U.S. Targets Online Auction Fraud

The U.S. Federal Trade Commission (FTC), Department of Justice, U.S. Postal Inspection Service and National Association of Attorneys General have banded together with other government agencies to aggressively seek out and prosecute perpetrators of online auction fraud.

The new Internet fraud initiative was unveiled Monday, on the first day of National Consumer Protection Week. According to Assistant U.S. Attorney General Christopher M.E. Painter, it is an idea whose time has come.

“The Internet has created tremendous opportunities for communications and commercial transactions,” Painter said. “Unfortunately, it has also created new opportunities for cyber rip-off artists intent on ensnaring victims in the World Wide Web.”

Painter, who is also the computer crimes coordinator in Los Angeles, California, said that consumers who use the Internet to make transactions should be afforded the same protections that are offered in their hometowns. “The Department of Justice is committed to working with all federal, state and local enforcement agencies to aggressively fight computer crime,” he said.

As of Monday, 35 law enforcement actions had been taken against online auctions. More legal action is expected throughout this week.

FTC: Con Artists are “Going, Going, Gone”

The FTC, in conjunction with National Consumer Protection Week, is launching a three-point program that combines law enforcement, training of other federal and state law enforcers to track and prosecute Internet scammers, and a consumer education campaign to stem consumer fraud in Internet auction transactions.

The National Consumer Protection Week concept is a public/private campaign that is designed to provide home shoppers with critical information that will protect them from fraudulent acts. The campaign targets all home-shopping concepts, including catalogs, telephone sales and e-shopping, but its main focus has become Internet auction transactions.

“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.”

Typical of online auction fraud is the case of Robert J. Guest, who was sentenced late last year to 14 months in federal prison for bilking eBay customers out of $37,000 (US$) without delivering anything.

“We want auctions users and the online auction industry to know that the e-con artists who capitalize on them are going, going, gone,” said Bernstein.

eBay Pledges Cooperation

As soon as the ambitious federal anti-fraud initiative was unveiled, eBay responded with its intention to fully cooperate in assisting the law-enforcement consortium by turning over all customer fraud complaints to the protection agencies.

The San-Jose, California-based eBay will provide the FTC with information that can be used by more than 200 law enforcement agencies. Last year, eBay said it handled $2.8 billion worth of business transactions on approximately 129 million items.

According to eBay spokesman Kevin Pursglove, less than one half of one percent of these transactions involved fraud.

Still, Bernstein believes that figure to be unacceptably high. “We don’t intend to let a handful of rogues erode consumer confidence in Internet commerce or Internet auctions. We’ve trained law enforcers from Florida to California to seek out and prosecute Internet fraud. If complaints continue to go up around the country and are expressed to all of us, I’m sure that our friends on Capitol Hill will hear about those complaints as well.”

Meanwhile, the group will rely on tips from auction sites as well as consumers who have been victims of fraud.