Scam Operations Caught in the Cross-Hairs
Law enforcers from both sides of the border have taken aim at Canadian telemarketers who target U.S. citizens for cross-border scams. In a series of coordinated crackdowns, the Federal Trade Commission and 17 Canadian and U.S. law enforcement and consumer protection agencies have unleashed criminal and civil law enforcement initiatives to stop the schemes and recover money for victims, many of whom are elderly.
"Cooperation between Canadian and U.S. law enforcers is allowing us to track down the operators and put a stop to their scams,"said Timothy J. Muris, Chairman of the FTC. "Our law enforcement partnerships across borders make it tougher for cross-border scam artists to ply their deceitful trade."
In a statement issued from Ottawa, Konrad von Finckenstein, Commissioner of Canada's Competition Bureau said that, "Our cross-border partnerships linking the Competition Bureau, other Canadian law enforcement agencies, the FTC, the United States Postal Inspection Service, as well as the FBI have proven to be extremely effective in combating cross-border fraudulent telemarketing. We will continue to work closely together to fight this criminal behavior."
Many of the cases highlighted today involved extensive cooperation between Canadian and U.S. law enforcement agencies, including coordination in accumulating evidence, collecting victim statements, and initiating civil and criminal proceedings. Fraud schemes targeted by the cases included illegal international lottery scams, phony advance-fee credit card offers, and bogus credit card loss-protection schemes.
International lottery and prize scam operators frequently target elderly consumers. Many claim that consumers are "guaranteed" to win; others are told they have already won. Victims are told that in order to redeem their "winnings" they must first send money - described variously as taxes, duties, or currency conversion costs - to the defendants. Consumers commonly pay hundreds or thousands of dollars, and in many cases, they are contacted multiple times to send more and more money. In some cases, the scam artists also operate "recovery rooms," where telemarketers contact the same consumers who have lost money in the lottery scam and claim that they can recover their money - for a fee. Buying and selling foreign lottery tickets is illegal in the United States.
In advance-fee credit card scams, consumers are told that for an advance fee - usually several hundred dollars - they will receive a low-interest credit card. Sometimes the consumers get nothing. Other times they only receive a list of banks and a booklet of tips on how to obtain a credit card.
Credit card loss-protection promoters use scare tactics and deception to scam consumers into buying worthless "insurance." Some tell consumers that laws limiting consumers' credit card liability in case of unauthorized use have been changed, and that consumers now stand to lose thousands of dollars if their cards are lost or stolen. Some tell consumers that computer hackers can access credit card numbers, or that computer "bugs" make it easy for thieves to place unauthorized charges on credit card accounts. Then they sell them "insurance," sometimes for hundreds of dollars. Consumer liability for unauthorized charges resulting from lost or stolen credit cards is limited to $50 by federal law
All of the scams violate the FTC Act, the Telemarketing Sales Rule, and Canadian federal and provincial laws.
In the U.S., cases were brought by the FTC and U.S. Department of Justice, while proceedings in Canada involved law enforcers in Ontario and British Columbia. Through the Strategic Partnership, the FTC's Midwest regional office coordinates law enforcement actions predominantly targeting Toronto-based telemarketing fraud. Strategic Partnership members include: the FTC, U.S. Postal Inspection Service, Toronto Police Service Fraud Squad, Ontario Provincial Police Anti-Rackets Section, Canada's Competition Bureau, Ontario Ministry of Consumer & Business Services, and the PhoneBusters National Call Centre. The Strategic Partnership also coordinates with DOJ's Office of Foreign Litigation, the Ohio Attorney General's Office, and the York, Canada Regional Police Service.
Project Emptor is a cooperative arrangement coordinated by the Royal Canadian Mounted Police that teams Canadian and U.S. law enforcers, including the FTC's Northwest Region, to target scams that emerge from Vancouver-area boiler rooms. Emptor participants include: the FTC, British Columbia Ministry of Public Safety and Solicitor General, RCMP's Vancouver Commercial Crime Section, FBI (Los Angeles), U.S. Attorney's Office (Los Angeles), and Canada's Competition Bureau. Project Emptor also coordinates with the U.S. Customs Service, DOJ's Office of Foreign Litigation, and Canada Customs and Revenue Agency. Project Colt, the Montreal-based telemarketing fraud task force coordinated by the RCMP, which also includes many of the agencies associated with Project Emptor and the Strategic Partnership, was not involved in any of the cases highlighted today.
In order to focus its efforts in combating cross-border fraud, the FTC's Bureau of Consumer Protection recently announced the creation of an International Division of Consumer Protection. At the same time, the FTC and Canada's Competition Bureau announced that they have adopted a protocol for sharing complaint and investigation information to make pursuit of cross-border fraud operators faster, more efficient, and more effective. This protocol will streamline and enhance cooperation under previously adopted agreements.
The FTC and five other members of the Strategic Partnership have developed a brochure, "Hang Up on Cross-Border Phone Fraud," to help consumers avoid telemarketing scams. The FTC's partners in this consumer education effort include Canada's Competition Bureau, the Ontario Ministry of Consumer and Business Services, the Ontario Provincial Police Anti-Rackets Investigation Bureau, the Toronto Police Service, and the U.S. Postal Inspection Service.
The FTC and the U.S. Customs Service recently released a consumer alert, "Custom-ized Cons," that warns about calls from telemarketers posing as Customs agents and requesting payment of taxes and fees in order to release a prize or package that supposedly is being held at the U.S.-Canada border for the consumer. Consumers are urged to wire funds to facilitate immediate release of the prize. The alert follows apparent proliferation of the scheme, based on evidence collected by a U.S. Customs officer assigned to Project Colt in Montreal and confirmed by data compiled in the FTC's Consumer Sentinel system. The investigative jurisdiction of the U.S. Customs Service includes financial crimes perpetrated by mail, wire, or phone that cross the U.S. borders.
Copies of the legal documents related to these cases and the brochures, "Hang Up on Cross-Border Phone Fraud" and "Custom-ized Cons," 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. 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.
Office of Public Affairs
C. Steven Baker Director,