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FTC Targets International Net Fraud

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) […]

Written By

Brian Morrissey

Sep 25, 2002

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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.