*Law Enforcers Target Internet Auction Fraud

The Federal Trade Commission, Department of Justice, U.S. Postal Inspection Service, National Association of Attorney Generals and other federal, state and local law enforcers yesterday announced a three-pronged effort to stem the fraud Internet auction-goers face regularly.

The law enforcement initiative — aimed squarely at people who fraudulently sell products on Internet sites — combines 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.

The initiative was announced on the first day of the 2nd Annual National Consumer Protection Week. This campaign, dubbed “Armchair Armor: Shopping Safely From Home,” began yesterday and runs through Saturday, and is designed to provide armchair shoppers with tips for safe shopping from home. The NCPW effort was spearheaded by the National Association of Consumer Agency Administrators, the NAAG , the National Consumers League and the AARP, in addition to the FTC, the DOJ and the U.S. Postal Inspection Service.

According to the FTC, while the NCPW 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, in a teleconference. “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.”

During the teleconference, law enforcement authorities also announced that they have taken more than 35 law enforcement actions already on fraudulent Internet auctioneers — and have many more in the pipeline.

“We’ve trained state and local law enforcers from Florida to California to seek-out and prosecute Internet fraud,” said Bernstein.

Fraudulent activity can involve non-delivery, where customers bid for something from a seller on an auction site, and the fraudulent seller takes the consumer’s money, but the consumer doesn’t get what they bid on. In addition, they may receive merchandise that is not as it was described or they do not receive it in a timely manner — these actions can also be considered fraudulent.

Tips to these fraudulent activities have come to the attention of the law enforcement agencies through surfing auction sites themselves, as well as from consumers who have contacted agencies after they have been conned. “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 Christopher M. E. Painter, an assistant U.S. attorney in Los Angeles who participated in the teleconference on behalf of the DOJ.

Painter said that he was involved in investigating and prosecuting one of the first Internet auction cases in the country. In that case, the defendant, Blue Jay, California-based Robert J. Guest, collected $36,000 from bidders over eBay’s Internet auction site then failed to deliver promised goods. He subsequently was sentenced to 14 months in prison. Guest, who pleaded guilty to fraud in July, was also ordered to pay more than $101,000 in restitution, $36,193 of which will go to 31 eBay users.

Painter said that his office, along with a task force comprised of the FBI, the Orange County Sheriff’s department in California, and the U.S. Postal Inspection Service, used a combination of traditional and cyber investigative methods. The group, for example, looked at Guest’s digital footprint that he left on the auction site and the Internet Service Provider he was using. He said his office, along with other agencies, are currently investigating several additional Internet auction fraud cases right now, and several others are being investigated at the state and federal levels across the country.

Prior to the Internet, auction fraud was simply not a problem, said Painter. “You could talk to the seller, you could talk to the buyer, you could inspect the merchandise,” he said. “In the online world, however, you don’t know who the seller is, you don’t where he is, you don’t even know if the merchandise exists at all. And all to often, it does not.”

Painter said the DOJ is committed to working with all federal, state and local law enforcement agencies to aggressively fight computer crime, and that the U.S. Attorney's office in Los Angeles has been prosecuting Internet auction fraud and other cyber criminals for a while.

“Federal and state authorities must vigorously pursue these cases to deter those who would exploit new technologies for criminal gain,” he said.

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