For
Release: March 23,
2004
FTC Details Efforts
to Halt Internet Scams
The Federal Trade Commission today told
a Senate committee that efforts to combat fraud and deception
on the Internet are critical for all consumers, including
seniors, because, “Internet fraud causes significant
injury to consumers and harms public confidence in the Internet
as an emerging market.” Howard Beales, Director of the
FTC’s Bureau of Consumer Protection told the Senate
Special Committee on Aging that the Commission has brought
319 law enforcement cases involving Internet scams, including
cases involving identity theft, auction fraud, investment
fraud and “Nigerian scams,” and cross-border Internet
fraud.
According to the testimony, the FTC maintains
a central clearinghouse of identity theft victims, making
the information available to more than 850 criminal and civil
enforcement agencies throughout the nation. The testimony
says that in 2003, 214,905 complaints were filed in the ID
Theft Clearinghouse, about 10 percent of which came from consumers
age 60 or older. The FTC refers identity theft cases to criminal
authorities because the FTC Act provides no direct criminal
law enforcement authority, but the agency also has brought
law enforcement actions to stop practices that involve or
facilitate identity theft. “Our cases have attacked
alleged ‘pretexting,’ the use of false pretenses
to obtain consumers’ confidential financial information,
and ‘phishing,’ the use of spam directing consumers
to update or validate their confidential payment information
on copycat Web sites that appear identical to the sites of
the legitimate companies with which they do business.”
The FTC also has taken law enforcement action against companies
that misrepresent the security they provide for consumer information.
The testimony states that auction fraud
accounted for nearly half of all Internet-related fraud complaints
consumers reported to the FTC’s Consumer Sentinel Database
in 2003. “Among seniors age 60 and over, auction fraud
accounted for 29 percent of all Internet-related complaints
in 2003, and ranked third in the list of ‘Top 15’
product or service complaints reported by seniors.”
The FTC has worked with state attorneys general and local
law enforcers in bringing more than 50 civil and criminal
cases involving auction fraud, according to the testimony.
The testimony states that deceptive business
opportunities and work-at-home scams filled the last two slots
of the “Top 15” scams affecting seniors age 60
and older. In response, the FTC has brought law enforcement
cases and led state and federal law enforcement sweeps against
these investment scams. In addition, ‘Nigerian Scams’
are a persistent con in which a purported third-world official
or business representative typically offers to share his family’s
fortune with a consumer in return for help with circumventing
his country’s currency restrictions by moving assets
outside his country to a safe banking haven – but only
after the consumer sets up a bank account in the scammer’s
name with a good-faith deposit, which soon vanishes. The Commission
has issued a Consumer Alert on Nigerian scams as part of its
consumer education mission, and assisted criminal authorities
in identifying potential cases,” the testimony says.
According to the testimony, cross-border
fraud on the Internet is a growing problem, and older consumers
are often the targets of cross-border fraud. “Top frauds
reported by seniors comprised 20 percent of all cross-border
fraud complaints where consumers reported their age. Top frauds
reported by consumers age 60 and over included prize promotions,
sweepstakes scams, foreign money offers, advance-fee loans,
and foreign lotteries – all common cross-border schemes.”
The testimony notes that bogus claims for products that promise
to cure or treat serious diseases also are a problem for seniors
and have been the target of agency actions.
“The Commission is hard at
work on efforts to protect all Americans, including the elderly,
from Internet scams. Through consumer education outreach efforts
and enforcement actions that halt law violations and return
money to victims, the Commission seeks both to help consumers
protect themselves and to take action when they cannot,”
the testimony says.
The Commission vote to approve the testimony
was 5-0.
Copies
of the testimony are available from the FTC’s Web site
at http://www.ftc.gov
and also from the FTC’s Consumer Response Center, Room
130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The FTC works for the consumer to prevent fraudulent, deceptive,
and unfair business practices in the marketplace and to provide
information to help consumers spot, stop, and avoid them.
To file a complaint, or to get free information on any of
150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357),
or use the complaint form at http://www.ftc.gov.
The FTC enters Internet, telemarketing, identity theft, and
other fraud-related complaints into Consumer Sentinel, a secure,
online database available to hundreds of civil and criminal
law enforcement agencies in the U.S. and abroad.
MEDIA CONTACT:
Claudia Bourne Farrell,
Office of Public Affairs
202-326-2181
(FTC File No. P97 4406)
(http://www.ftc.gov/opa/2004/03/phishing.htm)
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Related Documents:
Prepared Statement of the Federal
Trade Commission On Efforts to Fight Fraud on the Internet,
Presented by J. Howard Beales, III, Director, Bureau of
Consumer Protection, Before the Special Committee On Aging,
United States Senate (March 23, 2004)
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