The growth of internet use has spurred the growth of businesses while creating new opportunities for social and economic growth at a corporate and personal level. This growth is not without its challenges. Since the internet allows for anonymity, it has become ripe territory for fraudsters. Data from the FBI’s Internet Crime Complaint Center shows that Americans lost north of $4.2 billion over the internet through internet fraud in the years leading up to 2020. Victims in California suffered losses totaling more than $600 million.
California and the federal government have laws in place that issue hefty penalties upon conviction of internet fraud. You will need legal assistance to fight these charges. Contact the Los Angeles Criminal Lawyer team if you are under investigation or are facing internet fraud charges.
Various Crimes Constituting Internet Fraud
Internet fraud is an umbrella term referring to various fraud-related offenses committed over the internet. Prosecutors can either pursue federal charges if the crime violates federal law or state charges for offenses in violation of California law.
There are three categories of internet fraud schemes, namely,
- Phishing — Fraudsters obtain sensitive data like credit/debit card details or social security data from victims through emails or other forms of electronic communication
- Fraudulent schemes — Suspects in these schemes deceive victims by posing as reputable entities or individuals offering non-existent services to obtain data or money
- Accessing computers or data from the computers without authority to do so
Let us analyze each category further both at the state and federal levels.
Phishing is trickery through emails or the internet. Scammers attempt to obtain a victim’s sensitive information by posing as a reputable institution. The victim receives an email with a link redirecting them to a fake website. Once on the site, victims will be required to fill in their personally identifiable information. The perpetrators then gain access to the victim’s financial or other sensitive accounts using the identifiable information posted by the unsuspecting victims.
Phishing at the State Level
Prosecutors, both at the state and federal levels, pursue phishing charges.
State prosecutors will seek a conviction under:
- PC 530.5, which sets forth penalties for those convicted of identity theft
- PC 484e, which sets forth penalties for those convicted of credit card fraud
- Business & Professions Code 22948, Anti-phishing Act
Identity Theft Under PC 530.5
You face prosecution under PC 530.5 if it is established you engaged in any of the following behaviors.
- Deliberately obtaining and retaining another individual’s personally identifiable information without the individual consent and with the intent to commit fraud
- Intentionally acquiring another person’s personally identifiable information and using the information for illegal ends without permission from the individual
- Transferring, distributing, or selling another’s personally identifiable information without their consent to a third party with the intent to commit fraud
- Transferring, distributing, or selling another’s personally identifiable information knowing that the information will be used for fraudulent purposes
Any data that uniquely identifies you from the rest falls in the category of personally identifiable information. The information includes phone numbers, address, date of birth, social security, driver’s license, and bank account numbers. Details on your passport, health insurance policy, among others, also form the list of personally identifiable information.
Additionally, prosecutors must establish an intent to commit fraud. Prosecutors achieve this by listing any activity where you obtained another's personally identifiable information for illegal means like withdrawing or transferring money from the victim’s account to your account.
From the above, it is evident that prosecutors need to prove intent. This is significant because you do not have to be successful in defrauding another or for the victim to have suffered a financial loss for you to be guilty of identity theft.
Phishing under PC 530.5 is a wobbler. You can be charged with a misdemeanor or felony violation depending on which behavior of the four listed above prosecutors prove. Convictions for misdemeanor violations result in one year to 16 months behind bars, while two or three years for felony convictions.
Credit Card Fraud Under PC 484e
Phishing under PC 484e is specific to credit cards. You will only be found guilty under PC 484e for collecting other people’s credit card details through email or using the internet to make unauthorized purchases using another’s credit card details.
Prosecutors have to prove you committed any of the following to prove your guilt under PC 484e:
- Obtaining and possessing another’s credit card details without their knowledge with the intent to commit fraud
- Transferring, distributing, or selling another’s credit card details without his/her consent with the intent to commit fraud.
- Obtaining and possessing another’s credit card details without the card owner’s consent with the intent to sell, distribute or transfer the information to a third party and with the sole purpose of committing fraud
- Obtaining credit card details of four or more people within 12 months with the knowledge that you illegally obtained this information
- Using another’s credit card details to pay for your purchases with the intent to commit fraud, all the while possessing the information illegally.
If prosecutors prove their case and you are found guilty of the crime, you will face grand or petty theft penalties. If the value of fraud in the case is $950 or less, you will face petty theft charges. On the other hand, for fraudulent activities exceeding $950, grand theft charges will be preferred.
Petty theft is a misdemeanor punishable by up to six months in jail and/or a fine not exceeding $1,000. For grand theft, you can either face misdemeanor or felony charges. A conviction for a misdemeanor offense results in one year to 16 months behind bars, whereas felony convictions result in two or three years behind bars.
Convictions under the Anti-Phishing Act require the defendant to have successfully obtained another’s personally identifiable information through internet fraud. Under this law, prosecutors need only establish that the defendant successfully acquired another’s personally identifiable information through webpages, emails, or other internet-based avenues to induce unsuspecting victims to provide personal information.
Business & Professions Code 22948 does not establish criminal culpability and, by extension, criminal penalties for violation of its provisions. However, violating the law could result in a civil action by California’s Attorney General or the victim(s) of the defendant’s actions.
If the plaintiff(s) prove their case, as a defendant, you could part with close to $500,000 to $1.5 Million in damages paid to the plaintiff(s).
Phishing at the Federal Level
Federal prosecutors pursue charges for phishing activities under:
- Federal identity theft laws
- Federal credit card fraud laws
Federal Identity Theft
Under federal law, it is a crime to possess, transfer or use another’s identifiable information through email or other electronic communication platforms with the intent to commit a state felony or a federal crime.
Unlike state law, federal convictions result in hefty penalties. A conviction could result in imprisonment of up to 15 years. The courts will determine the punishment upon considering the circumstances of your case.
You could remain locked up in federal prison for up to 15 years if:
- It is proven that you transferred or possessed information from government-issued identity documentation, including birth and death certificates, social security numbers, driver’s licenses
- You are charged for federal identity theft of more than five means of identification
- You used your victim’s identifiable information to purchase goods worth $1,000 or more within one year.
Credit Card Fraud
Credit card fraud, under federal law, occurs in the following scenarios:
- Being in possession of more than 15 unauthorized credit cards with the intent to defraud another
- Using or trafficking another’s credit card detail with the intent to defraud by acquiring goods valued at more than $1,000 within one year.
- Engaging in transactions with another’s credit card aiming at committing fraud and in the process buying goods valued at more than $1,000 within one year
A conviction for violating federal credit card fraud law results in a prison sentence of up to 10, 15, or 20 years. Upon considering the circumstances of your case, the courts will determine the penalties.
You commit fraud when you deliberately obtain data, money, or other benefits through false pretenses, misrepresentation, material omission, or fake promises. These schemes fall into the internet fraud category when committed over the phone, the internet, or email.
The definition above gives latitude to any crime fitting the description to be included. However, there are fraudulent schemes that are common and worth addressing.
COVID-19 wiped out a significant number of jobs in a short time. Most sectors are yet to recover to the pre-COVID conditions. During this time, many people fell prey to ads promising significant income while working at home. While the work-at-home ads are not new, they significantly increased during the pandemic.
These scams require the victim to pay an upfront fee guise as a registration or an investment into the project. Victims soon realize the company does not exist and the job is non-existent.
Another scam under this category is Ponzi schemes presented as multi-level or affiliate marketing. Victims end up recruiting others for a cut of the fees.
Advance Fee Fraud
Advance fee fraud primarily affects victims looking to make product purchases online. Once the victim selects and orders a product, he/she receives a communication to pay an upfront fee to fast-track the delivery. Additionally, the fee could also be presented as shipping, delivery, or processing costs. Once the buyer wires the funds, he/she never receives the product they ordered, nor do they get a hold of the purported seller of the product.
Non-Delivery Merchandise Fraud
Victims of non-delivered merchandise fraud start by placing orders or online products. Unbeknownst to them, the product they ordered was based on a picture lifted off from another site. The perpetrators of the fraud scheme then ask for upfront payment. The victim ends up paying for the product but does not receive it. It becomes an established scheme if the suspect does this repeatedly to various victims.
Fake Apartment Rentals
Under fake apartment rental scams, perpetrators place an ad on classifieds-sites listing properties or sites like Craigslist. The photos of the rental property, like in non-delivered merchandise fraud schemes, are lifted from legitimate property listing sites. Further, the price tag is always a bargain.
When potential renters express interest, scammers will require paying fees or wire the first month’s rent to secure the apartment. Additionally, renters will be pressured to make prompt payments to secure the apartment owing to the high number of individuals interested in the apartment.
Real Estate Overpayment Fraud
Real estate overpayment fraud primarily targets real estate agents and property owners. Scammers respond to the posted ads and email the agent or owner a banker’s cheque, mainly from a bank outside the US. The amount in the cheque is higher than the asking price posted on the ad. Thus the scammer convinces the agent or property owner to wire the extra amount to a US account the scammer will provide. Later, the agent or property owner realizes that the check was fake, and they have lost their money (the funds they sent to the scammer) without receiving payment for the property.
Sale Transaction Scams
Fraudulent sales transactions describe the sale of products without delivery to the buyer or sale of counterfeits or versions far from what was advertised.
People are constantly bombarded with prize-winning ads claiming the viewer won a phone, tablet, shopping voucher, or lottery. Others assert that the victim is among those who have been entered in a draw to win a car or a holiday trip, among others.
The catch is to have the victim pay an upfront fee, taxes, or shipping costs to access the prize. And like the fraud schemes detailed above, the victim receives no prize while the scammers make away with the funds received from the victim.
Online dating is a fraudster’s paradise. Individuals referred to as catfish create fake online profiles to pursue romantic encounters. Over time, they convince their victims of the authenticity of the relationship. Said victims then send money, gifts, valuables, or travel expenses to their fake romantic pursuits.
Federal Prosecution for Fraudulent Schemes
While prosecutors could pursue the above crimes at the state level, you could also face federal charges. However, prosecutors prefer pursuing federal charges, and you will face prosecution for wire fraud.
Under federal law, prosecutors must prove that you had a scheme in place to commit or plan to commit fraud. Further, you intended to defraud another using electronic communication to complete your plan. Your scheme does not have to be successful for you to be found guilty. You can be convicted for simply having a plan or establishing a scheme.
If convicted for wire fraud, you could spend up to 20 years in federal prison and pay a fine.
Unauthorized Use or Access to a Computer
Accessing or using another person’s computer without authority is a simple definition of hacking, a violation of both California and federal law.
Under California law, hacking is prosecutable and punishable under PC 502. This law provides punishment in line with violations of specific provisions, detailed below.
- Knowingly accessing another’s computer without permission and subsequently deleting, tampering, altering, destroying, or using the data from the computer, network, or its system to execute or devise a fraudulent scheme or wrongfully obtain or control property, money, or data is a wobbler. Additionally, for knowingly accessing a computer, its system, or network without permission and acquiring, copying, or using data from the computer, its system, or network, you could face misdemeanor or felony charges.
- It is also a crime to deliberately and without authority access computer services or cause third parties to use the services. If you face prosecution for a first offense, a conviction will result in a fine of no more than $5,000 and a jail sentence not exceeding one year. However, the value of fraud should not exceed $950, and you should not have deleted, damaged, or made changes to the information in the computer, its system, or network.
If you face charges for a second offense and the victim incurs over $5,000 in losses, or the computer services you tampered with were valued at $950, you could be charged with a misdemeanor or felony charge.
- Deliberately accessing a computer, its system, or network and copying, taking, or using any data accessed will result in misdemeanor or felony charges.
- Willfully altering, damaging, adding, destroying, or deleting data, computer programs, or software without authority can be charged as a misdemeanor or a felony offense.
- Deliberately causing the disruption or disrupting computer services to authorized users without authority is also a wobbler.
- It is also a crime to deliberately access or cause access to a computer, computer system, or network without authority. Subsequently, it is also an offense to provide another with the means to access a computer, computer system, or network without permission.
For first-time offenders and if the action did not result in any damage, altering, or destruction of data, you will have committed an infraction punishable by a fine of up to $1,000. A second violation is a misdemeanor.
If the victim suffered a loss exceeding $5,000, prosecutors could pursue misdemeanor or felony violation charges.
- If you introduce a computer virus, worm, or any other contaminant to a computer, its system, or network and are charged as a first-time offender, you will face misdemeanor charges. Convictions for second offenses can either be pursued as misdemeanors or felonies.
- Finally, it is also an offense to deliberately and without permission to use another’s internet domain details and subsequently send one or two emails.
First-time offenses are infractions punishable by a $1,000 fine. However, subsequent offenses are wobblers.
You can spend up to one year in jail for a misdemeanor offense and part with up to $5,000 in fines. If convicted for a felony, you could spend up to 16 months, two, or three years behind bars and pay a fine totaling $10,000.
As for federal violations, you will face federal prosecution and penalties if you commit computer fraud on computers, their systems, or networks used by government agencies or banks. First-time offenders could face up to five years in prison and a fine. Second offenders, on the other hand, receive a prison sentence of up to ten years.
Contact a Los Angeles Criminal Defense Lawyer
A solid defense is your best chance at fighting internet fraud charges. At Los Angeles Criminal Lawyer, we are ready to provide you with the right defense. So call us today at 310-502-1314 for a free case assessment.