Most States Ineffective at Attacking Internet Fraud

A new report says that while state attorneys general get thousands of complaints a year about online fraud and abuse, not many are bringing cases in response. Are there any state AGs that are getting it right?

According to an article on the Government Technology website, the Center for American Progress and the Center for Democracy and Technology, Online Consumers at Risk and the Role of State Attorneys General released the report last month.

The study found that of the top 10 consumer complaints in 2007, 24 out of 30 states reported an Internet-related category within their top 10. Eight states ranked Internet-related complaints among their top three most common consumer complaints, including four states that ranked Internet-related complaints at the top of the list.

The Federal Trade Commission also provides data for all 50 states on consumer complaints related to Internet fraud. In 2007, the FTC reported 221,226 Internet-related fraud complaints, up almost 16,000 from 2006 and more than 24,000 in 2005.

“These numbers are startling, but they may even understate the problem,” Reece Rushing, director of regulatory and information policy at the Center for American Progress, told the publication. “Consumers are often unaware, and thus may not report, when they are victimized by online threats such as spyware or phishing. We must take action against these threats to protect consumers and preserve confidence in Internet commerce.”

The report found, however, that there were some attorneys general, in particular those in New York and Washington states, who brought important cases on behalf of online consumers. New York Attorney General Andrew Cuomo, for example, recently announced groundbreaking settlements with Priceline, Travelocity and Cingular, which advertised using Direct Revenue, a company that surreptitiously installed adware on consumers’ computers. In Washington, meanwhile, Attorney General Rob McKenna reached a recent settlement with the operators of several Web sites that lured more than 13,000 Washington consumers to divulge personal information that was then sold to third parties.