Each year, thousands of individuals put their trust in other people that they meet online. Even when a relationship never moves out of the virtual realm, a deep emotional connection (or the illusion of one) can develop surprisingly fast. Unfortunately, this can set unsuspecting victims up for a rude awakening when an online romance results in emotional abuse, financial fraud, or both. In an attempt to educate people about this unfortunate possibility, the Office of Fair Trading (OFT) is promoting “Scams Awareness” month and warning lonely hearts of the dangers of Internet dating scams this Valentine’s Day.

The recent Computeractive article, “Lonely hearts warned of Internet dating scams,” explains some common online romance scams. In one common scenario, a fraudster assumes the false identity of a foreign national working and living in West Africa. After stringing along an online acquaintance for weeks or months at a time—building trust and developing a romantic relationship—the impostor suddenly experiences some kind of financial hardship and finds himself in need of quick cash. That’s when he asks the victim for money to get him out of his bind. Once the unsuspecting victim sends the money, the fraudster is never heard from again.

Individuals can greatly reduce their chances of becoming victims of these type of scams by taking a few common-sense precautions. However, it is also the responsibility of internet dating sites and other online communities to make sure they are implementing effective anti-fraud tools and techniques to make their sites more secure and better protect their members. iovation works actively with the online dating community and, as a recognition of our success, we recently won the Best New Technology Award at the 2010 Internet Dating Awards.

iovation is attending the Internet Dating & Social Networking Conference in London this week and evidence of this industry’s continued growth is easy to find. Just this weekend, the Detroit News reported on the success of the online dating industry, despite, or perhaps because of the tough economic times. In fact, based on statistics from Forrester Research Inc., the article states:

Online dating is the third largest producer of revenue out of all paid content sites, generating $957 million in 2008, a figure that the firm predicts will grow 10% by 2013.

Unfortunately, the increased popularity of online dating is also good news for scammers who are always happy to take advantage of new, unsuspecting users. This month PRWeb reported that, according to trends revealed by Google, search terms like “online dating” and “free dating” are getting the most hits from fraudsters in African countries, looking for sites where they can con those looking for love online.

Once these online scammers set up accounts at a legitimate site, they begin targeting other users, with consequences that can be anywhere from mildly annoying to completely devastating. For a look at the variety of different scams in play, and the techniques used to lure people into a scam, check out the site Romance Scams. This site not only details the warning signs but also provides links to some of the actual profile photos used by the scammers.

Romance scams aren’t new, of course—taking advantage of an individual’s emotions is a technique that has been used by con artists for centuries. What is new, however, is the level of anonymity and safety that the Internet gives to scammers. The relative ease with which anybody can set up an account using a stolen identity, a fake photo and made-up personal information makes these scams highly attractive to online criminals. Instead of having to focus on a single face-to-face con, the scammer can be running multiple cons at once without a problem.

With this in mind, it is very important for individuals to protect themselves and for online dating companies to take every step to ensure that their sites are safe for their users. One of the important ways we help companies in the dating industry is by raising the bar for re-identifying scammers, by focusing on the computer they use, rather than the personal information (often fake) that they provide. With device reputation, it is much easier to identify scammers trying to return to a site and repeat their scam or con. Because of the impact our fraud prevention service has had, we were mentioned in a ComputerWorld article discussing how iovation helped eHarmony fight online scams and we were also featured in a separate article in the same publication on how we are helping the online dating industry in general.

If you happen to be at iDate London this week, let us know. We would love to meet with you.

1. Provide visitors with instant feedback (or matches)
2. Convert visitors from “Just Looking” to “Paid Customers”
3. Deliver high quality connections or matches
4. Keep the quality of the prospect pool high, by weeding out scammers, spammers and fraudsters.

Number four is where iovation comes in.  When we compiled all incidents in our worldwide database from online dating sites that use our services, we found that the top 5 types of abuse on online dating sites are:

1. Identity mining/phishing &/or credit card fraud – 61%
2. Spammers – 14%
3. Profile Misrepresentation – 7.6%
4. General Misconduct – 5.9%
5. Solicitation – 2.9%

Computerworld launched a separate article on February 13th featuring iovation’s technology, titled, “Online Dating: Blocking the Bad Guys”.  Read this article to find out how iovation’s ReputationManager service aims to help online dating sites keep the scammers and spammers at bay.

- Scott Olson, VP of Marketing, iovation