A Federal Trade Commission (FTC) initiative which brings together eight state law enforcement agencies and four agencies from Canada to fight deceptive spam and Internet fraud is beginning to bear fruit.
The FTC Tuesday said the agencies, operating under the International Netforce moniker, have brought 63 law enforcement actions against Web-based scams in the past six months — some of them in the past few weeks.
The scams range from fraudulent cancer cure sites to auction fraud. The FTC said it and its Canadian counterpart, the Competition Bureau, along with six state agencies, have sent more than 500 letters warning alleged deceptive spammers that their actions are illegal. The letters were sent to spammers based in Alaska, Idaho, Montana, Oregon, Washington, Wyoming and Canada. Those spammers are allegedly running illegal chain letter schemes.
The Netforce partners have also been conducting tests of “remove me” or “unsubscribe” options in spam to determine whether those options are being honored.
“Con artists who once relied on telephone boiler rooms and mass mailings can now rip people off through Web sites and email,” said Washington Attorney General Christine Gregoire. “While the scams are often very familiar, use of the Internet creates some major new challenges for consumer protection organizations. That’s why it’s so important that those of us who enforce state, provincial and national consumer protection laws work together to meet these new challenges.”
The FTC began training personnel for the Northwest Netforce in Washington state in July 2000, and began training Canadian agents in 2001. The International Netforce is now composed of the Alaska Attorney General, the Alaska State Troopers, Alberta Government Services, the British Columbia Securities Commission, the British Columbia Solicitor General, Canada’s Competition Bureau, the Federal Trade Commission, the Idaho Attorney General, the Montana Department of Administration, the Oregon Department of Justice, the Washington Attorney General, the Washington State Department of Financial Institutions, and the Wyoming Attorney General.
Recently, the Netforce has allowed the FTC to file suit against four alleged scams.
One high profile case involves David L. Walker, whom the FTC alleges uses an Internet site to market products he claims cure cancer. The products include his CWAT-Treatment: BioResonance Therapy and Molecular Enhancer. The FTC said his site claims the treatments — for which he charges between $2,400 and $5,200 — make surgery, chemotherapy and other conventional cancer treatments unnecessary.
The FTC alleges that Walker’s claims are unsubstantiated, and also noted that a distinguished oncologist has declared Walker’s treatments potentially harmful to cancer patients.
To emphasize the importance of this case, the FTC brought out Peter Fulton, a high school math teacher from Olympia, Wash., who fell prey to Walker’s alleged scam. Fulton’s wife had been diagnosed with inoperable pancreatic cancer and had been told that her condition was terminal. Walker’s site claimed 745 consumers had been offered his products and only 15 had not been cured.
“As we read this, there was hope, and up to that point there wasn’t any,” Fulton said. “How could I say no to my wife?”
Fulton’s wife died on July 5, 1999, after giving about $1,500 to Walker.
The FTC has asked the U.S. District Court for the Western District of Washington, at Tacoma, to bar Walker’s unsubstantiated claims permanently, and has also asked it to order consumer redress.
The other cases include:
- A complaint against Universal Direct and its principals, Linda Jean Lightfoot and Charles F. Childs. Their spam promotes “a MLM (multi-level marketing) Gifting Program that CAN’T FAIL” and promises $10,000 in cash gifts within a few months of joining, the FTC said. The commission alleges the scheme is an illegal chain-letter in which most participants fail to make any money, and has asked the U.S. District Court for the Southern District of Ohio, Western Division, to stop it and freeze the defendant’s assets pending trail. The FTC said it will seek a court order requiring the defendants to give up the money they made in the scheme.
- A complaint against Sound City 2000 Inc., and Linda M. Simmons that they violated the FTC’s Mail Order Rule by advertising and selling compact discs, which the FTC alleged were delivered late or not at all. The FTC also alleged the defendants failed to make prompt refunds. The defendants have agreed to settle the case, and have been required to pay consumer redress. The case was filed in U.S. District Court for the District of Oregon.
- A case alleging the use of deceptive spam that is under seal by order of a U.S. District Court. The commission said the seal would soon be lifted.
The Netforce partners have also been testing whether “remove me” or “unsubscribe” options in spam are being honored, using email forwarded to the FTC’s spam database. Many anti-spammers have a theory that replying to spam using such a link may actually validate your email address and bring down a flood of spam. But Charles Harwood, FTC Northwest Region director, said the agencies actually found that the majority of the addresses were “dead” links.
“We have not found evidence of increased spam for the links that were not dead,” Harwood said.
The agencies tested the spam by culling more than 200 emails that purported to allow recipients to remove their names from a spam list. They set up dummy email accounts to test the pledges. As a result, the FTC has sent more than 75 letters warning spammers that deceptive “removal” claims in unsolicited email are illegal.
As part of the effort to stamp out deceptive spam, the Netforce has initiated a consumer education campaign. As part of the campaign, the agencies will emphasize that consumers must be diligent when it comes to spam.
“There will never be enough cyber-cops to police the online world,” said Deborah Bortner, director of the Washington State Department of Financial Institutions Securities Division.
Bortner suggested consumers should take steps like not displaying their email addresses on commercial bulletin boards, considering deals scams until proven otherwise, investigating an investment before putting money into it, resisting high pressure sales techniques, getting written documentation before investing, and calling state securities regulators to ensure that investments have been registered as required by law.
“A five minute call can save you thousands of dollars,” she said.
Harwood said that consumers who believe they have been the victims of fraud should call 877-FTC-HELP, or use the online complaint form at the FTC Web site. Recipients of spam they believe to be deceptive should forward it to the FTC spam database. Harwood said the database has collected more than 10 million spam messages since 1998.
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