Prepared statement of Jodie Bernstein.
Re: Internet auction fraud.
Date: February 14, 2000.
Source: Federal Trade Commission.

Good morning, and thank you for being here. This is a banner day, so to speak, as we kick off National Consumer Protection Week, a public/private campaign designed to provide armchair shoppers with information to help them shop safely from home. We call it "armchair armor." While the campaign provides suggestions for consumers who shop online, through catalogs and by telephone, Internet auction transactions, which attract millions of consumers a year, are a special focus.

Today we're announcing a three-part initiative to fight Internet auction fraud. We're joined by some of our fraud-fighting friends and cohorts in National Consumer Protection Week: Christopher M. E. Painter, Assistant U. S. Attorney in Los Angeles; Robert Kuykendall from the U. S. Postal Inspection Service; Joe Curran, Attorney General of Maryland who is representing the National Association of Attorneys General; and last, but certainly not least, Susan Grant of the National Consumers League.

We know that with the dramatic expansion of e-commerce, Internet auction sites are experiencing amazing growth. We also know that the number of complaints the FTC has received about Internet auctions is exploding -- from 107 in 1997 to 10,700 in 1999. We want Internet auction users and the online auction industry to know that the e-con artists who capitalize on them are 'going, going, gone'. We don't intend to let a handful of rogues erode consumer confidence in Internet commerce or Internet auctions.

Our first complaints about auction fraud arrived in 1997. We recognized then that we were seeing the beginning of a growing fraud problem, and in March of 1998 we brought the first Internet auction fraud case. That case was brought against a seller named Craig Hare in Florida who was using Internet auction web sites to sell non-existent computers, accepting payment and not delivering the goods. Based on what we learned from the Hare case, we decided to take a more comprehensive approach to combating Internet auction fraud and have developed a three pronged approach, which involves: (1) training law enforcers all over the country about auction fraud and using our Consumer Sentinel database to identify emerging fraud artists in order to refer cases to other law enforcement agencies; (2) working with the auction sites to encourage them to adopt more consumer protection measures; and (3) educating consumers. Today that three-pronged approach is working. We have trained law enforcers from coast-to-coast and tomorrow our Northwest regional office, in Seattle, in conjunction with the FBI, will be training an additional 60 law enforcement officers in Washington State. We have had very productive meetings with the auction sites, and are pleased to announce that starting this month, we will be receiving fraud complaints from eBay, one of the largest auction sites on the web. Those complaints will go directly into the Consumer Sentinel database, accessible to more than 200 law enforcement agencies. Also, we have some wonderful new consumer education material about Internet auctions, available on our web site.

Many of the law enforcement actions we're announcing today were brought by state and local law enforcers. Here, representing them and the National Association of Attorneys General is Joe Curran, Attorney General of Maryland.

To tell you about some federal law enforcement efforts, I'd like to introduce Assistant U. S. Attorney, Chris Painter, the Computer Crimes Coordinator in Los Angeles.

To talk about the many cases pursued by the U. S. Postal Inspection service, here's Rob Kuykendall.

Finally, I'd like to introduce Susan Grant, Director of the Internet Fraud Watch at the National Consumers League.

I'd like to thank everyone for coming. We are all convinced that Internet auction fraud is a blight on e-commerce and a threat to consumer confidence in the 'Net. We're committed to fighting this consumer fraud.