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Computer Fraud

Computer Fraud

Computer fraud specifically consists of any fraud that involves the usage of computers. The term computer fraud covers a considerably broad range of activities, and can overlap with other types of fraud such as wire fraud. Generally speaking, any deliberate action taken to defraud or misrepresent information in order to get something of value by using the computer is considered to be computer fraud.

Given the fact that much of our world exists on the internet, computer fraud is much more common, as well as internet fraud which will be discussed further below. An example of one of the most common forms of computer fraud would be identity theft, in which another person's personal information is stolen.

Some other common examples of computer fraud activities include, but may not be limited to:

  • Computer Hacking: Hacking describes unauthorized access or entry into computers, computer files, online storage mechanisms, and other computer-related technologies. This entry results in a data breach, and is intended to obtain confidential information such as financial records, bank accounts, company client profiles, trade secrets, and copyrighted information;
  • Romance Scams: A romance scam involves a person making false claims to a victim during a courtship in order to obtain property or money. They make romantic intentions toward their victim in order to gain their affections; once the victim feels comfortable, the scammer uses their relationship to obtain money and/or property from their victim. Romance scams frequently involve catfishing as well as dating websites; and/or
  • Piracy: The most common forms of online piracy would be downloading songs and movies illegally. Many sites offer free servers which allow a person to download movies and songs for free, generally meaning that musicians and movie producers will experience potential profit loss.

Deleting or copying sensitive company information or files for personal gain would be another common example of computer fraud. Additionally, putting up a website or sending mass emails about a fraudulent business opportunity would be considered fraud schemes constituting computer fraud.

What Should I Do If I Am A Victim Of Computer Fraud or If I'm Being Accused Of Criminal Fraud?

If you believe you are a victim of criminal fraud, you should first contact your local law enforcement in order to report the fraud. If there is sufficient evidence to pursue your claim, the case will be forwarded to your local prosecutor or District Attorney's office. It is important to keep records of any and all losses resulting from the fraud. This may be especially important when restitution is a potential penalty. An area attorney will be best suited to helping you understand your legal options and how you should proceed once you have reported the fraud.

The penalties for a criminal fraud conviction can vary considerably, depending on:

  • The jurisdiction;
  • The severity of the fraudulent act;
  • The victim of the fraud; and
  • The amount of money or property that was lost as a result of the fraud.

A conviction of criminal fraud may include, but not be limited to, penalties such as:

Some examples of what the court will take into consideration include:

  • The severity of the fraudulent act;
  • Whether the defendant has any prior convictions, especially associated with fraud;
  • Whether the defendant is currently on probation or parole;
  • The amount of money or property that was stolen; and
  • The person or entity that was the targeted victim.

Penalties can also be influenced by the attitude of the community and/or the court towards this type of crime. An example of this would be how if the victim is the Federal Government, the charges may be brought under federal law instead of state law which would result in harsher penalties.

Internet Fraud

In general, the same types of schemes that have victimized consumers and investors for many years before the creation of the Internet and e-commerce are now appearing online. The term Internet fraud is used loosely to describe any type of scheme that uses one or more components of the Internet, such as chat rooms, e-mail, or message boards, to do one of the following:

  • To present fraudulent solicitations to prospective victims
  • To conduct fraudulent transactions
  • To transmit the proceeds of fraud to financial institutions or to others connected with the scheme

Most Common Types Internet Fraud

Here are some of the major types of Internet fraud:

  • Auction and Retail Schemes – These are the most commonly reported types of Internet fraud. These schemes generally propose to offer high priced merchandise for low prices, and induce the consumer to send money for the promised items, but then receive nothing or something of far lesser value in return.
  • Work-at-Home Schemes – Fraudulent schemes often use the Internet to advertise opportunities that will allow individuals to earn thousands of dollars a month in work-at-home ventures. These schemes induce the consumer to send money for start-up materials, but then the materials they receive are usually not adequate for the purposes of starting a successful business.
  • Identity Theft – Some forms of Internet fraud involve identity theft.  An Internet posting will induce someone to send a driver's license number or a social security number for the purpose of fraud or deception.
  • Market Manipulation Scheme – Action taken by the SEC and criminal prosecutors indicate that criminals are using two basic methods under this type of fraud: Pump-and-Dump Schemes which use false or fraudulent information in an effort to cause dramatic price increases in thinly traded stocks or stocks of shell companies, then immediately sell their holdings of those stocks to realize substantial profits, and Scalping Schemes disseminate false or fraudulent information in an effort to cause price decreases in a particular companies stock.
  • Credit Card Fraud – Credit card fraud is a variation on auction schemes.  In credit card fraud, the con-artist uses unlawfully obtained credit card numbers to order goods and services online.

Prosecuting Fraud Cases

Because jurisdiction can be complicated in cases involving e-commerce, the most active prosecution has been in the federal court system. Backed by the FCC, SEC, and countless statutes, offenders of Internet fraud face a wide variety of fines and, in some cases, federal prison time.

Computer Fraud and Abuse Act

The Computer Fraud and Abuse Act (CFAA) is the federal government's leading anti-hacking law. It prohibits unauthorized access to another person's computer. The law was originally meant to protect the computers owned by the U.S. government and financial institutions. However, the Act has been amended to include practically all computers in the country. Devices such as servers, desktop computers, laptops, cell phones, and tablets are all protected under the Act.

Criminal Penalties Under the CFAA

Below are examples of CFAA violations and the applicable punishments:

  • Obtaining National Security Information: Ten years; 20 years maximum for repeat offenders
  • Accessing a Computer to Defraud and Obtain Value: 5 years; 10 years maximum for repeat offenders
  • Accessing a Computer and Obtaining Information: 1-5 years; 10 years maximum for a first conviction. 1-10 years; 20 years maximum for repeat offenders
  • Intentionally Damaging by Knowing Transmission: 1-10 years; 20 years maximum for repeat offenders
  • Extortion Involving a Computer: 5 years; 10 years maximum for repeat offenders
  • Trafficking in Passwords: 1 year; 10 years maximum for repeat offenders.

Civil Violations Under the CFAA

The CFAA's penalties are mostly for criminal violations. However, in 1994, the Act was expanded to include punishments for civil suits, in addition to criminal prosecution.

Civil violations under the CFAA include the following:

  • Obtaining information from a computer through unauthorized access
  • Damaging computer data
  • Trafficking in a computer password used to access a computer
  • Transmitting spam

Federal anti-hacking laws provide civil remedies for hacking victims. These remedies include:

  • Injunctive relief
  • Seizure of property
  • Seizure of the stolen information and the electronic devices used to carry out the hacking. 

How Can A Lawyer Help Me With Computer Fraud?

Whether you are the victim of computer fraud or are being accused of the crime, you should consult with an experienced and local fraud lawyer. Again, an attorney will be best suited to helping you understand your legal rights and options according to your state's specific laws regarding fraud. Additionally, your criminal attorney can determine whether there are any legal defenses available to you, and will also be able to represent you in court, as needed.