The increasing globalization of the electronic marketplace offers nearly unimaginable opportunities for businesses and consumers in terms of both access and choices. Yet it also presents more risks. The same qualities that make the Internet so attractive to legitimate businesses make it fertile ground for fraudsters targeting consumers from Joliet, Illinois, to Jaipur, India. It gives con artists the ability to appear suddenly, defraud consumers quickly, and disappear without revealing their true identity or location. Stopping them requires law enforcement officials to move just as quickly -- and to operate in a culture of unprecedented cooperation.

The challenges for law enforcement officials are legion. For example, cross-border con artists can be difficult to track down and stop, and redress for consumers may be difficult to achieve. But several new initiatives are helping to establish the international cooperation necessary to take on Internet fraud -- and ultimately, to ensure that consumers develop the confidence in the global electronic marketplace necessary for it to reach its true potential. The U.S. Federal Trade Commission's (FTC) leadership in law enforcement, the use of technology, and policy development should go a long way toward increasing consumer confidence in the online marketplace.

ENFORCING LAWS

The FTC acts against fraudulent and deceptive foreign e-businesses that harm U.S. consumers. The FTC Act gives the FTC authority over acts "in or affecting commerce" and defines "commerce" to include "commerce with foreign nations." The act also gives the FTC specific authority to investigate practices that "may affect the foreign trade of the United States." Exercising extraterritorial jurisdiction raises a host of challenges relating to locating defendants, letting them know the government has filed a lawsuit against them, looking for evidence, and enforcing judgments.

Law enforcement cooperation with our foreign counterparts is critically important to our efforts to address the challenges of cross-border Internet fraud. The FTC was a founding member -- and is the president-elect -- of the International Marketing Supervision Network (IMSN), an eight-year-old membership organization of the consumer protection and trade practices law enforcement authorities of more than two dozen countries including most of the Group of Eight (G-8) major industrial countries. To encourage cooperation and communication among international law enforcement agencies, the FTC developed www.imsnricc.org, a Web site that includes members' contact information, links to their Web sites, and a password-protected section with information about current cross-border consumer protection and law enforcement issues.

At the same time, the FTC is working with law enforcement officials around the world on specific enforcement actions. For example, in FTC v. Carlos Pereira, the commission obtained restraining orders against defendants in Australia and Portugal who had engaged in a massive Internet scheme to "pagejack" 25 million Web sites around the world and divert unsuspecting consumers from their intended Web searches and link them to pornographic Web sites. With the help of law enforcement colleagues in Australia who executed search warrants "down under," we were able to get a permanent injunction prohibiting the fraudulent practices and a revocation of the fraudsters' domain name registrations.

When scams are uncovered and law enforcement actions follow, the FTC seeks redress for all injured consumers, no matter where they live. To date, in over 100 Internet-related cases, the commission has obtained injunctions stopping illegal schemes, collected over $20 million in redress for victims, and frozen another $65 million in pending cases. Of these cases, five involved redress for foreign consumers. For example, in FTC v. Fortuna Alliance, the FTC recovered over $1.2 million on behalf of 3,947 foreign consumers located in 70 countries from a company perpetrating a fraudulent Internet pyramid scheme. Indeed, our law enforcement actions have stopped consumer injury from Internet schemes with estimated annual sales of more than $250 million.

USING TECHNOLOGY

The same technology that Internet con artists use is proving invaluable to international law enforcers whose job is to track down fraudsters and stop their activities. The FTC has organized international "Surf Days" -- events that enable law enforcement agencies and consumer groups to surf the Internet for a particular type of scam at a particular time -- and then target their law enforcement efforts accordingly. Following the surfs, the FTC sends "warning e-mails" to the offenders letting them know that their sites may be violating the laws of the partner countries, and that law enforcement action may follow if their sites are not modified or taken down.

The FTC's most recent surf, GetRichQuick.con, brought together representatives of 150 organizations in 28 countries in the biggest international law enforcement effort to date to fight fraudulent Internet-based pyramid schemes, business opportunity and investment schemes, work-at-home scams, and deceptive day-trading promotions. The FTC recruited dozens of international organizations, including Forbrukerombudet (Norway Consumer Ombudsman), the Brazilian Institute of Consumer Defense, the Australian Competition and Consumer Commission, the Hong Kong Consumer Council, the Japanese Ministry of International Trade and Industry, and Consumers International, to participate with numerous U.S. federal agencies, 49 state and local consumer protection partners, and 39 different offices of the Better Business Bureaus in the surf. The result: fraud fighters from the United Kingdom to Uruguay and from Kansas to Korea uncovered some 1,600 separate sites making suspicious get-rich-quick claims, such as "earn $5,000 a week stuffing envelopes," "make $4,000 a day running your own mail-order business," and "guaranteed to make $200,000 a year operating a virtual mall."

Among the many details that made the GetRichQuick.con surf distinctive was the use of a password-protected Web site (in English and Spanish) for participating law enforcement and consumer protection officials that provided step-by-step instructions for surfing, descriptions of the targeted scams, suggested search engines and key words, and maps to show participating countries. A very efficient communications and organizational tool, the secure site allowed surfers to enter information about the suspicious get-rich-quick sites directly into a form on the Web site. The information was sent electronically to a database maintained and analyzed by staff at the FTC.

Each of the Web sites with dubious promotions received a warning e-mail signed by most of the surf partners, a clear signal to online scam artists that law enforcement and consumer protection organizations worldwide are cooperating across their borders to halt online fraud. About a month after the warning emails are sent, participants surf again to find out whether the sites in question have altered their claims to comply with the law, removed their claims or taken down their sites entirely. For sites that are still not compliant, law enforcement officials will do the necessary investigative work to determine whether the sites are appropriate targets for law enforcement, within the U.S. or elsewhere.

Consumer Sentinel is yet another vehicle designed by the FTC to facilitate the detection and deterrence of online scams. The first, and now the biggest, binational database of consumer fraud complaints in North America, Consumer Sentinel gives more than 230 law enforcement agencies in the United States and Canada free access to the data through a secure, searchable Web site, in turn enabling coordinated and comprehensive action against the most prevalent frauds. Last year, the database received 18,600 complaints related to Internet fraud and deception, bringing the total number of consumer complaints about Internet and other types of fraud to some 250,000. The FTC provides this information to other countries on a case-by-case basis, and looks forward to developing additional information-sharing opportunities.

The GetRichQuick.con surf and Consumer Sentinel are among the technological tools that will support an ambitious law enforcement effort scheduled for later this year involving many states and several countries that will bring coordinated actions against companies within their own jurisdictions.

DEVELOPING POLICY

The FTC also plays an active role in public policy discussions on international consumer protection principles for the global economy. FTC Commissioner Mozelle W. Thompson heads the U.S. delegation to the Organization for Economic Cooperation and Development (OECD) Committee on Consumer Policy, which has developed international guidelines on consumer protection in e-commerce. These guidelines set out principles for voluntary codes of conduct for businesses involved in e-commerce, offer guidance to governments in evaluating their consumer protection laws regarding e-commerce, and give consumers advice about what to expect and look for when they shop online. Several private international organizations, including the Council of Better Business Bureaus and the International Chamber of Commerce, have adopted standards for consumer protection in electronic commerce that reflect the recommendations of the OECD Guidelines.

The guidelines also promote the idea of international law enforcement cooperation. The goal of the guidelines? To build consumer confidence in the global marketplace by working to ensure that consumers are just as safe when shopping online as when shopping offline -- no matter where they live or where the company they do business with is based. The number of consumers making purchases online -- and the amount they are spending -- is soaring; some 40 percent of Internet users -- about 120 million people worldwide -- have made at least one purchase online. Last year, American holiday shoppers spent an estimated $7,000 million shopping on the Internet, more than twice the amount they spent online during the 1998 holiday shopping season. And some observers predict that annual consumer sales on the Internet will skyrocket from $15,000 million in 1999 to $78,000 million in 2003.

In addition, the Commission participates in a broad range of international forums examining consumer protection in e-commerce, including the Transatlantic Business Dialogue, the Transatlantic Consumer Dialogue, the Global Business Dialogue on e-Commerce, the Free Trade Area of the Americas, and the Asian Pacific Economic Conference. Through these organizations, among others, the FTC nurtures still more international private and public sector cooperation in combating online fraud, educating consumers, and encouraging self-regulatory consumer protection guidelines. The FTC also participates in formulating the U.S. approach to ongoing negotiations at The Hague Conference on Private International Law toward a convention on international recognition and enforcement of judgments, focusing on the treatment of consumer disputes and consumer protection enforcement actions.

Finally, the commission has held workshops on international policy issues affecting consumer protection online. Last summer, for example, more than 100 participants attended a commission-sponsored workshop to further the dialogue prompted by the OECD Guidelines, exploring questions of jurisdiction, conflicts of laws, and the roles of the private sector and international organizations in protecting consumers and fighting cross-border fraud. The Department of Commerce will join the commission in hosting another workshop on June 6 and 7 to discuss the availability of alternative dispute resolution as a way to obtain consumer redress for problematic online transactions.

The dizzying speed at which consumers are embracing new technology -- and the staggering rate of change in the technology itself -- certainly make the case for continuing the coordinated, cooperative international strategy for consumer protection online. The initiatives already under way to help ensure the safety of e-commerce and the protection of online consumers have set a new standard for public/private cooperation on a global scale and have laid the foundation for even greater consumer confidence in the global economy.