FTC puts Web scammers on notice

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by Jennifer Disabatino

(IDG) -- Scam Artistry 101: If you advertise your services on the Net, be aware that the FTC is watching you.

The Federal Trade Commission on Wednesday said that it has identified 200 firms, 175 of them on the Internet, that offer to collect personal financial information and then sell it to third parties, which is a violation of federal law.

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FTC staff surfed 1,000 Web sites and scanned 500 print advertisements looking for companies that offer to obtain and sell private data about consumers to third parties, such as asset or bank account information. Such information can then be used to obtain credit under a victim's name or to steal assets.

The practice of obtaining customer information under false pretenses is known as pretexting.

The investigation, called "Operation Detect Pretext," is continuing, according to an FTC spokesman. The focus is on those companies that offer to sell the information and not on those who buy it, he said. He wouldn't elaborate on the kind of information the companies were collecting.

While debt collectors can legitimately obtain such information, some in that field may sell it to others for illegal purposes, said Brad Bowler, assistant director of the Bureau of Consumer Protection's division of financial practices.

The Gramm-Leach-Bliley Act prohibits individuals from obtaining a customer's information from a financial institution or directly from the customer using false representations, fictitious documents or forgery.

Last Friday, FTC staff sent notices to approximately 200 firms via e-mail or fax warning them that their practices must comply with federal laws, including the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act.

The FTC said that it would continue to monitor Web sites and print media advertisements offering financial searches and that it would warn them to take steps to ensure that they comply with Gramm-Leach-Bliley Act and all other applicable federal laws.

Violations of the Gramm-Leach-Bliley Act may result in civil penalties of up to $11,000 for each violation, as well as criminal penalties.

Keeping It Private

The Gramm-Leach-Bliley Act of 1999 and the Fair Credit Reporting Act

Gramm-Leach-Bliley Act: Requires clear disclosure by all financial institutions of their privacy policy regarding the sharing of personal information with both affiliates and third parties.

Requires a notice to consumers and an opportunity to "opt-out" of sharing of personal information with nonaffiliated third parties subject to certain limited exceptions.

Fair Credit Reporting Act: Every consumer reporting agency shall, upon request, tell the consumer who has been given a copy of his or her consumer report.

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FTC identifies top ten 'dot cons'
(IDG.net)
Web users more likely to fall for investment scams
(Computerworld)
Phony lotteries, domain name extortion may be the latest con
(InfoWorld.com)
The real victims of Internet fraud
(The Industry Standard)
Ward-off phantom scam artists
(PCWorld.com)
Two sentenced in e-mail spam scam
(IDG.net)
FTC warns about top-level domain scams
(IDG.net)
Insurance, oversight urged to fight Internet fraud
(PCWorld.com)

Fair Credit Reporting Act
Gramm-Leach-Bliley Act

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