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March 1996 There are approximately 15 million Internet users in the United States. That number is increasing each month, according to industry sources. The largest commercial online services have an estimated five million subscribers nationwide. All are considered potential targets from the scam artists' point of view. The latest "hazards" on the information highway are scams broadcast over computer networks and electronic bulletin board services. The scams aren't new, just the medium. Some con artists who used telemarketing, infomercials, newspapers, magazines, and the mail to attract consumers are turning to the Internet and the online services of cyberspace to promote their scams. The Internet and the many commercial online services provide a valuable new information source for consumers. However, cyberspace has another side: fraudulent sellers use these computer services to promote bogus stock offerings, credit repair services, and exotic or high-tech investment opportunities. Promotions for ineffective weight-loss and health-related products and programs also appear online. The bottom line is: treat all ads with skepticism. Never make an investment or major purchase decision based on information from one source -- whether it's print, broadcast, or online. Advertising
on Online Services Classified
Advertising Another hot area in the classifieds is "business opportunities." Traditional "work-at-home" schemes, such as making handcrafts or stuffing envelopes, have been replaced by offers to "use your home PC to make money fast in your spare time." Other ads encourage consumers to invest in communications technologies, such as "900" number telephone services, with promises of high returns and low-risk. The investment attraction of "900" number pay-per-call services is the potentially high profit to be made -- 20 percent or more -- from the $3-to-$5 a minute fees charged to callers by the 900 service provider. The marketers promises on these investments are likely to be false. "Disguised
Advertising" The Internet and the commercial online services provide bulletin boards where interested parties can exchange information in general topic areas. In some cases, individuals contributing to the bulletin board have financial ties to companies or businesses that sell products or services related to the bulletin board subject area. This may not be obvious to the online user. What may appear to be an open discussion could be a sales pitch in disguise. Because the identities or affiliations of online bulletin board operators and participants may not be known, it could be difficult to detect disguised advertising. Some commercial online services also provide live discussion groups called "chat rooms" or "chat forums." Service subscribers can "drop by" for an online conversation by typing in their comments. These forums provide the chance to discuss a variety of subjects, including products and services. Some marketers have used these chat forums to promote their products without disclosing their interests. Tip-offs
to Fraud
When you make any decisions about investments or products, be careful. Check a variety of sources and references before you buy. For
More Information If
you have questions about whether an investment sales person is licensed or an
offered security is registered, contact the The National Fraud Information Center maintains a toll-free Consumer Assistance Service, 1-800-876-7060, to provide information about telephone or mail solicitations and online scams. They also tell consumers how and where to report fraud and how to file complaints. The Federal Trade Commission publishes free
brochures that explain fraudulent sales practices and how you can avoid them.
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