More Internet users falling prey to scams, FTC warns

By MIKE BENBOW

Herald Writer

Internet use is growing by leaps and bounds, and so are the number of scams and scammers, state and federal regulators warned Tuesday.

They announced that a yearlong crackdown on Net scammers had resulted in some 250 law enforcement actions, including six in Washington state.

"We concentrate on online investment and ‘biz op’ scams," said Deborah Bortner, director of the securities division of the state Department of Financial Institutions. "And there were plenty to keep us busy."

In Washington state, the scams included two people soliciting money for a movie they allegedly planned to direct. Other problems uncovered around the country included fraudulent auctions and travel or vacation fraud.

Bortner said the movie scams involved people seeking investors who had not registered with the state to sell securities, a process that requires a significant amount of financial disclosure.

"These are fairly typical of the types of scams that are being perpetrated on the Internet," Bortner said. "And there are many others masquerading as legitimate business opportunities.

Other examples in Washington included a man soliciting investors for a retirement program, another making unsubstantiated claims for a business opportunity involving liquidated merchandise and two others selling vending machine equipment.

State officials were part of an international crackdown spearheaded by the Federal Trade Commission. The first part of the attack involved lawsuits against the scammers. Now officials want to educate the public.

"The Internet has changed the way consumers gather information, shop and do business," said Jodie Bernstein, the FTC’s director of consumer protection. "It’s also changed the way law enforcers and consumer protection agencies do business."

Regulators warned consumers about Web sites that advertise a free "viewer" or "dialer" program to access free adult material. Without the victim’s knowledge, the program disconnects their computer from their Internet provider and makes an international phone call — typically to the Caribbean — to another Internet provider, racking up large toll charges on the victim’s phone bill.

Scammers are targeting small business owners and stock traders, too. Some consumers have used day-trading services that promise huge returns for predicting the market, later finding that the claims were inflated. Many online business and franchise opportunities turn out to be flops as well.

Several of the FTC’s highlighted scams are very old tricks made new because of the Internet. Miracle products, credit card theft and old-fashioned pyramid schemes are getting a new life online, which means consumer protection agencies have to go there, too.

"We want dot-con artists to know that consumer protection spans the globe — physically and in cyberspace," Bernstein said.