Five federal
agencies have joined 10 state attorneys general and 11 other state
and local law enforcement agencies to target cyberscams plaguing
the Internet.Led by the Federal Trade Commission, Federal Bureau
of Investigation, U.S. Postal Inspection Service, Securities and
Exchange Commission and the Commodity Futures Trading Commission,
the Midwest NetForce announced July 30, at least 19 civil and
criminal law enforcement actions against scammers who have bilked
tens of thousands of consumers out of millions of dollars.
"Scams
on the Internet spread very quickly," said J. Howard Beales
III, director of the FTC's Bureau of Consumer Protection. "That's
why the FTC and our partners are moving aggressively to shut these
schemes down."The FTC asked a federal district court judge
to shut down an operation that used spam (unsolicited e-mail)
and Internet Web sites to advertise an envelope stuffing work-at-home
opportunity.
According
to the FTC, in exchange for $40, the defendants promised to provide
consumers with sales letters and pre-stamped, pre-addressed envelopes,
and consumers would earn $2 for every envelope stuffed. Consumers
who sent their money didn't receive envelopes. If they received
anything - and many didn't - they got materials urging them to
solicit self-addressed envelopes from third parties and forward
them to the defendants.The FTC told the court the "Stuffing
for Cash" defendants likely cheated tens of thousands of
consumers out of more than $2 million in the past year. The judge
prohibited the defendants from engaging in further deceptive practices
and froze their assets, pending trial.
In another
FTC case, an operator used the Internet to advertise his "discount"
web hosting services, such as domain name registry, Web page design
and technical support, for monthly service fees of $10 to $15.
Consumers provided credit card numbers so they could be billed.
The FTC alleged the defendant, Brian Kruchten, doing business
as Page Creators, crammed additional unauthorized charges onto
consumers' credit cards for supposed "excess bandwidth"
use.
The district
court froze the defendant's assets and appointed a receiver, pending
trial. The defendant and the receiver later agreed to shut down
the defendant's Web hosting business. The defendant now has agreed
to settle the FTC charges. The settlement bars Kruchten, for five
years, from owning or controlling any business that handles consumer
credit or debit card transactions, unless he first obtains a performance
bond of $100,000.Based on financial declarations of the defendant,
the settlement requires consumer redress in the amount of $6,000.
Should the
financial statements be found to be inaccurate, $100,000 will
be due. The settlement also bars the resale of customer lists
and contains recordkeeping requirements to allow the FTC to monitor
compliance with the provisions of the order.Copies of the complaints,
judgments and orders, and the consumer publications are available
from the FTC's Web site at www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600
Pennsylvania Avenue, NW, Washington, DC 20580. To file a complaint,
call toll-free 1-877-FTC-HELP (1-877-382-4357), or use the complaint
form at www.ftc.gov.
By René Tankersley
