In its 100th law enforcement action targeting deception on the Internet, the Federal Trade Commission has asked a U.S. District Court Judge to halt a Internet scam that clones everyday Web sites and uses the copycat sites to barrage unsuspecting consumers with pornography. According to the agency, the scammers copy existing Web sites and insert coded instructions in the copycat sites which automatically redirects unwitting consumers to adult sites operated by the defendants. Then the scammers disable the browser's "back" and "exit" commands so that Internet surfers trying desperately to escape the pornographic images face screen after screen of similar material and advertisements for other adult sites. The FTC obtained a preliminary injunction from the United States District Court for the Eastern District of Virginia and is seeking a court order to permanently purge this scam from the Internet.
"These operators high-jacked Web sites, 'kidnapped' consumers and held them captive," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "They exposed surfers, including children, to the seamiest sort of material and incapacitated their computers so they couldn't escape. They copied as many as 25 million Web pages from sites as diverse as the Harvard Law Review and the Japanese Friendship Garden. When consumers used search engines to find subjects as innocent as 'kids on the net,' 'news about Kosovo,' or 'wedding services,' they risked being exposed to a torrent of tawdry images. This scam is outrageous and we want it off the Internet. We're confident the court will help us arrange that."
Bernstein explained the scheme at a press conference in Washington, D.C. where she also announced the FTC's new high-tech Internet Lab that will assist the agency's investigators as they search for fraud and deception on the Web.
According to the complaint, in a practice called "pagejacking," the defendants made exact copies of Web pages posted by unrelated parties, including the imbedded text that informs search engines about the subject matter of the site. Then they made one change that was hidden from view: they inserted a command to "redirect" any surfer coming to the site to another Web site that contained sexually-explicit, adult-oriented material. Internet surfers searching for subjects as innocuous as "Oklahoma tornadoes" or "child car seats" would type those terms into a search engine and the search results would list a variety of related sites, including the bogus, copycat site of the defendants. Surfers assumed from the listings that the defendants' sites contained the information they were seeking and clicked on the listing. The "redirect" command imbedded in the copycat site immediately rerouted the consumer to an adult site hosted by the defendants. Once there, consumers were victimized by another scam. The defendants "mouse trapped" consumers by incapacitating their Internet browser's "back" and "close" buttons, so that while they were trying to exit the defendants' site, they were sent to additional adult sites in an unavoidable, seemingly endless loop.
Bernstein speculated that the high rate of traffic generated by the "kidnapped" surfers allowed the defendants to charge premium prices for the banner ads displayed at their site. In addition, the defendants may have received income from diverting surfers to other adult oriented Web sites.
This case was investigated and evidence was gathered in the FTC's new Internet lab. The lab was established to provide agency lawyers and investigators with hi-tech tools to investigate hi-tech consumer problems. It allows investigators to search for fraud and deception on the Internet in a secure environment. To capture Web sites that come and go quickly, the lab also will provide FTC staff with the necessary equipment to preserve evidence for presentation in court.
The defendants charged in the FTC complaint are foreign nationals, Carlos Pereira, individually and doing business as "atariz.com," "Atari Corp.," "PremiaNet Corp.," and "Piratelynx.com"; W.T.F.R.C. Pty. Ltd., also doing business as Kewl Photographies, Kool Images, "taboosisters.com," "taboohardcore.com," and "tabooanimals.com"; and Guiseppe Nirta, individually and as a director and secretary of W.T.F.R.C.
This case illustrates both the ease with which scam artists abroad can use the Internet to target consumers in the U.S. and the importance of cooperation between consumer protection agencies in different countries. The Australian Competition & Consumer Commission has rendered invaluable assistance to the FTC in its investigation. The two agencies have coordinated their enforcement efforts in the past and will continue to work together. The FTC also was assisted by the Portuguese Instituto do Consumidor. This type of cross-border coordination is critical to ensuring that national boundaries do not insulate perpetrators of Internet fraud.
The Commission vote to file the complaint was 4-0. It was filed in U.S. District Court for the Northern District of Virginia on September 13, 1999.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaint are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
Paul Luehr, Stephen L. Cohen or Dean C. Forbes
Bureau of Consumer Protection
202-326-2236, 202-326-3222 or 202-326-2831
(FTC File No. 992 3264)
(Civil Action No. 99-1367-A)
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