Internet fraud sweep fails to turn up any NZ sites

The US Federal Trade Commission has identified more than 1600 sites suspected of trying to lure people into participating in bogus business propositions.

No New Zealand sites were among the 1600 suspected of trying to lure people into participating in bogus business propositions after a global survey in which our Ministry of Consumer Affairs participated.

Dubbed "GetRichQuick.Con", the multinational effort to scour the Web for illegal get-rich-quick schemes was co-ordinated by the US Federal Trade Commission (FTC).

Other New Zealand agencies to take part in the sweep were the Commerce Commission and the Consumer's Institute, said Consumer Affairs minister Phillida Bunkle

"Together with our international partners, we are putting get-rich-quick schemes on notice that we are monitoring the Web," said Ms Bunkle.

"Warning e-mails are now being sent to the targeted sites and the sites will be monitored to see that they are removed. If they are not removed, the US FTC will investigate enforcement action."

The FTC's project involved 150 organisations in 28 countries, including state attorneys general, affiliate offices of the Better Business Bureau and other international consumer protection agencies, Jodie Bernstein, director of the Bureau of Consumer Protection at the FTC, said.

Bernstein described "GetRichQuick.Con" as the largest-ever international law enforcement project to fight fraud on the Internet. Fraud-fighting investigators based in North America, Mexico, Brazil, Peru, Chile, Uruguay, Australia, New Zealand, Japan, South Korea, Hong Kong and most northern and central European countries used a secure Web site built by the FTC to support their searches during a 12-day period that ended earlier this month, Bernstein said.

Examples of the types of sites that were found were those offering people money for surfing the Internet, those promising millions of U.S. dollars through pyramid schemes and sites that used chain letters to draw people into fraudulent offshore investment clubs, officials said.

The FTC will now send warning e-mail messages to the 1,600 sites that were identified, and Bernstein said the FTC and the other law enforcement agencies involved intend to prosecute any site who continues to make fraudulent or deceptive claims on those Web sites.

"We will follow up and, in all likelihood, we will bring on law enforcement action against them with our partners in about June or July," Bernstein said.

However, the FTC anticipates that many of the sites will shut down voluntarily after they received the FTC notification. Following previous organized sweeps of the Web for other types of fraud, up to 70 percent of the sites identified shut down or removed the fraudulent claims before any action was taken against them, said Paul Luehr, a lawyer with the FTC's Bureau of Consumer Protection.

Some of the suspected sites are run by people who don't know they are doing something illegal, and just by "firing a shot across their bows it gives them a chance to clean their act up and we don't have to make a federal case out of it," Luehr said.

The hundreds of investigators who participated in the probe were given the names of at least two search engines to use as well as specific keywords to help them determine whether a site involved fraudulent activity, Luehr said. The investigators looked for claims like "make $1 million working from home" and "make $20,000 month" as clues that the Web sites might be involved in illegal activity.

Investigators gathered as much information about suspicious sites and their operators as they could by clicking through the sites and by examining information submitted to registrars. They looked for details about where the sites' servers were physically located and submitted that data over the Internet to an FTC database.

"In phase two of this project we will be analyzing the data and handing these sites out to law enforcement partners for future possible law enforcement actions," Luehr said.

Previous FTC actions to root out suspected illegal activity on the Web have resulted in successful prosecutions, Luehr added. Since 1994 the FTC has brought 119 cases against 339 defendants accused of involvement in fraud and deception on the Internet.

Among the international participants who assisted the FTC in the get-rich-quick project was the International Marketing Supervision Network (IMSN). Trine Corneliussen, deputy director general of Norway's Office of the Consumer Ombudsman, who joined the news conference from Norway by teleconference, said one of the goals of such Web sweep projects is to build confidence in the Internet.

"Through actions like FTC's get-rich-quick surf, we are able to demonstrate to online businesses that we are collectively watching the global marketplace and working together internationally to combat scams," Corneliussen said. "It also makes us able to ensure that cases are forwarded to agencies with the authority to actually pursue them."

Luehr at the FTC's Bureau of Consumer Protection admitted the international scope of the sweep could have been even broader by including more Asian countries, and by including Africa and Russia. But because the Internet hasn't penetrated those regions to the extent it has elsewhere, law enforcement agencies were reluctant to commit resources to the project when the FTC contacted them. The FTC would like to see future sweeps broadened to include even more countries, he added.

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