FEDERAL TRADE COMMISSION
Washington, DC 20580
Fraud promoters have moved from the back alleys of America to its front porch. Like legitimate businesses, modern con artists now use desktop publishing, the Internet, and sophisticated telemarketing to reach millions of consumers with persuasive messages. Once a local threat, the snake oil salesman now can market fraud on a national--even international--scale.
The good news for consumers and legitimate industry is that law enforcement agencies also have changed with the times. In 1996, the Federal Trade Commission reached out to its partners in government to an unprecedented degree, forming alliances to bring over 200 actions in law enforcement "sweeps" against fraudulent operators. Our partners include: the Federal Bureau of Investigation and the U.S. Postal Inspection Service; the National Association of Attorneys General (NAAG) and the North American Securities Administrators Association (NASAA), and many other state and local authorities. Just as important, the FTC reached out to new partners in the private sector to help "get the word out" to consumers on how to avoid frauds. The lesson learned: coordinated action can have a substantial impact on reducing current frauds and raising consumer awareness.
Congress laid the groundwork for this collaborative approach when it enacted the Telemarketing Consumer Fraud and Abuse Prevention Act of 1994, directing the FTC to issue a Rule governing telemarketing sales and authorizing states to enforce the Rule in federal court. Effective December 31, 1995, the Telemarketing Sales Rule allows state law enforcers to bring suit against fraud operators in federal district court to obtain nationwide injunctions. During 1996, the FTC, the U.S. Postal Inspection Service, and 25 states and the District of Columbia worked together to address telemarketing abuses, sending the message to an audacious fraud industry that more "cops" are on the beat--and that they will work together to stop telemarketing scams. In addition, innovative partnerships with responsive corporations and industry trade associations resulted in massive dissemination of consumer information on a variety of telemarketing scams. The FTC was not alone in trying new solutions: in Operation Senior Sentinel, the Justice Department led several agencies in conducting the largest criminal crackdown on telemarketing fraud in the nation's history.
This report focuses on the FTC's recent consumer protection activities in four areas: telemarketing fraud against older Americans; investment fraud; business opportunity and job placement scams; and consumer finance scams. These areas of fraudulent activity can result in significant financial injury to consumers individually and to the economy as a whole, but they are by no means the only areas of fraud that law enforcement officials and consumers face. Fraudulent or misleading health care products and services and deception in advertising and credit practices are perennial trouble spots that demand--and get--attention.
The FTC is pleased to offer this report in the hope that these collective efforts suggest a roadmap for fighting consumer fraud in the future.
By direction of the Commission.