Feds Warn About Online Scams

Reminding consumers that they should always be on guard when online, federal regulators announced today an education and law enforcement push against the top Internet scams.

Ranging from fraudulent auctions to mystery phone charges, the Federal Trade Commission listed the “Top Ten Dot-Cons” targeting Internet users.

The FTC has been working with an international coalition this year to stamp out Web scams through lawsuits and an online education campaign.

It’s a New World Online

“The Internet has changed the way consumers gather information, shop and do business,” Jodie Bernstein, the FTC’s director of consumer protection, said at the kick-off address. “It’s also changed the way law enforcers and consumer protection agencies do business.”

The FTC said 251 law enforcement actions had been brought by federal agencies against online scammers this year, and offered details about 18 of them.

In four cases, the FTC alleges that the defendants participated in online auctions without delivering the goods after payment. In another three cases, adult Web sites are accused of charging customer credit cards for services that were never ordered.

In a unique case, the defendants sent $3.50 “rebate” checks to consumers. When the checks were cashed, the consumers unwittingly agreed to allow the defendants to be their Internet service provider. Monthly charges started appearing on the victim’s phone bills that were difficult to remove.

Very Old Tricks Made New

Regulators warned consumers about Web sites that advertise a free “viewer” or “dialer” program to access free adult material. Without the victim’s knowledge, the program disconnects their computer from their Internet provider and makes an international call — typically to the Caribbean — to another Internet provider, racking up large toll charges on the victim’s phone bill.

Scammers are targeting small business owners and stock traders, too. Some consumers have used day trading services that promise “huge returns” in predicting the market, later finding that the claims were inflated. Many online business and franchise opportunities turn out to be flops as well.

Several of the FTC’s highlighted scams are very old tricks made new because of the Internet. Miracle products, credit card theft and old-fashioned pyramid schemes are getting a new life online, which means consumer protection agencies have to go there too.

“We want dot-con artists to know that consumer protection spans the globe — physically and in cyberspace,” Bernstein said.

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