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(A CASE STUDY OF BANKING INSTITUTION IN NIGERIA)
COLLEGE OF ACCOUNTANCY AND COMPUTER TECHNOLOGY
A RESEARCH PROJECT WRITTEN IN THE DEPARTMENT OF COMPUTER SCIENCE, IN PARTIAL FULFILMENT FOR THE AWARD OF NATIONAL DIPLOMA (ND) IN COMPUTER SCIENCE.
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
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.
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
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 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. for
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.
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
three, the researcher deals on research methodology while chapter four is data analysis and interpretation. The finding, summary and conclusion is in chapter five.
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:
Instant access to information Education (e-learning) Business transactions 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
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.
5. To determine ways of
reducing risks from online investment
opportunities that may be fraudulent.
To investigate internet banking code that could limit or extricate
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.
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.
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
OBJECTIVES OF THE STUDY
The salient objectives of the research were the following among others:
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.
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
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.
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.
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.
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 ecommerce 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.
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
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.
This fraud involves issuing faxes or e-mails to random businesses. These faxes
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
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
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:
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.
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
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.
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
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.
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.
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.
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
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
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:
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
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.
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
services like the Better Business Bureau at www.bbb.org to look up information on various businesses.
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.
The Internet and its Effect on the Economy and Government The Internet is Now More Accessible The Internet increases Marketing Opportunities Increased Advertising Opportunities Lower Operating Costs Increased Job Opportunities More Internet Know-How Equals More Business Safe Internet Transactions Equal More Business, too! Worldwide Economic Opportunities 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
a. b. c. d. e. f. g. h.
E-Commerce Laws Needed to Protect/Regulate Business Problems in the Workplace and the Cost to Employers
a. Employees Waste Time and Money b. Incorrect Addresses c. Insufficient Security Systems
Privacy Issues in the Workplace
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
The Internet has Positive Effect on the Global Economy 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,
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)
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).
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.
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
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.
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.
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.
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.
SOURCES OF DATA The source of the data collected and used in the course of this study were mainly secondary sources.
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
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.
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.
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.
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
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) (b) (c) (d) (e) (f) (g) Table numbers Title of the table Caption Stub or the designation of the rows and columns The body of the table. The head note or prefatory note or explanatory just before the title. Source note, which refers to the literally or scientific source of the table (Mills
and Walter 1995)
DATA PRESENTATION AND ANALYSIS
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
TABLE 4.1 THE SUMMARY OF THE PERSONAL DATA OF THE RESPONDENTS
SEX Male Female Total Marital Status Married Single Total AGE 21-30 years 31-40 years 41-50 years 51-60 years Total HIGHER EDUCATIONAL QUALIFICATION DIPLOMA OND HND FIRST DEGREE SECOND DEGREE NIM TOTAL
FREQUENCY 150 50 200 130 70 200 90 90 10 10 200 Angles subtended in degree
10 30 80 20 40 20 200
18 54 144 36 72 36 360
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
GENDER OF THE RESPONDENTS
10080 60 40 20
TABLE 2. GENDER OF THE RESPONDENTS
Frequency MALE FEMALE Total 150 50 200 percentage 75.0 25.0 100.0 Valid Percent 75.0 25.0 100.0 Cumulative Percent 75.0 100.0
Source: from data in table 1 (generated from SPSS) statistical science.
package for social
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.
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 80 60 40 20 0
TABLE 4.3. Status MARRIED SINGLE Total
MARITAL STATUS OF THE RESPONDENTS Percentage 65.0 35.0 100.0 Valid Percent 65.0 35.0 100.0 Cumulative Percent 65.0 100.0
frequency 130 70 200
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.
FIGURE 4.3: THE HISTOGRAM OF THE DATA ON THE AGES OF THE RESPONDENTS. AGES OF THE RESPONDENTS
TABLE 4. AGES OF THE RESPONDENTS Categories Frequency Percentage Valid (years) Percentage 21 TO 30 31 TO 40 41 TO 50 51 TO 60 Total 901.0 90 10 10 200
45.0 45.0 5.0 5.0
45.0 90.0 95.0 100.0
Age group 45.0 5.0 5.0 100.0
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 180 540 SECOND DEGREE 360 720 144 FIRST DEGREE 36
FIRST DEGREE OND
TABLE 4. 5 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS Educational level DIPLOMA OND HND FIRST DEGREE SECOND DEGREE NIM Total Frequency 10 30 80 20 40 20 200 Percentage 5.0 15.0 40.0 10.0 20.0 10.0 100.0 Valid Percentage 5.0 15.0 40.0 10.0 20.0 10.0 100.0 Cumulative Percentage 5.0 20.0 60.0 70.0 90.0 100.0
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.
CROSS-TABULATED ANALYSIS Table bellow show the analysis of the statuses of the 200 respondents
TABLE 6. CROSS- TABULATION 1
Is it possible to combat internet fraud?
YES NO DON’T KNOW NO ANSWER
2 7 9
DIPLOMA OND HND FIRST DEGREE SECOND DEGREE NIM Total
6 19 60 31 21 100
2 31 10 43
2 9 11
12 19 91
26 31 21 200
The above table shows that the total of 100 respondents 39 of 200 said (out 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?
DIPLOMA OND HND FIRST DEGREE SECOND DEGREE combat internet NIM
10 19 14 30 10
NO Total ANSWER 10
19 91 9 19 40 21 200
Is it possible to
fraud? . 21
(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.
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
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
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?
YES NO DON’T KNOW NO ANSWER Total
Observed F 100 43 39 18 200
Expected F 50.0 50.0 50.0 50.0
Residual 50.0 -7.0 -11.0 -32.0
Decision Accept Reject Reject Reject
Chi-Square Test (2)
Is it possible for individual to avoid internet investment scams?
YES NO DON’T KNOW NO ANSWER Total
Observed F 104 40 47 9 200
Expected F 50.0 50.0 50.0 50.0
Residual 54.0 -10.0 -3.0 -41.0
Decision Accepted Rejected Rejected Rejected
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
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.
Is it possible to combat internet Fraud?
Is it possible for individual to avoid internet investment scams?
note: df = degree of freedom
SUMMARY OF RESULT Level of significance……….0.05 Critical value………………………43.0 Calculated value……………………73.880
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
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.
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.”
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.