International Consumer Protection Group Meets in Scotland To Address Cross-Border Fraud Developments

The Federal Trade Commission and members of the International Consumer Protection and Enforcement Network (ICPEN) met in Edinburgh, Scotland, on March 9-10 to discuss the progress of international efforts to combat cross-border fraud and explore new international initiatives to protect consumers around the world.

At the meeting, ICPEN members discussed the results of the recent International Fraud Awareness Month initiative – during the month of February, ICPEN member agencies conducted consumer education campaigns to teach consumers about cross-border fraud and how to avoid it. Members explored ICPEN’s continuing role in implementing the Organization for Economic Cooperation and Development’s (OECD) cross-border fraud guidelines. The guidelines, issued in June 2003, present broad recommendations for coordinating international law enforcement efforts and suggestions on how countries can most efficiently use their resources to conduct joint investigations.

ICPEN also announced the results of a February 2005 Internet sweep to identify fraudulent spam e-mail. ICPEN conducted the sweep in conjunction with participants in the London Action Plan, a global effort to crack down on deceptive spam that was endorsed in October 2004 by 26 agencies from 19 countries and private sector representatives. Action Plan participants have agreed to coordinate spam-fighting efforts by sharing information, participating in investigative training sessions, and undertaking joint consumer education and enforcement projects.

ICPEN member agencies recently built on the network’s econsumer.gov alternative dispute resolution (ADR) pilot project, begun in October 2003, with the launch of the International ADR Directory. The directory allows consumers to locate neutral providers of resolution services in their country to help them with cross-border disputes. Currently, the directory lists service providers in Argentina, Australia, Bulgaria, Chinese Taipei, Finland, Ireland, Korea, Romania, the United Kingdom, and the United States. More service providers may be added in the future; until then, some listed providers have agreed to handle complaints against sellers in any country. Consumers can access the directory through econsumer.gov, an international Web site designed specifically for cross-border complaints. The site contains valuable consumer information in English, French, German, Spanish, and Korean.

ICPEN is composed of the consumer protection agencies in Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, the Republic of Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

In addition, the FTC today issued a report detailing cross-border fraud complaints for 2004. The report, which was compiled using data from the FTC’s Consumer Sentinel database, contains information on the number of complaints received and the top complaint categories. Consumer Sentinel receives information from phone and Web complaints to the FTC, Canada’s PhoneBusters, the U.S. Postal Inspection Service, the Internet Crime Complaint Center, and other organizations. More than 1000 law enforcement agencies in the U.S., Canada, and Australia have access to Consumer Sentinel’s data, enabling them to conduct efficient, joint investigations and to work together to crack down on cross-border fraud schemes.

The FTC received 61,744 cross-border fraud complaints in 2004, 57 percent of which were Internet-related. By comparison, in 2003, there were 46,767 complaints, 47 of which were Internet-related. Fifty-three percent of the total complaints came from U.S. consumers against companies located in foreign countries other than Canada, while 24 percent of the complaints were lodged by consumers against companies located in Canada. Eight percent of the complaints came from foreign consumers against companies located in the U.S. or Canada, another seven percent came from Canadian consumers against U.S. companies, and eight percent came from Canadian consumers against companies located in other foreign countries.

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

• Foreign money offers - 26 percent
• Internet auctions - 22 percent
• Prizes/sweepstakes/gifts - 15 percent
• Catalogue sales/shop-at-home - 11 percent
• Lotteries/lottery ticket buying clubs - 11 percent
• Advance-fee loans - 6 percent
• Others - 9 percent

The top subjects for econsumer.gov complaints include:

• Catalogue sales/shop-at-home - 40 percent
• Internet auctions - 14 percent
• Lotteries - 10 percent
• Computers: equipment/software - 8 percent
• Foreign money offers - 4 percent
• Internet access/portal services - 4 percent
• Cars - 3 percent
• Credit cards- 3 percent
• Clothing - 3 percent
• Others - 11 percent

Cross-border fraudsters employ a variety of methods to scam consumers. Some common cross-border schemes include foreign lottery or prize offers, advance-fee loans or credit cards, bogus work-at-home opportunities, and other “get-rich-quick” scams. The FTC offers the following tips to protect consumers from becoming victims of cross-border fraud:

• Ignore all mail, phone, and e-mail solicitations from foreign lottery promotions. Playing a foreign lottery is illegal in the U.S. and Canada. If you receive foreign lottery material, turn it over to your local postmaster in the U.S. or to the Competition Bureau in Canada.
  
  
• Ignore any ad that guarantees a loan or credit card for an advance fee. Legitimate lenders will never “guarantee” that you will receive a loan or credit card before you apply, and will not charge you a fee.
  
  
• Never send money in exchange for a so-called “prize.” Remember, “free” means free.
  
  
• Never share your personal information unless you are familiar with the company and know why the information is necessary. Keep your credit card, bank account, and Social Security number safe.

Copies of the cross-border fraud report are available on the Consumer Sentinel Web site, www.consumer.gov/sentinel, and on www.econsumer.gov. For more information, including the FTC’s Five-Point Plan fro Fighting Cross-Border Fraud, visit www.ftc.gov/crossborder. 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 in English or Spanish (bilingual counselors are available to take complaints), 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 http://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.