Investigators Go Online in Search of ‘Cyberscams’

WASHINGTON — Federal and state investigators, warning that age-old scams are emerging in the cutting-edge world of the Internet, launched a coordinated search of the World Wide Web this week and said they uncovered hundreds of possible con artists.

The Federal Trade Commission and other agencies announced Thursday that they have sent e-mail messages to operators of more than 500 Web sites, warning that they may be operating illegal pyramid schemes, lotteries or chain letters.

“We’re putting scam artists on notice. The Internet is not going to be a new marketplace where scam artists roam free,” said Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection. “We’ve sent the message: ‘Clean up your act or close down your site.’ And we plan to follow up to see that they do.”

On Monday, investigators from the FTC, the Securities and Exchange Commission, the Federal Communications Commission, the U.S. Postal Inspection Service, 20 state attorneys general and five state securities regulators jointly ventured into cyberspace in a probe called “Internet Pyramid Surf Day.” The investigators spent the day cruising the Web searching for scams.

“In just one day, we identified over 500 Web sites that make offers which may involve illegal pyramid schemes,” Bernstein said.

“Promoting chain letters on the Internet is simply putting old wine in new bottles,” U.S. Chief Postal Inspector Kenneth Hunter said. “Electronic chain letters are identical to old-fashioned scams in that they are likely to profit only the originator.”

The coordinated federal-state crackdown was announced during a news conference at the fall Internet World ’96 Conference in New York. Monday’s cybersearch, Bernstein said, was conducted with the cooperation of five major online companies: America Online Inc., AT&T; Corp., CompuServe Corp., Microsoft Corp. and Netcom On-Line Communications Services Inc.

The FTC, the federal government’s consumer protection agency, has for months warned that con artists are taking advantage of the Internet.

In May, the FTC charged a Bellingham, Wash., firm, Fortuna Alliance, with running an illegal Internet pyramid scheme--promising easy riches to Web users who send in $250 and sign up two new members, then watch the money roll in from a cut of future membership fees. Fortuna denied the charges.

Operators of the sites identified as possible high-tech pyramid schemes during the sweep were notified that law enforcement agents are watching, Bernstein said. Information from the Web pages was downloaded for possible use as evidence in later cases, and operators were told where to go for information about what’s legal and what’s not. Investigators will revisit all those sites and take appropriate action if the operators don’t mend their ways, Bernstein said.

“We’ve sent a message that we’re not going to tolerate illegal pyramid schemes on the Net,” Bernstein said. “We want the cyberworld to know that we intend to do everything we can to keep the electronic marketplace free and fair.”

The officials did not reveal the names of any Web sites they are monitoring.