May 15, 2003
Federal and state agencies have filed 45 criminal and civil law enforcement actions against Internet scammers and deceptive spammers, the Federal Trade Commission (FTC) announced.
Also, the FTC and 21 U.S. and international agencies have launched an initiative to get organizations in 59 countries to close the open relays that allow spammers to avoid detection by spam filters and law enforcers.
"Today's Internet is not a lawless environment," said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "In fact, the NetForce partnership demonstrates the importance of enforcement on the Internet beat. We have the biggest impact on deceptive spammers and online scammers when law enforcement agencies band together to root out and prosecute fraud."
The law enforcement actions announced today represent a wide array of deceptive schemes and illegal scams including auction fraud, the illegal sale of controlled substances, bogus business opportunities, deceptive money-making scams, illegal advance-fee credit card offers, and identity theft.
The FTC filed eight district court lawsuits, naming 20 defendants, to halt deceptive Web operations, including:
- Alyon Technologies, Seacaucus, NJ, and TelCollect, Norcross, GA. The defendants allegedly use a modem dialing program to disconnect consumers from their own Internet service providers and reconnect them to the scammers' network without the consumers' authorization or approval.
- College Advantage Inc. of Plano, TX targeted college-bound students and their parents. For a fee of $895, the defendants pledged to procure 100 percent of the funding students would need to attend college. In fact, they procured no money for the students. Instead, they provided consumers with readily available scholarship information that consumers could have obtained free.
- Two different cases involving e-mail chain letters. These schemes promised participants significant earnings, pledged that the scam was legitimate, and urged recipients to contact the FTC's Associate Director for Marketing Practices, who they claimed would vouch for the legality of the illegal schemes. The FTC stopped the illegal schemes, and settlements with the defendants bar them from participating in illegal chain e-mail schemes in the future.
- ClickForMail.Com, Inc. of Austin, TX, allegedly claimed that consumers who paid a one-time fee of $49.95 were guaranteed to receive a "100% unsecured" VISA or MasterCard credit card with a credit limit up to $5,000.00. Consumers who clicked on the "Claim your card NOW," icon on the Web site and entered their checking account information received a confirmation page or e-mail that typically stated, "Approved! Congratulations! Your membership has been approved." In fact, according to the FTC, what consumers received was access to a Web page containing hyperlinks to various companies that purportedly issue credit cards -- a list of hyperlinks that would have been available free to consumers who used a search engine.
- Envelope-stuffing A scheme used spam and Web sites to market a "100% Legal and Legitimate" work-at- home envelope stuffing opportunity. Using deceptive information in the "from" line of their e-mail, the defendants represented that they were affiliated with well-known entities, such as Hotmail and MSN. Marketing materials promised consumers that they would earn $1 for each envelope they stuffed, and could earn as much as $1,500 a week stuffing envelopes supplied by the defendants. What consumers received for their $50 fee was a set of instructions to market a deceptive credit-repair manual.
- "Instant Internet Empires" This work-at-home scheme touted the money-making potential of five pre-packaged Internet businesses, promising that buyers could make more than $115,000 a year using the product. The defendants told consumers that the product would enable them to make money while they sleep. What consumers received for their $47.77 investment was the right to reproduce the defendants' advertising Web site and try to resell its contents to other consumers. To achieve the promised $115,000 in earnings, consumers each would have to sell the product to 2,400 additional consumers, who would each need to sell to 2,400 additional consumers to achieve the same earnings, and so on. According to the FTC, by the third generation of the scheme, participants would need to make a total of 13,829,760,000 sales, more than twice the earth's population, for each of them to achieve the advertised earnings. In fact, many purchasers failed to make even one sale after months of trying.
- Another Web-based scheme was filed under seal. The seal had not been lifted at this writing.
In addition to the FTC cases, 11 other federal and state law enforcers brought 37 law enforcement actions. The agencies include the Attorneys General of Louisiana, Texas, Oklahoma, and Arkansas; the United States Attorneys for the District of New Mexico, the Western District of Louisiana, and the Northern District of Texas; the United States Postal Inspection Service; the Securities and Exchange Commission; Texas State Board of Pharmacy; and the Texas Department of Health.
