(Arizona Republic 19990224) Online fraud complaints surge, watchdog: group says By John Hendren Associated Press TRENTON, N.J -- Consumer complaints of online fraud jumped sixfold last year, with Internet auctions prompting two out of every three complaints, a consumer group reported Tuesday. The number of consumers complaining that they were defrauded online went from 1,280 in 1997 to 7,752 last year, according to Internet Fraud Watch, an online fraud reporting system created by the National Consumers League. As officials in New Jersey, California and New York try to cope with a brand of fraud that defies boundaries, the Federal Trade Commission said it is launching a 24-hour Internet fraud-detecting group next month. "More people are online, and more people are getting scammed," Susan Grant, director of Internet Fraud Watch, told New Jersey Attorney General Peter Verniero and a state panel at a hearing Tuesday. The top 10 complaints by callers to Internet Fraud Watch are, in order of frequency: auctions, general merchandise sales, computer equipment and software, Internet services, work-at-home offers, business opportunities, marketing schemes, credit card offers, advance fee loans and employment offers. William. Porter, a La Platta, Md., scientist, said he gave up trying to get his money back after he paid a California-based seller $615 for a computer that never arrived following an online sale hosted by eBay, the largest Internet auction service. He still bids online to add to his collection of vintage GI Joe action figures, but now he'll rarely risk more than $100. "The payoff is you're getting things at substantially reduced prices or things that you can't get anywhere else," Porter said. "But you've got to use common sense." New York City's Department of Consumer Affairs said last month that it is looking into whether some online auction sellers are offering bogus baseball paraphernalia, and a Ventura County, Calif., district attorney has prosecuted auction house Alto for failing to file a $20,000 bond with the state for holding auctions. Grifters have followed the surge that has brought 79 million Americans to the Internet, regulators say. Market researcher Jupiter Communications estimates that the number of Internet auction customers will jump more than fivefold from 1.2 million to 6.5 million by 2000, when they will spend about $7.1 billion. The Federal Trade Commission is increasing its surveillance of Internet fraud, but the agency says such crimes are not yet among its top complaints. Eileen Harrington of the FTC's Bureau of Consumer Protection said the agency plans to set up a special unit next month to monitor the Internet 24 hours a day to look out for scam artists. The agency held a meeting in August to inform online auction houses they needed to take extra measures to protect consumers, she said. Some, including eBay, did add security measures and penalties for bogus bidders and sellers who don't deliver what they promise. "Out of roughly every million transactions we receive notification of incidents of fraud of about 27 to 30," eBay Chief Executive Meg Whitman said in an interview last month. "There are a small number of incidents, but we are working hard to make sure that no one has a bad experience." The National Consumer League notes that many consumers take their complaints directly to Internet Fraud Watch or federal regulators. The FTC last week tracked down a group of three people sharing a house in Malibu, Calif., who allegedly were charging customers without their knowledge for non-existent Internet services totaling $45 million. "These people had never heard of this company, and many of them didn't even have computers," Harrington said. The FTC has pursued at least 57 cases of alleged Internet fraud, but only one has involved an online auction. In that case, Craig Lee Hare of Lake Worth, Fla., was sentenced to six months of home detention for selling computers he failed to deliver. Consumer advocates say people who buy on the Internet should use either a credit card or buy through an escrow service, a third party that will hold payment of the check until the consumer is satisfied for a fee of 3 to 5 percent. "If somebody sends a check or a money order offline to somebody they don't know, they're asking for trouble," Harrington said at the hearing Tuesday. ----------- N E W ! 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