Welcoming Remarks

FTC Workshop on
Public/Private Partnerships to Combat Cross-Border Fraud

Timothy J. Muris

Wednesday, February 19, 2003

Good morning.

Welcome to the Federal Trade Commission's Workshop on "Public/Private Partnerships to Combat Cross-Border Fraud." I would like to thank all of you for joining us, with special thanks to our international visitors.

We have convened this workshop to explore how the public and private sectors can cooperate to fight cross-border consumer fraud. For many reasons, the time is right for this discussion.

The evidence of cross-border consumer fraud - and the harms it causes to consumers and legitimate businesses - appears to be growing. This morning, we are releasing statistics from Consumer Sentinel, our central complaint database, which show that cross-border complaints by U.S. consumers rose in the past year - from 13,905 in 2001 to 24,313 in 2002.

The nature of these complaints also is changing. When we first started looking at statistics on cross-border fraud, most of the complaints focused on telemarketing of deceptive and fraudulent schemes based in Canada. While telemarketing schemes are still widespread, complaints about cross-border Internet-related schemes, located all over the world, also have grown - from 22 % of the total in 2000 to 34 % in 2002. The costs of cross-border fraud are high for both consumers and businesses - both in terms of monetary losses and consumer confidence.

The FTC has been taking steps to fight foreign scams that harm consumers. We have gone to federal court, using our civil powers under the FTC Act, to obtain injunctive relief and consumer redress for U.S. and foreign consumers. We have worked on investigations with foreign consumer protection agencies and pursued regional partnerships with U.S. and Canadian civil and criminal law enforcement officials in British Columbia and Ontario. These partnerships have resulted in dozens of law enforcement actions here and in Canada.

In 2002, the FTC filed about 20 new lawsuits involving foreign defendants or foreign consumers, and the agency continued to pursue dozens of other cases against frauds operating across national borders. Many of these cases deal with the top fraud areas identified in the new Consumer Sentinel statistics - advance fee loans and credit cards, foreign lotteries, sweepstakes and related prize promotion pitches, and Internet offers. In other cases, we face cross-border issues such as defendants transferring funds offshore to avoid paying consumer redress.

We expect our cross-border caseload to increase in the future. In the first two months of 2003 alone, we have filed cases against fraudulent advance fee credit cards scams peddled by Canadian telemarketers, bogus international driving licenses advertised through spam by defendants in Denmark and other foreign countries, and products and programs sold over the Internet by defendants based in Switzerland that falsely claim to cure cancer, AIDS, and other serious diseases. Indeed, tomorrow we will hold a press conference to announce the filing of a case against U.S., Canadian, and U.K defendants using the Internet and telemarketing to advertise so-called "treatments" at a clinic in Tijuana, Mexico. These "treatments" use an electromagnetic device that purportedly could kill cancer cells and cure consumers of breast, lung, brain, and liver cancers.

We need to do more against cross-border fraud. Recently, the FTC has begun to implement a Five-Point Plan for Fighting Cross-Border Fraud, which I announced this past October. One of the five points - and the impetus for this workshop - is to explore new ways for the government and the private sector to work together. We hope that the discussions over the next two days will provide us with a concrete action plan for such partnerships.

Today, we will study existing models of public/private sector cooperation and discuss the opportunities for cooperation with various financial sector entities. We have invited banks and other financial institutions, credit card providers, ACH processors, and money transmitter services. Tomorrow morning, we will explore potential partnerships with commercial mail receiving agencies, industry, and self-regulatory organizations. We then will focus on the role of Internet businesses: ISPs, web hosting companies, and domain registration authorities. We look forward to discussing what can be done together - in information sharing, risk analysis, identification and location of investigatory targets, training, asset recovery, and business and consumer education - to reduce the tide of cross-border fraud.

Again, I would like to welcome all of you and thank you for participating in what we expect to be a productive and enlightening workshop. In addition, I would like to thank my fellow Commissioners, and particularly, Commissioner Mozelle Thompson, who serves as the chair of the OECD Committee on Consumer Policy, who has been instrumental in pursuing our cross-border agenda.

We now will watch a short video of remarks by Susan Collins, the United States Senator from Maine. Senator Collins currently serves as the Chairman of the Senate Committee on Governmental Affairs. In June 2001, the Permanent Subcommittee on Investigations, under Senator Collins's leadership, held a two-day hearing - "Cross Border Fraud: Improving Transnational Law Enforcement Cooperation." Senator Collins could not join us in person today, but she wanted to emphasize the importance of this issue by addressing you via videotape.

We now will have the pleasure of hearing from Ted Kassinger, who has served as the General Counsel for the U.S. Department of Commerce since May 2001. Before assuming his current position, Ted was a member of the multinational law firm, Vinson & Elkins LLP, where he engaged in a broad international trade and business practice. Ted previously served as an attorney with the U.S. Department of State and the U.S. International Trade Commission.

I now will turn the program over to FTC Commissioner Mozelle Thompson. He will be leading off this morning's discussions with an introductory roundtable of distinguished guests, including Commissioner Sitesh Bhojani of the Australian Competition & Consumer Commission, Steve Bartlett, CEO of the Financial Services Roundtable, Scott Cooper on behalf of the Global Business Dialogue on E-Commerce, and Susan Grant of the National Consumers League.