Meet the FTC's unlikely enforcer

From...

by Elizabeth Wasserman

February 18, 2000
Web posted at: 2:17 p.m. EST (1917 GMT)

(IDG) -- In announcing a federal crackdown on online auction fraud this week, a gaggle of microphones awaited Jodie Bernstein, one of the nation's top cops on the Internet. But first, she had to stand on a wooden box to reach the lectern.

To the casual observer, Bernstein seems a highly unlikely law enforcer. A petite 73-year-old who heads the Federal Trade Commission's consumer fraud bureau, Bernstein confesses the only purchase she's made over the Net was pantyhose from Bloomingdales.com.

But Bernstein has a long history as a public servant, consumer advocate and Washington insider. While she may walk softly in her black suede heels, she carries a big stick.

Bernstein supervises a staff of Internet cops that over the last five years has grown from 14 to 79. Since September 1994, the FTC has used its authority to win more than 100 Net-related consumer cases, shutting down sites that hawk bogus investments, miracle health cures and other dubious merchandise.

Bernstein's innovations include the creation of an Internet lab with tools to gather evidence for use in court, the institution of "surf days" to comb the Web looking for fraud, and an online complaint form that will be unveiled next week for victims of identity theft.

The list of companies now under the scrutiny of the FTC ö and Bernstein ö reads like a who's who of the Internet Economy. Amazon.com (AMZN) is the subject of an inquiry into possible unfair and deceptive trade practices relating to collection of personal data. EToys is being investigated for the way it markets videogames and software to children. And in a bit of fallout from the holiday shopping season, other toy sites, including Toysrus.com and KBkids.com, are under the microscope over compliance with federal rules involving timely shipment of mail-order goods.

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Privacy watchdogs this week spurred the FTC to take a close look at online advertising company DoubleClick (DCLK) and its policy of merging data about the online habits of consumers with such personal information as names and post addresses. Bernstein won't discuss any ongoing investigations, but she notes that the number of Net-related complaints has skyrocketed ö and that they often involve big companies.

"It's a maturation of the medium," Bernstein said during a recent interview in her spacious and spotless office on Pennsylvania Avenue. "It's also the growth of these companies and the extent of the number of consumers they're now reaching. Obviously, they're going to be scrutinized."

Bernstein's boss and longtime friend, FTC Chairman Robert Pitofsky, rejects the notion that the agency is seeking a dot-com game trophy.

"We go where the fraud leads us," he says. "If it leads us to con artists or snake-oil salespeople, we go after them. I think from a rather early stage some large companies operating on the Internet have been scrutinized. We're not sensitive to going after bigger companies. It's not a recent innovation."

But he concedes that Bernstein, who first worked for Pitofsky at the FTC during the Carter administration, when he held her current job, doesn't shy away from major corporate targets. It was Bernstein, after all, who called upon R.J. Reynolds last year to can its "Joe Camel" cartoon advertising because it could induce children to smoke.

"Joe Camel has become as recognizable to kids as Mickey Mouse," Bernstein said at the time, in a shot heard 'round the tobacco industry. (She ended up as the question to an answer on "Jeopardy" about which famous Bernstein stopped Joe Camel in his tracks.)

It's those David vs. Goliath battles that seem to attract Bernstein, a mother of three. She apparently has boundless energy, swimming every morning before arriving at the office by 8 a.m. and impressing friends with her homemade pickles and chopped liver by night. Bernstein has always had a pioneering streak. She enrolled at Yale Law School in 1948, one of nine women in a class of 160.

"We were the two women on the Law Review in our year," recalls Bernstein's roommate, former U.S. Appeals Court Judge Patricia Wald, who now serves on the United Nations' war crimes tribunal in The Hague. "We were very supportive of each other. We enjoyed the opportunity to rake everybody over the coals."

As did many women in the 1950s, Wald and Bernstein got married, raised families and stayed at home for a spell before returning to the workforce. After a stretch in private practice, Bernstein landed a job with the FTC in 1970, where she impressed Pitofsky by bringing a case against a razor-blade company distributing samples in a newspaper's Sunday comics section.

She later brought cases against the Topper and Mattel (MAT) toy companies over television advertising directed at kids. "Part of the reason I went back to work was to get out of watching television with my children," Bernstein recalls. "So I told them to watch these ads, and then tell me whether they thought they were good or bad or true or false."

Bernstein quickly rose through the government ranks, becoming general counsel of the Environmental Protection Agency and, later, general counsel to the Department of Health and Human Services.

"She actually started the women's network in this town," says Donna Shalala, the current Department of Health and Human Services secretary. "Jodie brought all the women together from the Carter administration in her home." The guest list included Secretary of State Madeleine Albright and Department of Labor Secretary Alexis Herman, among others.

Bernstein left government for a stretch, becoming general counsel first for Chemical Waste Management and then for WMX Technologies. But in 1995, her old friend Pitofsky called. "She has the shrewdest ability to operate within a bureaucracy that I have ever seen," he says. "And she makes the best pickles I've ever had."

It didn't take Bernstein long to figure out the FTC needed to step up its monitoring of the Internet. The agency, with its consumer focus and broad mission, is well situated to press issues like stopping fraud, protecting privacy and setting ground rules for protecting children, she says.

Three years ago, the FTC startled the Internet business community by undertaking a sweep of Web sites and finding that only 14 percent posted policies that explained what they do with the personal information they gather. An industry-sponsored study last year found that 66 percent now have such policies.

The funding has been used to press federal officials to let industry self-regulate on privacy issues. This year, however, Bernstein has decided the FTC will undertake its own follow-up study.

"I think we have more credibility," Bernstein says. "Our first survey we felt was bulletproof. Nobody challenged it. Everybody had the data. Everybody knew the methodology."

Even among the staunchest critics of the government's privacy policies, Bernstein enjoys widespread regard. Marc Rotenberg, executive director of the Electronic Privacy Information Center, which filed a complaint with the FTC over DoubleClick, says that despite some criticisms of the agency, his organization appreciates Bernstein's work and "the important role she has in protecting consumers online."

But when it comes to protecting consumers, Bernstein makes sure con artists on the Web know she means business. This week she announced that her bureau is aggregating Internet auction fraud complaints from state officials, consumer groups and online auctions such as eBay (EBAY) into a massive database for exclusive use by law enforcement. This comes after the agency disclosed that it received 10,700 complaints about online auctions last year, up from 107 in 1997.

Standing on top of her wooden box, Bernstein made it clear that the FTC intends to remain vigilant. Avowed Bernstein: "We don't intend to let a handful of rogues destroy consumer confidence in Internet commerce."

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