Frauds vs Scams vs Ripoffs

There are many sites on the internet that attempt to part you from your hard earned money and there are many different ways to get you to cough up a credit card number and basically steal your money out from under you.

As we report on many of these types of sites here at The Electron Plumber, it’s important to keep our terminology straight so that you the reader can more readily identify the types of perils that are out there.

Important Note:  We are not lawyers here at The Electron Plumber nor do we claim to be.  Everything we say here about various offers and sites is our opinion and these definitions are probably not admissible in a court of law, as we more or less made them up to suit our needs.  With that said…

Frauds

These are probably the worst of the worst out there.  Fraud at it’s most basic is defined as as a planned deception made for gain.  Wikipedia includes the following in their list of frauds:

• bait and switch
• confidence tricks such as the 419 fraud, Spanish Prisoner, and the shell game
• creation of false companies
• embezzlement
• false insurance claims
• forgery of documents or signatures,
• social fraud, committing fraud to get social security benefits
• identity theft
• investment frauds, such as Ponzi schemes
• health fraud, selling of products of spurious use, such as quack medicines,
• tax fraud, not filing revenues or illegally avoiding taxes (tax evasion), in some countries tax fraud is also prosecuted under false billing or tax forgery
• securities frauds such as pump and dump
• taking payment for goods sold online, by mail or phone, such as tickets, with no intention of delivering them.

So for the most part, fraud is the intentional stealing of money knowing full well what you are doing.  Bernie Madoff ponzi scheme is probably the most famous fraud in recent history.  The most common frauds you will encounter directly on the internet are identity theft and non-delivery of goods.

Scams

Scams are typically defined as a specific type of fraud, where one attempts to take or steal through deceit and gaining of confidence.  Instead of the outright stealing that typically denotes a fraud, a scam involves at least some small measure of trust in order to work.

For example, all the fake blogs and fake news sites and Google Money Tree types of sites would be considered scams.  They use a trusted format such as a blog or news site to gain your confidence, then either outright lie or do their best to hide the true cost of the program you are signing up for in order to get you to cough up your credit card and start hitting you with charges you never knew were coming.  All in return for something that is likely not worth the amount they want you to pay for “shipping and handling” to get a supposed Google Kit, let alone all the charges you’ll get hit with later.

Some recently popular scams include:

• Hidden negative option offers – Google Biz Kit types
• Free trials with hidden charges if the items are not returned within a certain time frame.  Acai berries and teeth whitening trials are the most prevalent.

Ripoffs

Ripoffs are somewhat further down on the scale of internet crimes and probably the closest to a legal activity as any of these three.  A ripoff is basically where you knowingly pay a price for an item without realizing that it’s far above the value of the item that you are buying.  There are MANY different ripoffs out there, and the most important thing to recognize is just how much something should cost.  Most smart shoppers can spot a ripoff a mile away, but to those unfamiliar with shopping online or the regular price of an item may quickly find themselves taken by a 3rd Party Amazon price gouger.   Frequently you hear about grandparents buying the exact toy a child wanted off Amazon for $99, not realizing it’s been replaced by a newer version and the real price is only $19.

Note, most things we would call a ripoff fall into this overpriced category.  It’s not fraud or a scam since nothing it being misrepresented and no trust is being gained then broken.  But the fact that the seller neglected to mention that the item is really only worth a fraction what they are paying for it does not make it illegal in the eyes of the FTC like the above two do.

Caveat emptor!