Dirty, Rotten Cyber Scoundrels

Online scams are preying on the unemployed, write Christian E. Weller and Richard Phillips, but there are policies that can help.

Job seekers use computers to look for work in the resource center at Pennsylvania Career Link in Harrisburg, Pennsylvania. (AP/Carolyn Kaster)
Job seekers use computers to look for work in the resource center at Pennsylvania Career Link in Harrisburg, Pennsylvania. (AP/Carolyn Kaster)

Despite the onslaught of an economic recession, there is one job market that is booming: the fraudulent job market. Job seekers today not only face problems posed by a slumping economy; they are increasingly facing a series of sophisticated online job scams that prey on their desperation to find a job. And with unemployment hitting 6.5 percent and rising, there will certainly be no shortage of desperation anytime soon.

Nearly 1.2 million jobs were lost in the first 10 months of 2008, including 240,000 in October alone. So it goes without saying that there are many new job seekers, and many people use the Internet as their primary method of job hunting. In fact, 50 percent of hiring managers use online job boards more than any other recruitment tool, and the percentage of job seekers using the Internet rose from 66 percent in 2005 to 73 percent in 2007. The recent economic downturn represents a perfect storm of a dramatic increase in the number of job seekers and their use of the Internet to find jobs, and the FTC and Better Businesses Bureau are warning that the economic trouble will certainly exacerbate the amount of online job fraud.

We need a better jobs market to restrain predatory scammers, which means embracing the principles of stabilization, stimulus, recovery, and growth outlined by the Center for American Progress. Fiscal stimulus efforts could be especially important, such as expanding unemployment insurance and boosting Medicaid aid to states. This sort of aid would ease the desperation of job seekers by allowing them the cushion necessary to stave off desperation and allow them to find a good job.

Scams and efforts to exploit people during difficult times is nothing new—the Federal Trade Commission has been active in addressing these issues since its inception and has informed the public about online scams and worked with law enforcement agencies to stop them since the mid-1990s. Peter Swire, a Senior Fellow at the Center for American Progress, has pointed out that the FTC’s size and funding are not adequate to fulfill the agency’s mushrooming role with the rise of the Internet. He argues that the FTC needs to play a larger role in pursuing online consumer protection claims and that the Department of Justice needs to be more active in prosecuting cybercrime.

Fraudulent job offers come in all shapes and sizes, but they primarily ask the applicant for use of their personal financial tools. The most frequent scam is called "phishing," where the scammer asks the applicant for sensitive information in order to apply for the job. In some cases, the scammers attempt to render fees for finding the victim a job or for applying for a job.

Other times, the scammer really does give the victim a "job," but the job is to use their financial tools illegally. This usually takes the form of a "money mule" scam, where the victim is given a job wiring money received in their own bank to another account in exchange for a portion of the money wired. The problem, of course, is that the money is from illegal sources and the victim is usually caught.

Another major form of online job fraud is check fraud. In this case, the victim is sent a counterfeit check in the mail after replying to an online offer. The victim is asked to deposit the check and send some portion of it back to the company, only to discover later that the original check was counterfeit.

The FTC estimates that con artists pitching work-at-home schemes rake in more than $400 billion dollars a year with an increasing portion coming from online sources.

Stories about individuals falling prey to these scams can be found in communities nationwide. Take the story of Oregon resident Nicole Benson, who signed up online to become a mystery shopper and received a check for shopping and her own pay. Benson worried that this was a scam and went as far as to find out from her bank that the check was from a legitimate bank account. She decided to take a chance because she needed the money to pay her bills. After Benson was done shopping, she wired the remainder of the money to back to the company as per their instructions. Unfortunately, soon after she wired the money, Benson’s bank figured out that the check was fraudulent and is forcing her to pay back all the money that she wired and spent.

It is important to remember that online job scams become more effective in an economy that is pressuring Americans to settle for whatever job they can get. Of course, there will always be those who prey upon the misfortune of others in hard times, making a bad situation worse. That should not be tolerated. Now more than ever, the FTC and other federal organizations need the additional resources to effectively combat the damage caused by the rise in online job fraud.

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