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Law Enforcers Target "Top 10" Online Scams
Consumer Protection Cops From 9 Countries, 5 U.S. Agencies, And 23 States Tackle Internet Fraud
October 31, 2000
In a year-long law enforcement effort targeting the top 10 Internet scams, 5 U.S. agencies, consumer protection organizations from 9 countries and 23 states today announced 251 law enforcement actions against online scammers in "Operation Top Ten Dot Cons." The top 10 scams were culled from Consumer Sentinel, a database of more than 285,000 consumer complaints established and maintained by the Federal Trade Commission and accessible to more than 240 consumer protection agencies in the U.S. - including every state attorney general - and Canadian and Australian law enforcers. The FTC and the United Kingdom's Department of Trade and Industry, and Office of Fair Trading today announced an information sharing and coordination agreement to combat cross-border fraud. The top 10 targeted scams were:
"The Internet is revolutionizing the way we gather information, shop and do business," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "This collaboration with law enforcement agencies, industry and consumers will create a climate where e-commerce can be conducted with confidence. We want the dot con artists to know that we're building a consumer protection coalition that spans the globe. We aim to make the 'Net safe for consumers," she said.
Announcement of the international law enforcement effort was made in conjunction with a meeting of the International Marketing Supervision Network (IMSN), a group consisting of consumer protection enforcement authorities from 29 countries. The IMSN facilitates practical actions to prevent and redress deceptive marketing practices with an international component. As the current IMSN president, the FTC is seeking to increase the level of international coordination to protect consumers in an increasingly global marketplace.
Participants in "Operation Top Ten Dot Cons" include consumer protection agencies from Australia, Canada, Finland, Germany, Ireland, New Zealand, Norway and the United Kingdom and the United States. U.S. agencies include the Commodity Futures Trading Commission, the Department of Justice, the Federal Trade Commission, the Securities and Exchange Commission and the United States Postal Inspection Service. Cases were brought by the Attorneys General of Arizona, Colorado, Florida, Iowa, Illinois, Indiana, Louisiana, Massachusetts, Maryland, Michigan, Missouri, North Carolina, New Jersey, Nevada, Ohio, Oregon, Pennsylvania, Tennessee, Texas, and Washington State. Consumer protection offices in West Virginia, and Wisconsin also took action, as did the Louisiana Department of Justice, the Oklahoma Department of Securities, and the Washington State Securities Division,
Four FTC cases filed in U. S. District Court charge defendants with operating Internet auction scams. The complaints allege that the defendants advertised computer software and electronic consumer goods at various e-auction sites, took cashier's checks or money orders in payment but never delivered the goods. In three of those cases, the FTC has asked for assets to be frozen for consumer redress. In all of the cases, the FTC is seeking a permanent injunction on acts that violate the FTC Act and the Mail and Telephone Order Merchandise Rule.
In a unique FTC Internet cramming case announced today, defendants mailed $3.50 "rebate" checks to consumers. When consumers cashed the check, they were unwittingly agreeing to allow the defendants to be their Internet Service Provider, and the defendants started placing monthly charges on their telephone bills. The defendants made it nearly impossible to cancel future monthly charges and receive refunds. Stipulated permanent injunctions bar the billing behavior in the future and the amount of consumer redress is now being calculated.
A variation on cramming involves "Web cramming" - billing consumers for a Website page they didn't even know they had. Targeting small businesses and not-for-profit organizations, the scammers call and offer a "free" Web page, then start billing phone bills without authorization. Five settlements with defendants charged with Web cramming bar the practices. A sixth defendant will also pay more than $3 million in consumer redress.
In three other matters, complaints were filed in U.S. District Court charging the operators of adult-oriented Web sites and their principals with cramming - billing consumers credit cards or phone bills for services they did not order or authorize. The FTC has asked the courts to shut down the adult sites and freeze the assets of two, pending trial. The agency will seek permanent injunctions and will seek to provide redress to thousands of consumers who have been billed without authorization.
The FTC announced the filing of one complaint targeting a work-at-home medical billing scam that allegedly made deceptive earnings claims on the Internet and in print ads to promote its $369 package of "training, software and clients." The agency asked the court to stop the deceptive practices, appoint a receiver and freeze the defendants' assets, pending trial.
Two other FTC cases announced today involve Web site operators who illegally promised quick riches with little risk to consumers who would sign up for their day trading programs and products. The companies have agreed to settle Federal Trade Commission charges that their claims were deceptive in violation of federal law. The settlements require substantiation for any future earnings claims; bar misrepresentations about day trading risks; and require conspicuous disclosure of the high-risk nature of day trading and bar the deceptive use of testimonials.
This year, the participants in this law enforcement effort have brought 251 cases, including 77 by the SEC, and a total of 54 FTC cases, including the 18 cases announced today - one of which remains under seal.
As part of the ongoing Internet law enforcement initiative, the FTC has trained more than 700 law enforcement and consumer protection officials from 20 different countries, including 17 federal agencies, 25 state governments and 14 Canadian consumer protection offices in online investigation and law enforcement techniques in locations ranging from Anchorage, Alaska to Paris, France.
A list of the FTC cases announced today is attached.
FTC v. Para-Link International, Inc., AAA Family Centers, Inc., The Liberty Group of America, Inc., Deborah R. Dolen, Matthew See, and Judy Graves (Middle District of Florida, Tampa Division)(Made Public on October 23, 2000)
FTC v. Western United Service Corporation d/b/a Titan Business Solutions and Scott Ford (Central District of California).
FTC v. Automated Transaction Corp.; WWW Provider Co.; Edward S. Lipton; World Telnet, Inc.; and Donald Tetro (Southern District of Florida)
FTC v. Cyberspace.com, LLC; French Dreams; Coto Settlement; Electronic Publishing Ventures, LLC; Olympic Telecommunications, Inc.; Ian Eisenberg; and Chris Hebard (Western District of Washington).
FTC v. Computers By Us, Inc., also d/b/a Fenceway Computers and Tweekable Computers; Jeffrey M. Wesko; Wanda M. Wesko; and Richard A. Wesko, Jr. (District of Maryland, Northern Division)
Complaint [PDF 766K]
FTC v. Michael Dewhurst Individually and Doing Business As Empire Designs (District of Massachusetts)
FTC v. Auctionsaver, LLC; Richard Phim; Carman Lee Caldwell; Shade Delmer, aka Shane Delmer; and Naomi Ruth Anderson (Southern District of California)
Complaint [PDF 20K]
In the Matter of WFS Enterprises, Inc. d/b/a The Cash Nursery, and Rabb Sabin and Arthur Smith (File No. 002 3025)
In the Matter of R.S. of Houston Workshop, Ronald J. Schoemmell, and Valdimar Thorkelsson (File No. 002 3024)
FTC v. RJB Telcom, Inc.; Robert J. Botto, Jr.; Suzette Botto (Relief Defendant); Richard D. Botto; and Anne Botto (Relief Defendant) (District of Arizona, Phoenix Division)
FTC v. Verity International, Ltd., Integretel, Inc., eBillit, Inc., Robert Green, and Marilyn Shein (Southern District of New York) (Made public on October 5, 2000)
FTC v. Ty Anderson; 583 665 B.C. Ltd.; Virtualynx Internet, Inc.; and Charlo Barbosa (Western District of Washington at Seattle).
FTC v. YP.Net, Inc.; Telco Billing, Inc., d/b/a Yellow-Page.Net; Publication Management, Inc.; Michael K. Bloomquist; Joseph T. Carlson; William D. O'Neal; Gregory B. Crane; and Rebecca L. Bloomquist, Karina Carlson, Elizabeth O'Neal, and Laura Crane (Relief Defendants) (District of Arizona, Phoenix Division).
Complaint [PDF 24K]
FTC v. Mercury Marketing of Delaware, Inc., and Neal D. Saferstein
Complaint [PDF 13K]
FTC v. Wazzu Corporation, et al. (Central District of California, Southern Division)
Stipulated Final Order [PDF 60K]
FTC v. Webviper, LLC, et al. (Middle District of Alabama) (Made public on June 17, 1999)
FTC v. Shared Network Services, LLC, et al. (Eastern District of California)
FTC v. Webvalley, Inc., a Minnesota Corporation, et al. (District of Minnesota)
The above article was reprinted from an announcement on the Federal Trade Commission web site dated October 31, 2000. Check the FTC web site for any changes to the article.
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