In the days before cable modems, scam artists filled rented boiler rooms with telemarketers or took out classified ads in the local rags to locate victims.
Now they simply type out a hyperbolic tagline – Make $$$$Millions$$$$ While You Sleep – hit send and wait for the suckers to hit reply. Or they plug brand-spanking-new Beemers or laptops on eBay for dirt cheap, collect the cash, and don’t deliver the goods.
All too often, by the time law enforcement officials get a whiff of Internet thieves, they’ve disappeared and taken their e-mail addresses with them.
Although the Internet has made it easier for fraudsters to separate consumers from their money, investigators often rely on old-fashioned sleuthing to suss out cyber-savvy bad guys.
“The Internet is a two-edged sword for investigators,” said Brian Huseman, a staff attorney for the Federal Trade Commission. “If a website is promoted by e-mail, you can look at the registration and see who the contact is. But spammers can forge their identities; they can send messages through open relays. It can be very hard to track them down.”
The FTC announced Tuesday that a multi-agency task force had closed down 19 Internet-based schemes that had bilked consumers out of millions of dollars. Half of the crimes were auction fraud.
Of the cases already settled, the stiffest punishment fell on a young couple from the rural town of Farmington, Missouri (population 13,000), who scored $30,000 hawking nonexistent cars, computers and other electronic gear online.
The pair, Phillip Chapman, 21, and Amanda Warren, 20, first got started in auction fraud when they were mere teens, said Scott Holste, a spokesman for the Missouri Attorney General’s office. Each defendant received a 12-year prison sentence – the longest for auction fraud in the history of the state – due, in part, to the couple’s utter lack of remorse after they were indicted.
“They were Bonnie and Clyde with a modem,” he said. “Now they are separated by many miles and many bars.”
When investigations lead to a tangled web of fake identities and disappearing webpages, authorities fall back on a timeless investigative maxim: Follow the money.
“If you’re going to run a scam, obviously you’ve got to get people’s money,” said Steve Baker, the director of the FTC’s Midwest operations. “People send checks, so you look at the back of the check and see where it was deposited. If they pay with a credit card, there’s an electronic trail. It’s far easier than tracking down false e-mails.”
Another scheme the FTC task force squelched was an updated version of a decades-old swindle: stuffing envelopes for money. Like the Nigerian scams that bilk Americans out of millions of dollars each year, the old cram-ads-into-envelopes-from-the-comfort-of-home gambit has also metastasized online.
Here’s another government maxim: If it sounds too good to be true, it probably is.
“Picture yourself stuffing 500 envelopes and making $1,000.00,” the Google cache of the front door of stuffingforcash.com says. The business worked by prying a “refundable deposit” of $39 from respondents to cover the cost of materials.
People who fell for the scam never saw their money again, no matter how many envelopes they diligently stuffed. Although the postal address for the site – which ironically warned about “fraudulent and chain letter schemes” – was in Chicago, the guy running it lived in Miami, officials said.
Baker said stuffingforcash.com made $2 million in one year. That means around 50,000 suckers fell for the scheme. The FTC got a court order to shut the site down and freeze the company’s assets.
One advantage the Internet has given authorities is the ability to coordinate multi-agency investigations and create a central dumping ground for consumer complaints and information at Consumer.gov.
The FTC has created a central spam database that currently holds 15 million messages. Investigators can search the database by keyword to find out the extent of each scheme.
“We’re probably the only people in the world who want your spam,” said Baker. The address is firstname.lastname@example.org.