FTC Releases 2002 Statistics on Cross-border Consumer Fraud

As part of its two-day "Partnerships Against Cross-Border Fraud" workshop, the Federal Trade Commission has released a report detailing consumer complaints about cross-border fraud and listing the top complaint categories reported by consumers in 2002. The FTC compiled the report from its Consumer Sentinel complaint database, which receives contributions from numerous sources, including phone and web complaints to the FTC, Canada's PhoneBusters, the National Consumers League, and econsumer.gov, a database of cross-border e-commerce complaints. According to the report, total cross-border fraud complaints from U.S. consumers jumped from 13,905 in 2001 to 24,213 in 2002. Total cross-border complaints have risen from 12 to 14 percent of all non-identity theft-related fraud complaints.

The report details complaints from U.S., Canadian, and other foreign consumers against companies located in the U.S., Canada, and other foreign countries. Forty-six percent of the total complaints came from U.S. consumers against companies located in Canada; 33 percent of the complaints were lodged by U.S. consumers against companies located in other foreign countries; 12 percent were from foreign consumers against companies located in the U.S. or Canada; 6 percent of the complaints came from Canadian consumers against companies located in the U.S.; and 3 percent came from Canadian consumers against companies located in other foreign countries. The complaints revealed that U.S. consumers paid over $60 million for cross-border fraudulent products or services.

The top products or services for cross-border fraud complaints from U.S. consumers include:

• Advance-Fee Loans - 24%
• Foreign Money Offers - 24%
• Prizes/Sweepstakes/Gifts - 23%
• Internet Auctions - 10%
• Shop-at-Home Catalog Sales - 5%
• Lotteries/Lottery Ticket Buying Clubs - 3%
• Business Opportunity/Franchises/Distributorships - 2%

The top subjects for Econsumer complaints include:

• Catalog Sales/Shop at Home - 35%
• Internet Auctions - 16%
• Computers: Equipment/Software 13%
• Foreign Money Offers - 9%
• Internet Access/Portal Services - 4%
• Adult Sites - 3%
• Credit Cards - 3%
• Clothing - 3%

The FTC established Consumer Sentinel in 1997 in conjunction with the National Association of Attorneys General and Canada's PhoneBusters. Consumer Sentinel currently provides over 635 law enforcement agencies in the U.S., Canada, and Australia with access to more than one million complaints, enabling countries to coordinate their investigations against cross-border fraudsters. Econsumer.gov was created in April 2001 as a joint effort involving 13 countries to gather and share cross-border e-commerce complaints in order to respond to the challenges of multinational Internet fraud, and enhance consumer confidence in e-commerce.

The FTC offers the following tips to protect consumers from cross-border fraud:

• Ignore all mail and phone solicitations from foreign lottery promotions. If you get what looks like lottery material from a foreign country, turn it over to your local postmaster in the U.S. or to the Competition Bureau in Canada. In both the U.S. and Canada, it is illegal to play a foreign lottery.
  
• Ignore any ad that guarantees a loan in exchange for an advance fee. Legitimate lenders never "guarantee" that you will receive a loan before you apply, especially if you have bad credit or no credit record.
  
• Don't share personal information. Never give your credit card or bank account numbers, Social Security Number or other identifying number unless you are familiar with the company and know why the information is necessary.
  
• Remember that "free" means free. Never agree to pay for a so-called "prize."

The FTC's new cross-border fraud report is available on the Consumer Sentinel Web site, www.consumer.gov/sentinel, and on www.econsumer.gov. The FTC currently is working with agencies worldwide to combat cross-border fraud on a global scale. For more information on cross-border fraud, including the FTC's Five-Point Plan for Fighting Cross-Border Fraud, visit the FTC's Cross-Border Fraud Web site at www.ftc.gov/crossborder.