FTC Sues to Halt Deceptive Internet Access Fee Scam

The Federal Trade Commission has filed suit in U.S. District Court against an Internet operation, www.rhinopoint.com, that conned consumers into paying membership fees and turning over sensitive personal and financial information by deceptively claiming it would pay their Internet access fees. The agency charges that more than 50,000 consumers were taken in by the scam and that the defendants actually paid the access fees for fewer than five percent of them. On June 1, 2001, the Court entered a stipulated preliminary injunction order that prohibits misrepresentations, freezes the defendants' assets, and bars the use of the consumer data, pending trial.

In papers filed with the court, the FTC charges that, starting in November 1999, the defendants operated the rhinopoint.com Web site where they offered to pay Internet access fees to consumers who became part of their "network," and paid a one-time "set-up" fee ranging from $10 to $16. To join the network, consumers completed a questionnaire detailing personal information and agreed to complete monthly marketing surveys. At least 59,000 enrolled, according to the FTC, many of them drawn to the site by their own Internet service providers which advertised that they could receive free or reduced-cost Internet service by going to the Web site and signing up. Consumers who signed up were required to complete "member profile forms" that asked for such information as credit card numbers and income level. The Web site claimed it marketed "group data response to companies that provide us survey questions for our members." The site's privacy policy stated, "We do not sell or provide individual names, addresses, phone numbers, credit information or other personal contact information data to outside parties under any circumstances."

The FTC alleges that the operation pocketed about $500,000 in "set-up" fees and obtained consumers' personal information from the questionnaire they originally filled out, but did not follow up with "marketing surveys" or pay Internet access fees for most of the consumers. "Defendants rarely sent the promised surveys, even more rarely reimbursed consumers for their Internet access costs, but collected initial setup fees and personal information from tens of thousands of consumers anyway," court documents say.

The FTC is seeking a permanent halt to the scam, a ban on the use of the consumers' personal and financial information, and redress for consumers.

The FTC complaint names New Millennium Concepts, Inc., doing business as Rhinopoint.com and Karl V. Kay of Hoffman Estates, Illinois.

The Commission vote to file the complaint was 5-0.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaint are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 002 3351)