it. Many companies will bill you for an item or service after its been

provided to you. By avoiding payments before receiving them, there is less

chance that you will pay for something you didn't want, and avoid not receiving

anything at all.

Investigate the businesses you deal with - Look up information of merchants

on the Internet before transacting business with them, and look into offers that

are made to you before agreeing to them. Information on various types of

frauds are publicized on Web sites, and allow you to see whether an offer may

be fraudulent. Some auction sites allow visitors to provide feedback about a

seller, and may also provide fraud protection (so that if you don't receive what

you want, all or a portion of your money will be returned). You can also use

35
services like the Better Business Bureau at www.bbb.org to look up information

on various businesses.

2.6 THE INTERNET AND ITS

EFFECT ON THE ECONOMY AND GOVERNMENT

In the past two decades, the Internet has become the ultimate component of a

worldwide strong. In the United States particularly, the Internet has been

incorporated into various arenas such as education, health care, and business. As

a result, more jobs have been created, international trade has increased,

underdeveloped countries have become more technologically advanced, the

gross national product has grown, larger corporations have developed, goods are

in greater demand, and educational opportunities have expanded profoundly.

All of these things affect the economy in that people receive education in order

to attain employment (that provides goods and services for people), and allows

economic expansion. Furthermore, the market can become stronger through the

World Wide Web. The Internet plays an important role in creating businesses

that propel the economy. As a result, it is important to create laws for Internet

use that will also ensure a stable economy.

36
I. The Internet and its Effect on the Economy and Government

a. The Internet is Now More Accessible

b. The Internet increases Marketing Opportunities

c. Increased Advertising Opportunities

d. Lower Operating Costs

e. Increased Job Opportunities

f. More Internet Know-How Equals More Business

g. Safe Internet Transactions Equal More Business, too!

h. Worldwide Economic Opportunities

II. E-Commerce and How it Impacts The Economy

a. Potential Problems with E-Commerce

b. E-Commerce Signature Draws Policy Concerns

c. Legislature Defines Three Elements of Trust

III. E-Commerce Laws Needed to Protect/Regulate Business

IV. Problems in the Workplace and the Cost to Employers

a. Employees Waste Time and Money

b. Incorrect Addresses

c. Insufficient Security Systems

V. Privacy Issues in the Workplace

37
 a. E-Mail Privacy in the Workplace

b. Personality Rights Law

c. Advanced Technology Creates

d. Title I Loophole

e. Title II Had The Best Intentions . . .

f. Third Time's Not The Charm, Either!

g. Employers Need to Establish Ground Rules

h. Companies Should Caution and Educate Employees

VI. The Internet has Positive Effect on the Global Economy

The Internet is Now More Accessible--

The Internet has become more accessible to all people, regardless of their age,

income, or levels of computer literacy. Computers are available in many places

including malls, libraries, and banks. Computer companies have made the

Internet versatile, so anyone will be able to use it.

The Internet increases Marketing Opportunities--

Manufacturers take advantage of the Internet because they use it to post

information and market their business. "In product design, companies can share

information over the Internet . . .business-to-business e-marketplace

initiatives . . . improving their [company's] post-sales support of

products." (http://www.lexis-nexis/universe, Nov. 2000)

38
The Internet allows businesses to import and export with foreign countries.

Sometimes meetings between corporations are held on-line in the form of

"Virtual meetings." Virtual meetings allow manufacturers to discuss business

without having to travel. Businesses that take advantage of the Internet's

numerous features find it highly beneficial to the success of their company.

Increased Advertising Opportunities--…………………..

There are new types of software that automatically arrange data to be published

on the Web. Companies can advertise their goods or services much quicker

than they could when using tangible documents. Other files from the Internet

serve a variety of purposes, such as, "hosting online meetings, accessing design

information from the worldwide design community, and dragging content from

manufacturer's Web sites and dropping it into

drawings." (http://www.internetindicators.com, Nov. 2000)

Lower Operating Costs…………………………………..

The Internet takes the place of unnecessary labor. Previously, companies would

spend thousands of dollars hiring receptionists, secretaries, etc. Companies can

now save more money and spend more time planning marketing strategies.

Nevertheless, it is unlikely that having access to the Internet will cause a

noticeable decrease in employment in these corporations because labor is still

needed to supply the demands of consumers (such as assembling products).

39
Increased Job Opportunities………………………..--

The Internet helped 650,000 people attain jobs in 1999. In order to increase

employment, companies have to create more jobs.

More Internet Know-How Equals More Business

Businesses that have knowledge about the Internet attract more clients. If the

company has more people consuming its product (with the use of the Internet)

then it can afford to increase labor.

Safe Internet Transactions Equal More Business, too!

Trivnet, which promotes Internet access, also uses the Internet to increase their

company's production.

Worldwide Economic Opportunities--………………………………………..

The Internet has been incorporated throughout the world. As a result of having

access to the World Wide Web, many companies -- specifically those with high

rates of poverty -- now have the opportunity to use the Net and possibly create

business negotiations with wealthier countries. Once there is interaction,

countries may offer economic assistance to each other.

2.7 ABOUT ZENITH BANK

Zenith Bank Plc is one of the biggest and most profitable banks in Nigeria. The

bank was established in May 1990 and started operations in July same year as a
40
commercial bank. It became a public limited company on June 17, 2004 and

was listed on the Nigerian Stock Exchange on October 21, 2004 following a

highly successful Initial Public Offering (IPO). The bank presently has a

shareholder base of over one million, an indication of the strength of the Zenith

brand.

Its head office is located at 87, Ajose Adeogun Street, Victoria Island, Lagos,

Nigeria. With over four hundred (400) branches and business offices nationwide

Zenith Bank has presence in all the state capitals, the Federal Capital Territory

(FCT) and major towns and metropolitan centres in Nigeria.

41
 CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

3.1 INTRODUCTION

It is customary to design and spelt out the method by which an intended

research work is to be conducted by the researcher.

The research design was aimed at enhancing the effectiveness of the

study thus paving way for a meaningful and systematic approach to the

study. It is on this ground that this chapter had being devoted to the

explanation of the research procedures, method of data collection, sources

of data collected, and the instruments employed. The chapter also

presents the methods used in analysing the data collected.

3.2 RESEARCH METHODOLOGY

There are different approaches or methods often adopted in conducting a

research. Some of these methods include experimental method,

econometric method, comparative, etc. It is worthy to note here that the

methodology to be adopted in the collection of presentation and in

analysing a research data depends on the objectives of the study.

42
 In this chapter, the methodology employed in this study, were

meticulously explained in the various sub sections that made up this

chapter. The main objective of this study has been to examine internet

fraud and it effect on the economy.

3.3 RESEARCH DESIGN

The study is empirical in nature and falls within the realms of macro

economic problems This situation made the use of historical data

inevitable. The techniques adopted in the research involved a

combination of statistical, mathematical and econometric techniques.

The use of historical data for the study, was informed by the need to

make use of authenticated and authoritative data computed from

published materials to give the study a more objective approach.

3.4 SOURCES OF DATA

The source of the data collected and used in the course of this study were

mainly secondary sources.

3.5 SECONDARY DATA

The secondary data were gathered from a variety of sources such as text

books, journals, magazines, papers delivered at symposia and seminars

by eminent scholars, statistical and economic bulletins, as well as

43
 other related sources.

In searching for the relevant and necessary data needed for the research

the researcher also embarked on using internet resources.

3.6 POPULATION DESCRIPTION

The population, in this study is the totality of the senior and junior staff of Zenith

Bank PLC. Warri. The sample size is 200 and this number of respondents were

chosen from the population. The rationale for studying a sample rather than the

population includes that:

1. Most empirical research work in the social science involves studying a

sample in place of the population.

2. Statistical Laws reveal that statistics composed from the sample data are

usually reasonably accurate.

3. Luckily, it is usually possible to estimate the level of confidence that can be

placed on the results.

We should note that above is only possible if the probability sample size is large

enough.

3.7 SAMPLE SIZE

Spiegel (1992) observes that sampling theory is a study of the relationship existing

between a population or universe and the samples drawn from it. The population in

this study is from the senior/ junior staff of the firm. In order to make conclusions of

sample theory and statistical references to be valid, a sample must be selected as to

be representative of the population (Spiegel,1992). One way in which a representative

sample may be got, is by the process of stratified random sampling. In this research
44
 work, the technique of simple random sampling is used to select the sample of 100

respondents from each group of the personnel, making a total sample size of 200.

The list of all senior and junior staff of the firm is from the personnel department of

the company. The numbers were written on a piece of paper, put in a basket and the

papers were folded to cover the numbers and one of the pieces of paper was selected

at a time without replacing it and any name corresponding to the number becomes a

number of the sample. This method of sampling without replacement was done until

the sample of 100 respondents per group of personnel was arrived at.

3.8 INSTRUMENTS FOR DATA COLLECTION

Due to the macro nature of the problem under investigation. the use of the

basic or traditional research instruments of questionnaire, interviews,

observations, etc were precluded.

However, the research relied on published (secondary)materials from

where the data considered necessary for the purpose of this study, were

completed and extracted.

3.9 FIELD WORK

The researcher and three other field data collectors did the fieldwork. The field data

collectors were other classmates also offering the Part-time ND program, who have

also offered research methodology. They had no problem gaining entrance into the

office under consideration since one of them has a friend working in the same Zenith

Bank. They were to be trained by the researcher on how to greet the respondents and

how to tick the questionnaire correctly and honestly.

45
3.6 DESCRIPTION OF DATA PRESENTATION AND ANALYSIS TOOLS

The data presentation tools are simple bar charts, histograms, and pictorial tables. The

most important parts of a table include;

(a) Table numbers

(b) Title of the table

(c) Caption

(d) Stub or the designation of the rows and columns

(e) The body of the table.

(f) The head note or prefatory note or explanatory just before the title.

(g) Source note, which refers to the literally or scientific source of the table (Mills

and Walter 1995)

CHAPTER FOUR

46
 DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

In the previous chapter, the research methodology and design have been

handled. In this chapter the data presentation and analysis are to be done. The

data is to be presented by means of tables; two simple bar charts, one

histogram and one pie chart to make it amenable for further analysis. By

analysis is meant the act of noting relationship and aggregating the set of

variables with similar attributes and also breaking the unit of their components

(Mills and Walters 1995).

In this research work, the research accepts the contention of Podsakoff and

Dalton (1995) that the factual information from the data can be used as a basis

for reasoning, calculation and discussion. Apart from the heading above, the

other headings in this chapter include:

Data Presentation,

Percentage analysis

Cross-tabulated analysis

Hypothesis testing

4.2 DATA PRESENTATION

TABLE 4.1
THE SUMMARY OF THE PERSONAL DATA
OF THE RESPONDENTS
47
 1 SEX FREQUENCY
Male 150
Female 50
Total 200
Angles
2 Marital Status subtended
Married 130 in degree
Single 70
Total 200

3 AGE
21-30 years 90
31-40 years 90
41-50 years 10
51-60 years 10
Total 200

4 HIGHER
EDUCATIONAL
QUALIFICATION
DIPLOMA 10 18
OND 30 54
HND 80 144
FIRST DEGREE 20 36
SECOND DEGREE 40 72
NIM 20 36
TOTAL 200 360

The marital statuses of the 200 respondents: It is found that 130 of them

are married while 70 are single. For the ages of the 200 respondents, there

are 21-30 years, 31-40 years, 40-50 years, 51-60 years with frequency of

90,10 respectively. For the educational qualification of the 200 respondents

there are diploma, OND, HND, First Degree, Second Degree, NIM. and

they have frequencies of 10, 30, 80, 20, 40 and 20 respectively.

Figure 4.1 below shows the simple bar chart of the data on the sex of the respondents.

FIGURE 4.1: THE SIMPLE BAR CHART OF THE DATA ON THE SEX
OF THE RESPONDENTS
48
 GENDER OF THE RESPONDENTS
160-

140-

120-
Frequency

100-

80

60 --

40 -

20
-
0 -
MALEGender FEMALE

TABLE 2. GENDER OF THE RESPONDENTS

Frequency percentage Valid Cumulative
Percent Percent
MALE 150 75.0 75.0 75.0
FEMALE 50 25.0 25.0 100.0
Total 200 100.0 100.0

Source: from data in table 1 (generated from SPSS) statistical package for social
science.

From figure 4.1 above, it is shown that male respondents have the modal

frequency of 150 out of the 200 respondents while the female respondents

have a frequency of 50.

49
Figure 4.2 below shows the simple bar chart of the data on the marital

statuses of the respondents.

FIGURE 4.2: THE SIMPLE BAR CHART OF THE DATA ON THE MARITAL
STATUSES OF THE RESPONDENTS

140 -

120 -

100 -
Frequency

80 -
60 -
40 -
20 -
0 -
MARRIED SINGLE
Marital status

TABLE 4.3. MARITAL STATUS OF THE RESPONDENTS

Status frequency Percentage Valid Cumulative

Percent Percent
MARRIED 130 65.0 65.0 65.0
SINGLE 70 35.0 35.0 100.0
Total 200 100.0 100.0

From figure 4.2 above, it is shown that the married respondents have the

modal frequency of 130 out of the 200 respondents while the single

respondents have the frequency of 70 of them.

50
 FIGURE 4.3: THE HISTOGRAM OF THE DATA ON THE AGES OF THE
RESPONDENTS.

AGES OF THE RESPONDENTS

100
80
60
40
20
Frequency

TABLE 4. AGES OF THE RESPONDENTS

Categories Frequency Percentage Valid Cumulative

Percent
(years) Percentage
21 TO 30 901.0 2.0
45.03.0 45.0
4.0
45.0
Age group
31 TO 40 90 45.0 45.0 90.0

41 TO 50 10 5.0 5.0 95.0

51 TO 60 10 5.0 5.0 100.0

Total 200 100.0 100.0

51
SOURCE: From the data in Table 1.

From figure 4.3 above, it is shown that the age classes limit are 20.5-30.5

years, 30.5-40.5 years, 40.5-50.5 years and 50.5-60.5 years with

frequencies of 90, 90, 10, and 10 out of 200 respectively. This shows that

this is bi-modal distribution as the age classes of 20.5-30.5 years and 30.

5-40.5 years have a frequency of 10.

Figure 4.4 below shows the pie chart of the data on the highest

educational qualifications of the 200 respondents.

FIG.4.4 THE PIE CHART OF THE DATA ON THE HIGHEST

EDUCATIONAL QUALIFICATIONS OF THE 200
RESPONDENTS

OND DIPLOMA
FIRST DEGREE
180
540 OND
SECOND DEGREE 360

720
HND
0
144
FIRST DEGREE 36 0

52
 TABLE 4. 5 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS
Educational level Frequency Percentage Valid Percentage Cumulative
Percentage
DIPLOMA 10 5.0 5.0 5.0

OND 30 15.0 15.0 20.0

HND 80 40.0 40.0 60.0

FIRST DEGREE 20 10.0 10.0 70.0

SECOND 40 20.0 20.0 90.0

DEGREE
NIM 20 10.0 10.0 100.0

Total 200 100.0 100.0

SOURCE: from the data in table 1.

From figure 4.4 above, the Educational Qualifications are Diploma, O.N.D, First

Degree, Second Degree and NIM and the subtended angles in degrees are equal to

180, 540, 1440, 360, 720 and 360 and respectively at the center of the circle.

4.3 CROSS-TABULATED ANALYSIS

Table bellow show the analysis of the statuses of the 200 respondents
53
 TABLE 6. CROSS- TABULATION 1

Is it possible to combat internet fraud?

NO
YES NO DON’T ANSWER Total
KNOW 2 12
19
91
DIPLOMA 6 2 2
OND 19 7
HND 26
FIRST
60 31 31
DEGREE - 10 9 21
SECOND 31 9 200
DEGREE 21
NIM
Total 100 43 11
939
The above table shows that the total of 100 respondents 39
(out of 200 said

YES. This proved it is possible to combat internet fraud.

TABLE 7. Cross-tabulation 2

Is it possible for individual to avoid Internet investment scams?

YES DON’T NO
NO KNOW Total
DIPLOMA 10
ANSWER 10

OND 19 19
HND 14 30 47 91
FIRST
DEGREE 10 9 19
SECOND
DEGREE 40 40
Is it possible to combat
NIM internet fraud?
21 . 21
Total 104 40 47 9 200

(2) Is it possible for individual to avoid Internet investment scams?

The above table indicates that it is possible for individual to avoid

investment scams. 104 respondents out of 200 said yes. While 40 did not

agree with the fact.

4.4 HYPOTHESIS TESTING

54
In attempting to arrive at decisions about the population, on the basis of

sample information, it is necessary to make assumptions or guesses about

the population parameter involved. Such an assumption is called

statistical hypothesis, which may or may not be true. The procedure,

which enables the researcher to design on the basis, of samples regarding

whether a hypothesis is true or not is called test of hypothesis or test of

significance.

The null hypothesis asserts that there is no significant difference between

the statistics and the population parameters and what ever is observed as

difference there, is merely due to fluctuations in sampling from the same

population. Null hypothesis is denoted by the symbol H0. Any

hypothesis, which contradicts the H0, is called an alternate hypothesis

and is denoted by the symbol H1. The researcher used chi-square

analysis.

CHI-SQUARE TEST

The C is one of the simplest and most widely used non-parametric test in

statistical work. It makes no assumptions about the population being

sampled. The quantity c describes the magnitude of discrepancy between

theory and observation i.e, with the help of c test we can know whether a

given discrepancy between theory and observation can be attributed to

chance or whether it results from the inadequacy of the theory to fit the
55
 observed facts. If c is zero, it means that the observed and expected

frequencies completely coincide. The greater the value of c the greater the

higher the discrepancy between observed and expected frequencies.

The formula for computing chi-square is –

c =  ( O- E)2/E

Where,O=Observed frequency

E=Expected or theoretical frequency

4.5 SOFTWARE USED FOR DATA ANALYSIS:

For the data analysis and the interpretation, the researcher has adopted

advanced version of SPSS (statistical package for social science). This

application software has facilitated the researcher to construct the

frequency table, various types of charts and to find out the valid

percentage responses from the sample. This automated data analysis has

minimized the researcher’s time constraints and reduced human error to

give accurate outlay of information.

Chi-Square Test (1)

Is it possible to combat internet fraud?

Observed Expected Residual Decision
F F
YES 100 50.0 50.0 Accept
NO 43 50.0 -7.0 Reject
DON’T
KNOW 39 50.0 -11.0 Reject
NO 50.0
ANSWER 18 -32.0 Reject
Total 200

56
Chi-Square Test (2)

Is it possible for individual to avoid internet investment scams?

Observed Expected Residual Decision
F F
YES 104 50.0 54.0 Accepted
NO 40 50.0 -10.0 Rejected
DON’T
KNOW 47 50.0 -3.0 Rejected
NO
ANSWER 9 50.0 -41.0 Rejected
Total 200

Residuals

The observed value of the dependent variable minus the value predicated

by the regression equation, for each case. Large absolute values for the

residuals indicate that the observed values are very different from the

predicted values.

SOURCE: From the questionnaires administered.

The formulated hypothesis that is subject to statistical test is at 5% level

of significance in testing hypothesis, the calculated value of the test

statistics is usually compared with tables of value. The critical values of

57
 the test statistics serve as criterion value, it affords the basis for rejecting

the null hypothesis as a function of the value of the tested statistic.

Reject the null hypothesis if the calculated value of the test statistic is

greater than the critical value.………………………………………….

Accept the null hypothesis if the calculated value of the test statistic is

less than the critical value.

TEST STATISTICS

Is it possible for
Is it possible to individual to
combat internet avoid internet
Fraud? investment
scams?

Chi-Square 73.880 94.120

df 3 3

note: df = degree of freedom

4.6 SUMMARY OF RESULT

Level of significance……….0.05

Critical value………………………43.0

Calculated value……………………73.880

58
 From the above analysis, it could be seen that in the first test (is it

possible to combat internet fraud), the calculated value is greater than the

critical value so we reject the hypothesis.

In the second test which state that is it possible for individual to avoid

internet investment scams?, the level of significance is 0.05, the critical

value is 44 while the calculated value from the test statistics table is

94.120. Analysis the data above, it is very clear that the calculated value

is greater than the critical value so we reject the hypothesis.

CHAPTER FIVE

FINDINGS, SUMMARY AND CONCLUSION

5.1 FINDINGS

Through this research, the researcher has been able to discover and

established the fact that: There are a number of fraud schemes that have

been developed over the years, and a number of these are appearing on

the Internet. These scams may appear on Web sites, or potential victims

may be approached through email, chat rooms, or other Internet

technologies. Their goal is to get people to become involved in a

fraudulent transaction, send money, or participate in some other way in

the scam.

59
5.2 SUMMARY

Internet fraud includes the wide range of misdeeds from phony sales on

auction and classified sites to financial pyramids like Ponzi scheme.

Identity theft is now one of the most widespread and fastest-growing

crimes in the United States. Each year about ten million people become

the victims of some form of identity fraud. Phone and utilities fraud, bank

and loan fraud, employment and government document fraud, and

medical records fraud represent perhaps even more pernicious forms of

ID crime. Identity theft considers being very dangerous form of Internet

fraud because of its long-term effect – for years it can prevent person

from securing employment, tag him as a criminal offender, throw him

into a higher tax bracket, or worse.

Talking about the protection from the Internet fraud, Justin Yurek,

President of ID Watchdog, Inc., the most comprehensive consumer

identity monitoring service available, says: “Most identity theft protection

services focus solely on ID monitoring but that is just half the story. As

Internet fraud and identity theft crime becomes more and more prevalent,

the need for a consumer advocate in this space has never been more

pressing.”

5.3 CONCLUSION

60
Over the years, there have been a number of scams that have evolved,

which are designed to defraud consumers and investors. In the past,

many of these fraud schemes were conducted through telemarketing,

mail, or in person. The global economy available through the Internet has

provided a new forum for these and other scams.

61