Dear Reader:

1997 was an important year for law enforcement officials across the nation involved in the fight against consumer fraud. The Federal Trade Commission filed over 50 lawsuits against fraudulent operators and formed alliances with other consumer protection authorities that resulted in 374 actions being filed by our law enforcement partners. Cases filed by the FTC alone stopped alleged frauds that cost consumers over $185 million in 1997, and more than $747 million over the lifetime of the scams. These accomplishments were enhanced by collaborative efforts with other federal agencies, state Attorneys General and other state law enforcement agencies, and foreign governments, and cooperation between civil and criminal authorities.

These law enforcement efforts were supported by a practical, plain-English consumer education program conducted by the FTC, often with the collaboration of the private sector. During 1997, the FTC and its partners disseminated over 7 million publications, counted over 610,000 unique accesses to information on its web site, and through mass media took steps to raise consumer awareness of the many facets of fraud.

The Commission's major law enforcement and education initiatives of the year addressed the actions of fraudulent telemarketers of investment offerings, crooks who promised would-be inventors sophisticated market research and patentability studies, scam artists who hoped to make their fortune marketing pyramid schemes, and fraud promoters who claimed "scientific breakthroughs" for health products, peddled "guaranteed" work-at-home business opportunities, and pitched international lottery ticket scams. One technique they shared was using the Internet as an inexpensive and efficient way to reach vast numbers of consumers.

Other scams depended on the unique features of the Internet. For example, some consumers who surfed the Internet were hooked up to international pay-per-call lines without their prior authorization. Other unwary consumers fell prey to unsolicited e-mail with claims for get-rich-quick schemes and bogus investments.

The Commission's actions to address Internet fraud represent a fraction of its total anti-fraud effort. With its partners, the FTC has used technology for enforcement, detection, deterrence and education. The Commission believes that its actions thus far have been effective and offers this report in the hope that these collective efforts serve as a guide for fighting online consumer fraud in the future.

By direction of the Commission.

Robert Pitofsky