FTC Targets International Net Fraud

The Commission launches initiatives aimed at combating cross-border online consumer scams and fraud against military personnel. The Great Credit Card Bazaar
Posted September 25, 2002
By

Brian Morrissey


With scam artists around the world finding the Internet fertile new ground, the Federal Trade Commission (FTC) announced an international effort to combat online fraud.

The Commission announced online initiatives Tuesday with international law enforcement agencies to root out cross-border fraud in health care and e-commerce. The FTC and the International Marketing Supervision Network (IMSN) announced they had launched a joint project to crack down on Internet health scams.

"Cross-border fraud is a growing problem that hurts consumers and dilutes consumer confidence in the global marketplace," FTC Commissioner Mozelle Thompson said in a statement. "The only way to combat it effectively is to cooperate with our foreign counterparts through international networks such as the IMSN. Consumer protection law enforcers need to work together so that fraudsters know that they cannot escape law enforcement scrutiny by setting up shop in one country and targeting consumers in another."

The international reach of the Internet can bedevil law-enforcement efforts, as evidenced by the proliferation of Internet credit-card fraud rings, which often originate from the former Soviet Republics and Southeast Asia. In March, researcher Gartner Group estimated online credit card fraud alone totaled $700 million.

"It's an enormous problem," said Gartner Group analyst Avivah Litan. "Fraud's at least two and a half times higher internationally. Many merchants stop selling internationally."

The FTC and IMSN also unveiled a revamped www.econsumer.gov, where consumers can file complaints, access information, and contact consumer-protection agencies around the world. More than 2,500 complaints have been filed at the site since its original launch in April 2001.

In the first phase of the push against health-care fraud on the Net, the FTC banded together with their national counterparts in 19 countries to seek out potentially dubious health-related claims on the Internet. The agencies identified over 1,400 Web sites as making potentially fraudulent claims, and then sent them e-mails warning them about their activities. So far, IMSN members have announced legal action or settlements with 45 companies.

The top two complaints to the FTC last year were identity theft and online auction fraud. The Internet Fraud Complaint Center (IFCC), a taskforce of the Federal Bureau of Investigation and National White Collar Crime Center, recorded nearly 50,000 complaints of fraud totaling $17.9 million last year. In addition to online auctions, non-deliverable merchandise and the ubiquitous "Nigerian letter" scam made up the lion's share of complaints.

Separately, the FTC and Department of Defense announced the launch of Military Sentinel, an online consumer complaint system for military personnel and their dependents to file fraud complaints from wherever they are stationed. The system is modeled after Consumer Sentinel, the FTC's current consumer complaint system.






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