Trade Commission's Cyber Sleuths Bust Cyber Swindlers
By Lily Whiteman
Type into a
search engine the key words, "This is not a scam", and
you will likely
be linked to scores of web pages shouting empty promises, such as:
- Earn a 50
percent return on your money!
- Burn more
calories while you're just standing or sitting around doing
nothing -- even while you're sleeping!
- Money to
loan...regardless of credit history!
Robbery on the Information Highway
claims have long been the stock-in-trade of fast-talking cold-calling
con artists hawking pyramid schemes, bogus business opportunities,
phony credit repair kits, and various forms of snake oil. But these
types of traditional scammers,
known for crowding into rented "boiler rooms", are quickly
as anachronistic as the rotary phones they once did business from.
place is a new breed of cyber crook -- often a plugged-in shut-in
who beams fraudulent offers around the world with nothing more than
a computer and modem. These hi-tech swindlers are also working new
scams, such as page jacking, mouse trapping, modem hijacking, and
e-mail marketing, that are unique to the Internet. Drawn to the
anonymity and low cost of web pages and e-mails, the ranks of cyber
swindlers are steadily growing.
Federal Trade Commission (FTC) received 18,600 consumer complaints
of Internet fraud in 1999 -- up from fewer than 1,000 complaints
just two years ago. Such reports now account for about one fourth
of all fraud complaints. According to the National Consumers League
in Washington, cyber scammers duped each of their victims out of
an average of $580.00 last year.
to federal investigators, the tables are rapidly turning on Internet
con artists. Jodie Bernstein, Director for the FTC's Bureau
Protection assures that "if these bad actors can use this new
to deceive consumers, we can use it to catch them."
How is the
FTC catching cyber scammers? The Agency's Consumer Sentinel
Database currently contains 265,000 complaints that were phoned,
mailed or e-mailed to the Agency by the public and 250 law enforcement
agencies that were specially recruited to help the FTC fight fraud.
By adding special analytical tools to the Consumer Sentinel Database,
the FTC boosted its ability to identify emerging trends in cyber
crimes and target its law enforcement activities.
FTC investigators regularly search for questionable claims by trolling
the Internet with computers that are equipped to conceal their federal
addresses. Such cover enables these investigators to access offensive
sites that are routinely hidden from law enforcers whose government
addresses give away their surveillance efforts. FTC investigators'
computers are also specially outfitted to copy suspicious pages
for use as potential evidence. The Agency gets additional tips of
suspicious sites from its 250 crime fighting partners, which similarly
patrol the Internet.
Web site operators
whose promises do not pass muster from FTC lawyers
are sent what an Agency spokesperson calls "a strongly worded
warning them of the FTC's concerns. Typically, that's enough to
them to either change their site's content or shut it down
Those that ignore FTC warnings are subject to further investigations
or enforcement actions.
So far, the
FTC has brought more than 140 law enforcement actions against over
400 fraudulent Internet merchants. Among the Agency's recent
victories was a court decision that closed Five Star Auto Club,
which had advertised on the Internet a pyramid operation based upon
car leases. The company was also forced
to pay back $2.9 million to 8,200 consumers, some of whom had paid
thousands of dollars to participate in the scheme.
consumers about the Internet's too-good-to-be true offerings, the
FTC maintains various teaser web sites. With deceptively tantalizing
claims, colorful come-ons and convincing but fictional testimonials,
these sites invite unsuspecting surfers to click through their pages
until they reach a warning: "If you responded to an advertisement
like this, YOU COULD GET SCAMMED!" The site's hyper-link back
to www.ftc.gov offers these consumers
additional educational information.
Here are some
tips for avoiding cyber scammers:
- Avoid Internet
merchants who don't have a street address and phone number. If
necessary, call and ask them for their location, or check their
location with the telephone book.
- Never give
your bank account or Social Security number to Internet merchants
who you don't know or who don't tell you why they need such information.
- Favor auction
sites that post references from past customers and that
to place money in escrow until goods arrive.
- Avoid credit
and loan offers that require you to make up-front payments
have the credit or loan in-hand.
- To report
suspicious claims and get more tips on safe Internet shopping,
FTC's web site.
For her work
in protecting online consumers, Joan Bernstein was one of nine runners-up
for this year's
Good Housekeeping Award for Women in Government.
is a writer with the National Partnership for Reinventing Government.
You may reach her at email@example.com.