The Internet is quickly becoming the marketplace of choice for deceitful telemarketers and a new generation of fraud that uses increasingly sophisticated technology, according to a report issued today by the Federal Trade Commission. The Internet allows fraud promoters to mimic legitimate businesses more convincingly and reaches potential victims more efficiently than ever. The report, "Fighting Consumer Fraud: New Tools of the Trade," highlights the FTC's recent experience with fraud in cyberspace: how it occurs and how the agency has refashioned the "tools" of its trade to fight it.
In 1997, cyberfraud accounted for a relatively small percentage of total consumer complaints, the FTC report stated. But, with electronic commerce increasing and the number of people online skyrocketing, it is taking on increasing importance for consumer protection authorities. The FTC is expanding its enforcement and education efforts to encompass high tech schemes as well as traditional scams.
"The actions taken between the FTC and its partners have been very effective thus far in fighting consumer fraud," said FTC Chairman Robert Pitofsky. "But with increased activity on the Internet, scam artists are coming up with inexpensive and efficient ways to reach vast numbers of consumers. The FTC and its law enforcement partners, using technology for enforcement, detection, deterrence and education, will continue our full-fledged campaign."
The report highlights the efforts led by the agency to continuously fight fraudulent pyramid schemers, bogus work-at-home promoters, spurious health and weight loss claims, investment offerings, would-be inventors, business opportunity and international lottery scams. Alliances between the FTC and its federal and state law enforcement partners resulted in 374 actions against fraudulent operators in 1997. The FTC filed over 50 major lawsuits against fraudulent operators. The Commission's cases alone stopped alleged fraud that cost consumers over $185 million in 1997 and more than $747 million over the lifetime of the scams. In addition, the FTC and its law enforcement partners conducted 11 major "sweeps" that targeted numerous marketers of particular types of fraud, followed up by extended consumer education campaigns. These accomplishments were based on hard work and collaborative efforts between the FTC, other federal agencies, state Attorneys General, foreign governments and civil-criminal cooperation.
In conclusion, according to the report, today's con artists are still pitching sure-fire cures, easy money, and self-improvement. But they are no longer confined to traditional venues to perpetrate their frauds. The Internet, a popular new channel of communication and commerce, poses many challenges beyond the mere control of fraud, not the least of which is the potential for invasion of privacy. The FTC is currently working to meet the challenges that the Internet poses for safe and secure transactions.
The Commission vote to release the Second Annual Fraud Enforcement Report of the Federal Trade Commission was 5-0.
Copies of the report are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC Matter No. P974903)