FTC Targets Internet Auctions

The following is a news release from the Federal Trade Commission, dated Feb. 14, 2000.

"In a coordinated law enforcement initiative targeting con artists that prey on Internet auction users, the Federal Trade Commission, Department of Justice, U.S. Postal Inspection Service, the National Association of Attorneys General and other federal, state and local law enforcers today announced a three-pronged effort to stem the fraud faced by Internet auction-goers. Law enforcement authorities announced that they have taken more than 35 law enforcement actions already and have many more in the pipeline. Tips to the fraud, which involves non-delivery among other offenses, come from auction sites as well as consumers who have been conned.

The Internet auction fraud initiative was announced on the first day of National Consumer Protection Week -- a public/private campaign to provide armchair shoppers with tips for safe shopping from home. The NCPW effort is being spearheaded by the National Association of Consumer Agency Administrators, the National Association of Attorneys General, the National Consumers League, and AARP, in addition to the Federal Trade Commission, the Department of Justice and the U.S. Postal Inspection Service. While the campaign offers suggestions to help consumers who shop online, through catalogs, and by telephone, Internet auction transactions, which attract millions of consumers a year, are a special focus.

"We know that with the dramatic expansion of e-commerce, Internet auction sites are experiencing amazing growth," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "We also know that the number of complaints the FTC has received about Internet auctions is exploding -- from 107 in 1997 to 10,700 in 1999. We want Internet auction users and the online auction industry to know that the e-con artists who capitalize on them are 'going, going, gone'. We don't intend to let a handful of rogues erode consumer confidence in Internet commerce or Internet auctions," Bernstein said.

In conjunction with National Consumer Protection Week, the FTC has launched a three point program combining law enforcement, training of other federal and state law enforcers about how to track and prosecute Internet scammers, and a consumer education campaign to stem consumer fraud in Internet auction transactions. Federal and state enforcers have filed 35 law enforcement cases to date, and are poised to follow up many open investigations with law enforcement. "We've trained state and local law enforcers from Florida to California to seek-out and prosecute Internet fraud," said Bernstein.

"The Internet has created tremendous opportunities for communications and commercial transactions; unfortunately, it has also created new opportunities for cyber rip-off artists intent on ensnaring victims in the World Wide Web," said Assistant United States Attorney Christopher M. E. Painter, the Computer Crimes Coordinator in Los Angeles. "Consumers who use the virtual world to exchange information and to purchase goods should expect the same protections offered in their hometowns. The Department of Justice is committed to working with all federal, state and local law enforcement agencies to aggressively fight computer crime. The United States Attorney's Office in Los Angeles has been in the vanguard of prosecuting Internet auction fraud and other cyber criminals. Federal and state authorities must vigorously pursue these cases to deter those who would exploit new technologies for criminal gain."

"My advice is to first and foremost do a little research before buying anything by mail, phone or over the Internet," said Maryland Attorney General Joe Curran. "Know who you're dealing with and what their policies are, and pay the safest way, which is usually by credit card."

"As the oldest nonprofit consumer organization in the U.S., the National Consumers League (NCL) is committed to working in partnership with the FTC and other law enforcement agencies to stem the tide of online auction abuses and other Internet frauds," said Susan Grant, Director of Internet Fraud Watch operated by the NCL.

The FTC advises consumers who buy items through Internet auctions that they should:

• Identify the seller and check the seller's feedback rating;

• Do their homework. Be sure to understand what they're bidding on, its relative value, and all terms and conditions of the sale, including the seller's return policies and who pays for shipping;

• Establish their top price and stick to it; and

• Evaluate their payment options. If possible, they should use a credit card because it offers the most protection if there's a problem. If the seller doesn't accept credit cards, buyers should consider using an escrow service.

Copies of "Armchair Armor: Shopping Safely From Home," "Internet Auctions, A Guide for Buyers and Sellers,""Going, Going, Gone . . . Law Enforcement Efforts to Combat Internet Auction Fraud" (PDF only), and other consumer education material are available from the FTC's web site at www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll free at 877-FTC-HELP (877-382-4357).