e-Commerce is Up ' and So Are Complaints of Identity Theft

The FTC noted that identity-theft complaints have topped the list of the 10 leading consumer complaints since 2000 and accounts for 43% of all complaints registered in the agency's citizens'-protection database, Consumer Sentinel.

Crunching the numbers, the FTC said the volume of fraud-complaint filings leapt last year to 380,000 from 220,000 in 2001. Fraud cost consumers an estimated $343 million in 2002 and $160 million in 2001.

Uncle Sam wants to help

J. Howard Beales III, director of the FTC's Bureau of Consumer Protection, urged people who feel they've been a fraud victim to file a complaint with the government.

'We are the portal through which consumers can enter complaints and receive assistance and guidance,' Beales said.

Complaints can be made online at www.ftc.gov. The FTC notes on its Web site that victims of identity theft ' or those looking for ways to avoid becoming a victim ' can log onto an FTC page at www.consumer.gov/idtheft for help.

Beales offered several possible explanations for the higher complaint count from 2001 to 2002.

'One of them has to do with the success of our outreach efforts ' that is, more people know where to complain about fraud and ID theft,' he said. 'That's important because more complaints give us a more complete picture of the types of fraud that are occurring, the characteristics of fraud victims, and the companies that are appropriate targets for law enforcement.'

He said another reason for the increase is a rise in Consumer Sentinel partners contributing and using data to aid enforcement. Beales explained that 40% of complaints in the Sentinel database are entered at such data sources as the Social Security Administration's Office of Inspector General, the Internet Fraud Complaint Center, the National Consumers League's National Fraud Information Center and Better Business Bureaus nationwide.

The FTC launched Consumer Sentinel in 1997 with state attorneys general and Canada's Phonebusters. It provides about 630 US, Canadian and Australian law-enforcement bureaus access to 1 million complaints, the FTC said, describing Sentinel as 'law enforcement's virtual water cooler.'

Breaking out the numbers

The agency provided the following breakdown of last year's top 10 consumer-fraud complaint categories:

• Internet auctions – 13%
• Internet services and computer complaints – 6%
• Advance fee loans and credit protection – 5%
• Shop-at-home/catalog sales – 5%
• Foreign money offers – 4%
• Prizes/sweepstakes and lotteries – 4%
• Business opportunity and work-at-home plans – 3%
• Telephone services – 2%
• Health care – 2%
• Magazines and buyers' clubs – 2%
• Defend yourself with knowledge

The agency offered the following tips on guarding against fraud:

• Protect personal information. Share credit-card or other personal information only when buying from a known, trusted company.
• Know those you're dealing with. Walk away from companies that don't clearly state their name, physical address and telephone number. A Web site alone or a mail-box drop should raise suspicions.
• Don't rely on oral promises. Get written promises and review them before making payments or signing contracts. Read and understand fine print in any written agreement.
• Don't pay up front for a loan or credit. Remember: Legitimate lenders never guarantee a loan or credit card before application, especially when bad credit, lack of credit or bankruptcy is involved.

The FTC offers a publication called ID Theft: When Bad Things Happen to Your Good Name. It's available online at www.consumer.gov/idtheft.

Michael Lear-Olimpi is the Editor-in-Chief of this newsletter.

e-Commerce has become a mainstream staple, research from the private sector and the government indicates.

Consider:

• U.S. Census Bureau figures show 2002 holiday season record online sales of $13.7 billion
• A recent survey by the nonprofit research outfit The Conference Board showed consumer confidence in online services stronger than ever, with more than a third of online shoppers saying they believe transactions are safe
• e-Legal services undoubtedly have benefited from the e-commerce uptick, but at lest some of that benefit has also undoubtedly come in an unfortunate form.

Identity theft

The U.S. Federal Trade Commission (FTC) said in January that identity theft last year was again the leading consumer fraud complaint ' and e-commerce categories lead the list in terms of percentage of reports, with Internet auctions at 13%, and Internet services and computer services at 6%. The agency did not, however, note which percentage of overall identity theft or other fraud complaints involved e-commerce transactions. e-Commerce Law & Strategy sought clarification, but did not receive it by presstime.

The FTC noted that identity-theft complaints have topped the list of the 10 leading consumer complaints since 2000 and accounts for 43% of all complaints registered in the agency's citizens'-protection database, Consumer Sentinel.

Crunching the numbers, the FTC said the volume of fraud-complaint filings leapt last year to 380,000 from 220,000 in 2001. Fraud cost consumers an estimated $343 million in 2002 and $160 million in 2001.

Uncle Sam wants to help

J. Howard Beales III, director of the FTC's Bureau of Consumer Protection, urged people who feel they've been a fraud victim to file a complaint with the government.

'We are the portal through which consumers can enter complaints and receive assistance and guidance,' Beales said.

Complaints can be made online at www.ftc.gov. The FTC notes on its Web site that victims of identity theft ' or those looking for ways to avoid becoming a victim ' can log onto an FTC page at www.consumer.gov/idtheft for help.

Beales offered several possible explanations for the higher complaint count from 2001 to 2002.

'One of them has to do with the success of our outreach efforts ' that is, more people know where to complain about fraud and ID theft,' he said. 'That's important because more complaints give us a more complete picture of the types of fraud that are occurring, the characteristics of fraud victims, and the companies that are appropriate targets for law enforcement.'

He said another reason for the increase is a rise in Consumer Sentinel partners contributing and using data to aid enforcement. Beales explained that 40% of complaints in the Sentinel database are entered at such data sources as the Social Security Administration's Office of Inspector General, the Internet Fraud Complaint Center, the National Consumers League's National Fraud Information Center and Better Business Bureaus nationwide.

The FTC launched Consumer Sentinel in 1997 with state attorneys general and Canada's Phonebusters. It provides about 630 US, Canadian and Australian law-enforcement bureaus access to 1 million complaints, the FTC said, describing Sentinel as 'law enforcement's virtual water cooler.'

Breaking out the numbers

The agency provided the following breakdown of last year's top 10 consumer-fraud complaint categories:

• Internet auctions – 13%
• Internet services and computer complaints – 6%
• Advance fee loans and credit protection – 5%
• Shop-at-home/catalog sales – 5%
• Foreign money offers – 4%
• Prizes/sweepstakes and lotteries – 4%
• Business opportunity and work-at-home plans – 3%
• Telephone services – 2%
• Health care – 2%
• Magazines and buyers' clubs – 2%
• Defend yourself with knowledge

The agency offered the following tips on guarding against fraud:

• Protect personal information. Share credit-card or other personal information only when buying from a known, trusted company.
• Know those you're dealing with. Walk away from companies that don't clearly state their name, physical address and telephone number. A Web site alone or a mail-box drop should raise suspicions.
• Don't rely on oral promises. Get written promises and review them before making payments or signing contracts. Read and understand fine print in any written agreement.
• Don't pay up front for a loan or credit. Remember: Legitimate lenders never guarantee a loan or credit card before application, especially when bad credit, lack of credit or bankruptcy is involved.

The FTC offers a publication called ID Theft: When Bad Things Happen to Your Good Name. It's available online at www.consumer.gov/idtheft.

Michael Lear-Olimpi is the Editor-in-Chief of this newsletter.