International Coalition Tackles Net Fraud

The U.S. Federal Trade Commission (FTC) announced Thursday that 150 organizations in 28 nations have pledged to join forces to tackle Internet fraud.

FTC Bureau of Consumer Protection chief Jodie Bernstein described the cooperative effort as the largest of its kind. “Internet con artists are bad actors without borders. We want them to know that the borderless Internet marketplace is not a free zone,” Bernstein said.

In the U.S., 7 federal agencies, 34 Attorneys General and 39 Better Business Bureaus have agreed to participate by methodically sweeping the Web for phony “get-rich-quick” schemes.

Sweeping the Net

The effort, dubbed “GetRichQuick.Con” — a play on the “dot-com” in Internet domain names — has already started, Bernstein said. The FTC recruited investigators via e-mail and posted a step-by-step manual for collecting evidence on a password-protected Web site. The goal is to scan the Net for bogus work-at-home offers, business opportunity scams, pyramid schemes, illegal lotteries and other cons.

The watchdogs forward their findings to the FTC, which is spearheading the project. So far, more than 1,600 Internet sites have been identified as suspects for just one week in late February.

The group is currently e-mailing warnings to suspect sites, providing a link to www.consumer.gov, where the U.S. government has posted information on fraud laws. The investigators will continue to monitor those sites while surfing the Web for other potential offenders.

Legal action will be taken to shut down sites that fail to comply with the law, Bernstein said.

Tracking Down the Culprits

The FTC did not specify how it will determine which government agency or even which country should pursue a particular site that is suspected of illegal activity. Questions about how to enforce laws on the Internet — which recognizes no national borders — have been debated in international bodies such as the European Union (EU) and the World Trade Organization (WTO) for more than a year.

While many Internet issues have yet to be resolved, most major countries already have basic laws against fraud that could arguably be applied to Web site operators.

The main hurdle to overcome is the difficulty in physically locating the people behind the Internet fraud. Reportedly, the U.S. Department of Justice (DOJ) and the Department of Commerce, which operates the FTC, have repeatedly asked Congress for more money to spend on improving methods for tracking down Internet lawbreakers.

Several bills that are awaiting action in the U.S. Congress would make domain name registrars responsible for aiding law enforcement officials when owners of fraudulent businesses are sought. However, the domain registrars would have some power to protect themselves from this obligation.

Even if the registrars were to fully cooperate with law enforcement officials, many experts acknowledge that tracking down criminals on the Web would be a major challenge. Because site operators have the option of supplying false contact names and addresses when registering domain names, the Internet’s anonymity cannot easily be breached.