Internet Fraud: Federal Trade Commission Prosecutions of Online Conduct

By Loza, Emile | Communications and the Law, June 2001 | Go to article overview

Internet Fraud: Federal Trade Commission Prosecutions of Online Conduct


Loza, Emile, Communications and the Law


I. THE SCOPE AND IMPACT OF INTERNET FRAUD

Online business is booming. That business in the United States is slated to reach some $3.2 trillion by 2004.(1) In fact, consumers are making online purchases of around $3.5 billion each month, with these purchases pegging a stunning $6.2 billion in December 2000.(2) Internet fraud operators are pursuing these online dollars with vigor. While the costs attributable to Internet fraud in the United States are difficult to pinpoint, estimates run in to the billions of dollars.(3) Online payment fraud losses alone, for example, were estimated to be $1.5 billion in late 1999 and are projected to be some $30 billion by 2005.(4) Furthermore, losses from all types of Internet fraud that were reported by consumers to the National Consumers League Internet Fraud Watch during 2000 increased nearly 38% from 1999 figures.(5)

As a result, the Internet fraud business also is booming at the Federal Trade Commission (FTC),(6) where the agency receives an estimated 6000 complaints each month from individual and business consumers (collectively "consumers") defrauded by online operators.(7) As one of the most active prosecutors of online conduct, the FTC already has taken action to prosecute 182 Internet fraud cases against some 593 defendants since its first such case in September 1994 to May 2001.(8) More telling of the rapid growth in these prosecutions, however, is the fact that more than 90% of these cases have been filed only since May 1996.(9) Furthermore, the FTC's vigorous prosecution of Internet fraud shows few signs of abating, with new cases announced almost every day.(10)

Several qualities render the Internet a tremendous boon to the global economy and to people everywhere. Many of these same useful qualities also make the Internet a near-perfect implement for fraud, with such qualities including: (1) the constant and ubiquitous availability of the Internet and its vast content; (2) the broad distribution of Internet access, and the ease with which such access can be established; (3) the rapidity with which content can be published and delivered online; and, finally, (4) the almost complete physical disconnection between Internet content and the individual or entity purveying that content.

To online fraud operators, these qualities have the effect of eliminating the physical and time barriers that exist for fraudulent schemes that are promoted and distributed solely through more traditional means, e.g. personal selling and hard copy promotional materials. Additionally, these qualities of the Internet significantly boost the market potential for fraud by increasing the size of the audience exposed to the fraud operator's message. Thus, where broad access to and rapid delivery of the schemer's promotional message explode by placing that message online, so too does the number of consumers available for the shearing.

Finally, the only brick-and-mortar connection between online fraud and its purveyor may be as finite as a data file stored on a server computer located on the premises of some third-party Web site hosting company. Add a phone line into a telemarketing boiler room located in some obscure part of the Florida panhandle; a commercially rented postal drop box; and a checking or merchant account with one of several more disreputable financial institutions, often located off-shore, and the picture is complete. Given these tactics by scammers, defrauded consumers stand little to no chance of obtaining redress through self-help measures, even when aided by the excellent efforts of Better Business Bureaus.

Likewise, law enforcement against online fraud is difficult. Not only is it difficult to detect, and therefore prosecute, any but the most egregious frauds, but great challenges exist in other aspects as well. First, investigations are hampered by the difficulties associated with identifying and locating the individuals and entities responsible for the online frauds.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Internet Fraud: Federal Trade Commission Prosecutions of Online Conduct
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.