Germany Facing Record Levels of Internet Fraud

A recent case in Germany revealed just how common fraudulent online storefronts have become. The Munich District Court heard a case that exemplified the fraud issues in Germany. And Matthias Huber, public prosecutor, explained the reason similar shops kept causing problems for the general public—and the police.

The biggest issue that victims often face, he explained, was that fraudsters usually operated covertly, stacking up a significant amount of money, and then washing their hands and starting fresh. A customer never saw his or her money again, even after police involvement. A Munich District Court heard the case of Mark-Thomas E, a 35-year-old defendant who owned more than 21 online shops and brought in more than $482,000 in fraudulent proceeds.

He sold 750 different items. Some of the items he sold were “coffee machines, mobile phones, and game consoles,” one site explained. He never truly sold or shipped a single item.

The prosecutor explained that this was not the first case seen by police officers and investigators in the district. And he said it would not be the last either. These types of fraudulent websites continually reappear in one form or another. He said that this was one of the main reasons the district created a cyber crime investigation unit.

Many of the fraudulent internet websites created their own economy. Another reason for creating a cybercrime and internet fraud investigation department was the growing online drug trade. He explained that the majority of the drug trade occurred on the darknet. But, also on the darknet, similar types of fraud occurred​ as well.

Many federal states created their own cybercrime division for the very same reason. The Bavarians Cybercrime Investigations unit launched 1545 cases in 2016, Huber said. Many smaller cases occurred too. But “normal public prosecutor’s offices” handled the less catastrophic cases.

Many states offered flyers and brochures on how to avoid internet fraud.

“Fake shops advertise with low prices, sometimes high-quality goods, which are available in other online shops only at a higher price or not at all. In this way, consumers are specifically lured into the trap. In these “sham-shops” you always have to pay in advance, the ordered goods are not delivered or have inferior quality, you never see your money again.”

He explained that these cases often were, or resembled, the notorious Amazon scam that ran rampant throughout Germany. Vendors attempted to contact buyers outside the platform and encouraged them to “cut out the middlemen.” They​ referred to the true or official site, like Amazon, as middlemen. However, he explained, “the identity of the perpetrators is usually difficult to determine.” The fraud itself relied on a middleman.

In some cases, the fraudsters used middlemen for hire—he explained anyone could pay $500 for “financial agents and other people” who would ask no questions. The perpetrators also used anonymous payment methods. Even if investigators found the account where customers sent their money—often the account of the middleman—investigators only closed the case once much further down the “chain of command.”

So-called “fraudsters” used anonymous forms of currency when they cashed out. Even basic services like Western Union, he said, provided a significant hurdle for investigators. And as a result, customers or victims rarely see their money returned to them. Mark-Thomas E., for example, “already drank and snorted” it away. (Note that further details revealed that Mark-Thomas E. may have been a middleman of sorts; he said that most of the money went to another suspect and thus he had not blown through $482,000.)

In closing, Huber warned, watch for majorly underpriced items. “If the TV costs 1000 euros, and only one seller has it for 500 euros, one should be suspicious.”