For
Release: April 2, 2002
International Netforce
Launches Law Enforcement Effort
Sweep Targets Deceptive Spam and Internet Fraud
The Federal Trade Commission has joined eight state law
enforcers in the United States and four Canadian agencies in an initiative targeting
deceptive spam and Internet fraud. The agencies have brought 63 law enforcement actions
against Web-based scams ranging from auction fraud to bogus cancer cure sites, and have
sent more than 500 letters warning people sending deceptive spam that it is illegal. In
addition, Netforce partners tested whether "remove me" or
"unsubscribe" options in spam were being honored.
"Illegal Internet schemes and deceptive spam don't stop
at state lines or international borders," said J. Howard Beales III, Director of the
FTC's Bureau of Consumer Protection. "The FTC and its law enforcement partners are
sending a signal to scammers: We're out there surfing the Net, reading our spam and
working together to stop Internet scams."
"Cyberspace is a wondrous place, but we are quickly
learning that it can also be a dangerous place for the unwary. Con artists who once relied
on telephone boiler rooms and mass mailings can now rip people off through websites and
e-mail," said Washington Attorney General Christine Gregoire. "While the scams
are often very familiar, use of the Internet creates some major new challenges for
consumer protection organizations. That's why it's so important that those of us who
enforce state, provincial and national consumer protection laws work together to meet
these new challenges."
The FTC targeted four operations using the Net to scam
consumers:
- An FTC complaint named Universal Direct and its principals,
Linda Jean Lightfoot and Charles F. Childs. Their spam promotes "a MLM (multi-level
marketing) Gifting Program that CAN'T FAIL" and promises participants $10,000 in cash
gifts within a few months of joining. The FTC alleges the scheme is an illegal
chain-letter in which most participants will fail to make any money. The FTC has asked the
court to halt the illegal scheme and freeze the defendants' assets pending trial. The
agency will seek a court order requiring the defendants to give up their ill-gotten gains.
- The FTC alleges David L. Walker is using an Internet site to
market products he claims cure cancer, including his "CWAT -Treatment: BioResonance
Therapy and Molecular Enhancer." The site claims his treatments, for which he charges
between $2,400 and $5,200, make surgery, chemotherapy, and other conventional cancer
treatments
- unnecessary. The FTC alleges the claims are unsubstantiated
and a declaration from a distinguished oncologist suggests the therapies are potentially
harmful to cancer patients. The agency has asked the court to bar the unsubstantiated
claims permanently, and order consumer redress.
- In a third case, Sound City 2000, Inc. and Linda M. Simmons
have agreed to settle charges that they violated the FTC's Mail Order Rule. The Sound City
Web site advertised and sold compact discs. The FTC alleged that Sound City delivered
discs late or not at all and failed to make prompt refunds. The settlement bars the
defendants from violating the Rule and requires them to pay consumer redress.
- A fourth case alleging use of deceptive spam is under seal by
order of a U.S. District Court. The seal will be lifted shortly and details of the case
will be released at that time.
In addition to the law enforcement actions, the FTC, six
state agencies, and Canada's Competition Bureau sent warning letters to more than 500
spammers based in Alaska, Idaho, Montana, Oregon, Washington, Wyoming, and Canada who
allegedly are running illegal chain letter schemes. The spammers promised quick money to
recipients who send $5.00 in cash to each of four or five participants at the top of the
list. In return for the $5.00 payment, recruits received "reports" providing
instructions about how to start their own chain letter schemes and recruit tens of
thousands of others via spam. The chain letter deceptively claimed the program is legal
and urged recruits who question its legitimacy to contact the FTC. The FTC maintains a
database of unsolicited commercial e-mail (UCE). Consumers currently send unwanted spam to
the agency at a rate of approximately 15,000 e-mails a day using the agency's database
address, uce@ftc.gov. The FTC has collected more than 10
million unwanted spam messages since 1998.
In another initiative, Netforce partners tested whether
"remove me" or "unsubscribe" options in spam were being honored. From
e-mail forwarded to the FTC's database, the agencies culled more than 200 e-mails that
purported to allow recipients to remove their name from a spam list. The agencies set up
dummy e-mail accounts to test the pledges, but discovered that the vast majority of
addresses to which they sent the requests were invalid. Most of the "remove me"
requests did not get through. Based on information gathered by the Netforce, the FTC has
sent more than 75 letters warning spammers that deceptive "removal" claims in
unsolicited e-mail are illegal.
In conjunction with the law enforcement initiative, the
agencies also are mounting a consumer education campaign. An FTC publication You've Got Spam: How to
"Can" Unwanted Email advises consumers who want to reduce the amount of spam
they receive:
- Try not to display your e-mail address in public.
- Check the privacy policy when you submit your address to a Web
site.
- Read and understand the entire form before you transmit
personal information through a Web site.
- Decide if you want to use two e-mail addresses - one for
personal messages and one for newsgroups and chat rooms.
- Use a unique e-mail address.
- Use an e-mail filter.
Partners in the International Netforce include the Alaska
Attorney General, the Alaska State Troopers, the Alberta Government Services, the British
Columbia Securities Commission, the British Columbia Solicitor General, Canada's
Competition Bureau, the Federal Trade Commission, the Idaho Attorney General, the Montana
Department of Administration, the Oregon Department of Justice, the Washington Attorney
General, the Washington State Department of Financial Institutions, and the Wyoming
Attorney General.
The Commission votes to file the complaints were 4-0 each,
with Commissioner Sheila Anthony not participating. The FTC complaint naming Linda Jean
Lightfoot, Charles F. Childs and Universal Direct was filed in U.S. District Court for the
Southern District of Ohio, Western Division. The complaint naming David L. Walker and DLW
Consulting, Inc., was filed in U.S. District Court for the Western District of Washington,
at Tacoma. The complaint and proposed consent decree with Sound City 2000 and Linda M.
Simmons was filed in U.S. District Court for the District of Oregon, by the Department of
Justice on behalf of the FTC. The Commission vote to refer the matter to DOJ for filing
was 5-0. |