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Wednesday, February 24, 1999 Published at 14:55 GMT


Business: The Economy

Internet fraud complaints soar

It's on your screen, but is it worth bidding for?

Complaints about fraud on the Internet have jumped sixfold in the United States, according to consumer watchdog Internet Fraud Watch.

The rising numbers are in line with the rapid growth of e-commerce in the United States, where it has become a multi-million dollar business.

Around 79 million US citizens are now estimated to surf the Web and many made their first online purchases last Christmas, with Internet business seeing record sales. However, as e-commerce booms, more and more con artists are trying to take their cut.

Susan Grant, director of Internet Fraud Watch, said: "More people are online, and more people are getting scammed."

Auction fraud

Online auctions attract the bulk of consumer gripes, prompting two out of three complaints.

Last year the Federal Trade Commission (FTC) succesfully sued a seller who advertised personal computers on different auction sites. He took as much as $1,450 each from "successful bidders" across the country but failed to send any computers or refunds.

The top 10 of Internet fraud are:

  • Auctions
  • General merchandise sales
  • Computer equipment and software
  • Internet services
  • Work-at-home offers
  • Business opportunities
  • Marketing schemes
  • Credit card offers
  • Advance fee loans
  • Employment offers

Internet Fraud Watch is a private organisation that was set up by the National Consumers League. Last year it registered 7,752 Internet complaints, up from just under 1,300 a year earlier.

But Internet fraud is difficult to detect and combat. The web site of a fraudster can look just as honest as that of a blue-chip company, while claims of product quality and company credentials are difficult to verify.

The US Government is now trying to get a better grip on online fraud. In March, the FTC is due to launch its own 24-hour Internet fraud-detection group.

Last year, Eileen Harrington, Associate Director of the FTC's Bureau of Consumer Protection, told a Congressional committee that the "Internet's promise of substantial consumer benefits is ... coupled with the potential for fraud and deception".

She warned that "fraud operators are always ... among the first to appreciate the potential of a new technology". Mrs Harrington said that large-scale fraud could seriously tarnish the reputation of e-commerce and damage its growth potential.





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