Statement of FTC Chairman Robert Pitofsky at Joint FTC/HUD Press Conference on "HUD Tracers"

For Release

Thank you Secretary Cuomo,

I am certainly pleased to join you and Assistant Secretary Retsinas in this united effort to reduce fraud on the Internet.

"Hud Tracer Surf Day" is the latest in a series of Surf Days that the FTC has conducted in conjunction with federal and state officials.

The Internet poses unique opportunities and difficult challenges for consumers. One of those challenges is that the medium provides new ways to perpetrate deceptive schemes. To meet that challenge, we at the FTC have developed the Surf Day approach to policing fraud on the Internet. The Surf Day approach takes advantage of this vast new medium. Using the Internet as a tool, our investigators surf the net for possible fraud and deception. When they find a potentially deceptive site, the investigators notify the site operator by e-mail that they may be violating the law.

Today we are announcing "Hud Tracer Surf Day." Last week FTC and HUD investigators surfed the web and identified 330 web sites, news group postings and bulk e-mail messages claiming to teach consumers how to make big money by becoming "Hud Tracers."

We have sent each site an e-mail describing the relevant laws.

Many web site operators and bulk e-mailers are new players in a new media who may not know they could be violating the law. For that reason we have used the new media as an educational tool, to let Internet operators know the rules of the road. The 330 sites that we sent an e-mail to today will be revisited in the future by our investigators, and if evidence demonstrates that they are illegal operations, further actions would result.

The joint FTC/HUD Surf Day has allowed us, working with HUD, to address two important related consumer issues.

First, we are pleased to take this opportunity to make the public aware that over $70 million is available for consumer refunds from the HUD/FHA program. Consumers can contact HUD directly to determine whether they are entitled to a refund. Consumers do not need to pay third- party tracers to have access to any refund to which they are entitled.

Second, this joint effort allows us to alert the public to the problem of so called "HUD Tracer" business opportunities. As our Surf Day has shown, the Internet is full of web pages, news group postings and spam e-mail -- claiming to teach consumers how to make big money by becoming "HUD Tracers." As has been noted, HUD does not authorize any third-party tracer programs. Therefore, consumers should very skeptical of anyone who claims to be selling a business opportunity authorized by HUD. Additionally, some of these tracer programs claim that consumers can make significant amounts of money by becoming a tracer. Just like any get-rich- quick scheme, consumers should not be taken in by promises of huge earnings.

Before buying any business opportunity, we strongly recommend that consumers take the following steps: (1) ask for a list of everyone who has purchased the business opportunity, and talk to as many purchasers as you can -- beware of sellers who won't give you this information, or who only provide a few names. These may be phony references; (2) ask to see the company's basis for its earnings claims in writing -- beware of companies that cannot provide you with written verification of the earnings claims they make; (3) get specific information about the tasks you need to perform, how you will get paid, by whom and when; (4) get all promises in writing, including any refund policies; and (5) check out the company with the better business bureau, the state attorney general's office or other consumer protection agencies in the state where the company is headquartered and in your own state.

We hope that this joint effort by HUD and the FTC will:

  • Alert consumers that access to any money due to them from the HUD/FHA refund program is free;
  • Help consumers to steer clear of business opportunities that promise big money by becoming HUD tracers;
  • Warn those who use the Internet to sell "HUD Tracer" get-rich-quick schemes that the FTC is on the beat and will not permit deceptive claims about earnings or their affiliation with HUD.

 

Webmaster's Note: FTC Educational Material.