Consumer Protection Agencies from Around the World Meet in Finland to Combat Cross-Border Fraud

The Federal Trade Commission and members of the International Consumer Protection and Enforcement Network (ICPEN) will meet beginning March 22, 2004, in Saariselkä, Finland, to discuss continuing international efforts to combat cross-border fraud. ICPEN announced the results of its "Too Good to be True" sweep, an international Internet initiative involving the FTC and 23 additional ICPEN consumer protection agencies which surfed the Internet for Web sites that may be misleading consumers with get-rich-quick schemes, bogus work-at-home opportunities, and fake "free" offers. The FTC participated in the surf, issuing warnings to potentially fraudulent Web site operators.

ICPEN members also discussed the ongoing progress of the network's econsumer.gov alternative dispute resolution (ADR) pilot project, begun in October 2003. The econsumer.gov Web site, which was launched in April 2001, allows consumers to file cross-border e-commerce complaints, access consumer education materials, and contact consumer protection agencies around the world. Consumers can access econsumer.gov's data in English, French, German, Spanish, and Korean. Theeconsumer.gov complaint database currently contains more than 10,000 complaints. The ADR pilot project enables a consumer who visits econsumer.gov conveniently to refer his or her cross-border complaint to an ADR services provider, who will attempt to resolve the complaint for free, or at a very low cost. Participating providers include the Better Business Bureau (U.S. and Canada), SquareTrade (other countries), the Electronic Commerce Promotion Council of Japan (Ecom) and the Korea Consumer Protection Board.

"The complaints we have received at econsumer.gov tell us that our international efforts are working," said FTC Commissioner Mozelle W. Thompson, who heads ICPEN's U.S. delegation. "The FTC's continuing work with ICPEN and econsumer.gov enables us to learn more about consumer complaints from around the world and how we can prosecute cross-border cases. At the same time, consumers are learning more about their rights and gaining access to additional remedies. The ADR pilot project will enhance cross-border enforcement cooperation and boost consumer confidence worldwide."

ICPEN members also discussed the role the network can play in implementing the cross-border fraud guidelines issued by the Organization for Economic Cooperation and Development (OECD) in June 2003. The guidelines outline broad principles for international law enforcement coordination, as well as specific information about how countries can best work together in conducting joint investigations. They also invite private-sector cooperation in combating cross-border fraud, and set the stage for future discussions regarding consumer redress. The guidelines can be found on the OECD's Web site at www.oecd.org/sti/crossborderfraud. "The OECD guidelines reflect an international commitment by consumer protection law enforcement agencies to work together to fight cross-border fraud," said Commissioner Thompson.

ICPEN is a network composed of the consumer protection agencies in 31 countries - Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Estonia, the European Union, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Republic of Korea, Latvia, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, the OECD, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, the United Kingdom, and the United States. In the fall of 2004, the network's presidency will move from Finland to the United Kingdom.

In addition, the FTC today released a report detailing consumer cross-border fraud complaints and listing the top complaint categories consumers reported in 2003. The report was compiled from the FTC's Consumer Sentinel database, which receives contributions from numerous sources, including phone and web complaints to the FTC, Canada's PhoneBusters, the National Consumers League, and econsumer.gov. The report found that total cross-border fraud complaints from U.S. consumers jumped from 30,798 in 2002 to 45,066 in 2003. Total cross-border complaints represent 14 percent of all non-identity theft-related fraud complaints in 2003.

Forty-two percent of the total complaints came from U.S. consumers against companies located in foreign countries other than Canada, while 35 percent of the complaints were lodged by consumers against companies located in Canada. By comparison, in 2003, complaints against Canadian companies represent more of the total complaints than any other category. Nine percent of the complaints came from foreign consumers against companies located in the U.S. or Canada, another nine percent came from Canadian consumers against U.S. companies, and five percent came from Canadian consumers against companies located in other foreign countries.

The top products or services for cross-border fraud complaints from U.S. consumers include:

• Prizes/sweepstakes/gifts - 25%
• Foreign money offers - 19%
• Internet auctions - 16%
• Advance-fee loans - 11%
• Catalogue sales/shop-at-home - 10%
• Lotteries/lottery ticket buying clubs - 10%
• Business opportunities/franchises/distributorships - 1%

The top subjects for econsumer.gov complaints include:

• Catalogue sales/shop-at-home - 40%
• Internet auctions - 14%
• Computers: equipment/software - 10%
• Lotteries - 6%
• Foreign money offers - 5%
• Internet access/portal services - 4%
• Credit cards - 3%
• Clothing - 3%
• Cars - 3%
• Adult sites - 2%
• Travel/vacation/holidays - 2%

The FTC established Consumer Sentinel in 1997 in conjunction with the National Association of Attorneys General and Canada's PhoneBusters. Consumer Sentinel currently provides over 900 law enforcement agencies in the U.S., Canada, and Australia with access to more than one million complaints, enabling countries to coordinate their investigations against cross-border fraudsters.

The FTC offers the following tips to protect consumers from cross-border fraud:

• Ignore all mail and phone solicitations from foreign lottery promotions. If you get what looks like lottery material from a foreign country, turn it over to your local postmaster in the U.S. or to the Competition Bureau in Canada. In both the U.S. and Canada, playing a foreign lottery is against the law.
  
  
• Ignore any ad that guarantees a loan in exchange for an advance fee. Legitimate lenders never "guarantee" that you will receive a loan before you apply, especially if you have bad credit or no credit record.
  
  
• Don't share personal information. Never give out your credit card, bank account, or Social Security number unless you are familiar with the company and know why the information is necessary.
  
  
• Remember that "free" means free. Never agree to pay for a so-called "prize."

Copies of the FTC's cross-border fraud report are available on the Consumer Sentinel Web site, www.consumer.gov/sentinel, , and on www.econsumer.gov. The FTC currently is working with agencies worldwide to combat cross-border fraud on a global scale. For more information, including the FTC's Five-Point Plan for Fighting Cross-Border Fraud, visit the FTC's Cross-Border Fraud Web site at www.ftc.gov/crossborder.

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.