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PREVIOUS PAGE • SUBSCRIBE TO THE NEWSLETTER • CLIENT LOGIN If you like being ripped off, ignore this2ND IN A SERIES OF 5 The Internet was developed in the 1960s to connect research institutes, colleges, and the Defense Department. The goal was to share information, to share computer resources, and to communicate with people who were working on projects similar to yours. Nobody was selling anything on the Internet back then. There were no spammers. Nobody stole services because all services were shared. Well, times have changedThe Internet now connects about half of the people in the United States and some of those people are crooks, perverts, or worse. And the Internet is available to millions of people overseas, including a lot of people who don't much care for the United States or its citizens. The first rule of using the Internet is to keep in mind that the person you're communicating with might not be the age or sex that he or she claims. Your Internet contacts may not live where they say they do. They may not work for the companies they claim to work for. The person touting a really hot stock may be a 15-year-old New Jersey kid operating a "pump-and-dump" scheme. (This, by the way, is something that actually happened.) The most popular consThe Columbus Dispatch printed this Associated Press account by D. Ian Hopper in November of 2000: WASHINGTON - Getting stiffed at an Internet auction. An "all-expenses-paid" hotel stay that turns out not to be free. An offer for free adult material on the Web that secretly runs up a hefty phone bill. The government cited these gimmicks yesterday as it posted its first top-10 list of Internet scams. Officials vowed to work with overseas law-enforcement agencies to crack down on Web con artists. "The Internet has changed the way consumers gather information, shop and do business," said Jodie Bernstein, the Federal Trade Commission's director of consumer protection. "It's also changed the way law enforcers and consumer-protection agencies do business." Several of the FTC's "dot-con" scams are old tricks reincarnated on the Internet. Miracle products, credit card theft and old-fashioned pyramid schemes are getting a new life on-line, officials said. Worries about Internet thieves have slowed electronic commerce since its inception, but consumers gradually are warming to the idea of making Internet purchases. The FTC's consumer-protection effort is intended to keep criminals from undermining that trust, officials said. The agency said the government has brought 251 lawsuits against on-line scammers so far this year. For instance, the FTC has sued three individuals and their company, Computers By Us of Thomasville, Pennsylvania, alleging they participated in on-line auctions without delivering the goods or offering a refund. The operators of the company did not respond to calls seeking comment yesterday. The agency also alleged that a group of affiliated Arizona companies sent $3.50 "rebate" checks to consumers. When the checks were cashed, the consumers unwittingly agreed to allow the defendants to be their Internet service provider. Monthly charges started appearing on phone bills and were difficult to remove, officials alleged. The companies could not be contacted for comment. RJB Telcom of Scottsdale, Arizona, was sued along with its principals for offering a free "viewer" or "dialer" program to access free adult material. The government alleges that, without consumers' knowledge, the program disconnected the user's computer from their Internet provider and made an international call - typically to the Caribbean - to another Internet provider. Consumers unwittingly racked up large long distance charges, the government alleged. The company and its executives also are accused of billing credit-card holders for services the consumers say were never used. Attempts to contact the company for comment yesterday were unsuccessful. Officials also warned that scammers are targeting small business owners and stock traders. In traditional computer crime, such as hacking, law-enforcement efforts can be hobbled by international borders with differing jurisdictions and laws. The FTC said it is trying to overcome those obstacles by creating a new international network of consumer-protection agencies. It said it is working with 240 agencies in the United States as well as officials in Australia, Canada, Finland, Germany, Ireland, New Zealand, Norway and Britain. Fighting backStories like that AP report give you a warm fuzzy feeling about the Internet, don't they? The trouble is that some people believe that the Internet is somehow separate from the "real world". While that was the case from the 1960s through much of the 1980s, it's not the case today. If it seems to good to be true, it probably is. On the street, nobody will give you a Rolex watch for $30. On the Internet, nobody will give you something for nothing. Believe that they will and you'll probably pay something for a whole lot of nothing. On the street, that Rolex watch you get for $30 will turn out to be a Rollex watch (note the extra letter in the name) and you'll find that it was made in China. If you're lucky, it'll run for 30 days. On the Internet, the equivalent is misspelled domain names. A cybersquatter who specializes in misspelled names has registered "nitendo.com". If you really want Nintendo, then you need to spell it right. Fortunately, the government has begun to take notice of some of these "business people" and has started putting them out of business. In October 2000, US District Court Judge Berle Schiller of Philadelphai ordered John Zuccarini - a Pennsylvania man who has registered thousands of domain names and been the defendant in several domain-related suits - to pay more than $500,000 in damages to Electronics Boutique, a retail store. Schiller ruled that Zuccarini was guilty of violating the Anticybersquatting Consumer Protection Act of 1999 by registering "electronicsboutique.com" and misspelled versions of the name. According to the judge, "Zuccarini specifically intended to prey on the confusion and typographical and/or spelling errors of Internet users." Zuccarini has been sued in similar cases brought by Radio Shack, Office Depot, Nintendo, Hewlett-Packard, the Dave Matthews Band, The Wall Street Journal, Encyclopędia Britannica, the distributor of Guinness beers, and Spiegel's cataloge. Zuccarini even managed to find 50 ways to misspell "Yahoo" but the Internet portal won them back via a United Nations arbitration procedure in October. Also in October, madonna.com was restored to the singer, Madonna, and is no longer a porn site. Mousetrapped!US District Court Judge Berle Schiller was critical of Zuccarini for using what's known as "mousetrapping". Here's how that works: A visitor who accidentally arrives at one of Zuccarini's domains suddenly faces up to a dozen new advertising windows. As the user closes one, another opens. How does this profit Zuccarini? Easy. The merchants pay him for every ad "impression". How much? Estimates are in the range of 10 to 25 cents for every advertisement a user clicked on. The judge's ruling says that Zuccarini admitted earning between $800,000 and $1,000,000 annually from the domain names he has registered. Is this good business?No. That should be enough of an answer, but some marketers are a little dense around the ears, so let's take this a bit further. If somebody tricks you, are you likely to think "this is a good person to do business with"? Are you likely to make a purchase? One part of marketing is making a good impression on the prospective customer. Fail to do that, and you probably won't make a sale. Any company that tries to do business by "mousetrapping" you is by definition not honest. Taking stockThe Securities and Exchange Commission warns about several fraudulent practices that are increasingly common: The "Pump And Dump" Scam: It's common to see messages urging the reader to buy a stock quickly or tell you to sell before the price goes down. Often the writers claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. These people gain by selling their shares after the stock price is pumped up by gullible investors. When they sell their shares and stop hyping the stock, the price falls. The Pyramid or Chain Letter: Watch out for "How To Make Big Money From Your Home Computer!!!" messages and understand that those who suggest you can "turn $5 into $60,000 in just three to six weeks" are lying. These are just the classic pyramid scheme on the Internet. "Risk-Free" isn't: Invitations to participate in "Exciting, Low-Risk Investment Opportunities" (wireless cable projects, prime bank securities, and eel farms have all been offered through the Internet). The SEC reminds us that no investment is risk-free, particularly when it comes from a stranger who has stolen Internet access to tell you about it! Sometimes the investments touted don't even exist. They're just garden variety scams. Be wary of opportunities that promise spectacular profits or "guaranteed" returns. Send your Money Off-shore for a vacation? At one time, off-shore schemes targeting US investors cost a great deal of money and were difficult to carry out. Conflicting time zones, differing currencies, and the high costs of international telephone calls and overnight mailings made it difficult for scammers to prey on US residents. The Internet has changed all that. You are now vulnerable to scams from anywhere in the world! Be extra careful when considering any investment opportunity that comes from another country, because it's difficult for US law enforcement agencies to investigate and prosecute foreign frauds. |
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