One Year Ago: U.S. Lists Top Ten ‘Dot Cons’


Originally published on November 1, 2000 and brought to you today as a time capsule.


Auction fraud has the dubious honor of being the No. 1 online scam, the U.S. Federal Trade Commission (FTC) said.

Rounding out the “Top Ten Dot Cons” are: Internet service provider (ISP) scams, Web site design scams, Net porn credit card fraud, multi-level marketing schemes, business opportunities and work-at-home cons, fraudulent investment and get-rich-quick scams, travel and vacation fraud, telephone/pay-per-call frauds, and Net health care frauds.

The list was culled from Consumer Sentinel, a database of more than 285,000 consumer complaints established and maintained by the FTC.

Operative Words

The announcement came as part of a massive crackdown on online fraud, dubbed “Operation: Top Ten Dot Cons,” involving federal agencies from nine countries and 23 U.S. states. During the year-long effort, a total of 251 law enforcement actions were taken against online scammers.

“We want the ‘dot-con’ artists to know that we’re building a consumer protection coalition that spans the globe. We aim to make the Net safe for consumers,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “This collaboration with law enforcement agencies, industry and consumers will create a climate where e-commerce can be conducted with confidence.”

Auction Fraud Escalates

The popularity of online auctions has led to explosive growth in fraud, with the number of reported cases ballooning from 100 in 1997 to a whopping 10,000 in 1999.

The average victim loses US$293, according to the Internet Fraud Watch, usually paying for goods that are never delivered.

Fraudulent Billing

Three of the top ten Web scams involve fraudulent billing. For example, in the No. 2 scam, ISP fraud, a company will fraudulently sign up consumers for Net access and then put phony charges on their monthly phone bills.

In one recent case, according to the FTC, scammers mailed “rebate” checks for $3.50 to consumers. When people cashed the checks, they unwittingly “agreed” to allow the defendants to provide Internet access services. The defendants then started charging the consumers between $19.95 and $29.95 a month and “made it nearly impossible to cancel future monthly charges and receive refunds.”

In a related scam, dubbed “Web cramming,” scam artists call small businesses and offer “free” Web pages. After the victim signs up, the scam artists begin charging high fees.

Web Porn Credit-Card Fraud

The No. 4 “dot-con,” Net porn credit card cramming, targets the Web surfer who gives an adult site his or her credit-card number because the site says it needs the number to verify that the visitor is of age.

After obtaining the credit card data, the scam artists start billing the credit card without authorization. The FTC recently sued the operators of three adult-oriented Web sites allegedly engaged in this practice and asked the court to freeze the assets in two of the cases.

Investment and ‘Get Rich’ Schemes

Preying on the hopes and dreams of individuals who want to make a little extra cash, some of the less common Web scams promise victims “the moon and the stars,” but deliveronly heartache.

In dot-con scam No. 5, the multi-level marketing or “pyramid scam,” the con artists promise people they will make money through selling products or services, as well as through the products sold by people they recruit into the program.

Some Web con artists, realizing that not everyone will fall for the promise of “something for nothing,” resort to dot-con scam No. 6 by offering people the chance to invest in business opportunities or home-based money-making programs.

Travel Scams

Companies that offer consumers luxurious trips with “extras” at bargain-basement prices land at No. 8 on the FTC’s list. Some of these Web scam artists deliver lower quality accommodations and services than promised, while others fail to deliver any travel services at all.

Still others hit consumers with hidden charges or additional requirements after they have paid for their travel.

Web Versions of Real-World Scams

Web scam No. 9 is a variation on the telephone billing scam. In many of these cases, the con artists offer consumers free access to adult material if the consumers will download a “viewer” or “dialer” computer program.

What the scam artists do not tell consumers is that once they have downloaded the dialer, it will disconnect their modem from the Internet and then reconnect through an international long-distance number, resulting in exorbitant long-distance charges.

The last scam on the FBI’s list of the “Top Ten Dot Cons” is a modern day version of the snake oil salesman. In these scams, e-tailers sell consumers “miracle” cures that are “proven” to cure serious and even fatal health problems.

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