Scams Plague the Internet from the April 2000 Actrix Newsletter

Based on an article by Tom Stein and published in The San Francisco Chronicle 7 September 1999.

Bill Banks, a 42-year-old financial planner from New Jersey, was in the market for a new set of golf clubs. Like many of today's wired consumers, he jumped onto the Internet to check out the best deals. He now wishes he hadn't.

Banks' foray led him to a small Internet company called Gary Player Direct Inc., named after the famous golf pro. Impressed with the look of the Web site and the Gary Player name, Banks placed a credit card order for $719 in April.

The clubs arrived a few weeks later, but after testing them out at his local golf course, Banks decided they weren't for him. The company had promised a 60-day money-back guarantee, so he shipped the clubs back and waited for his Visa statement to be credited. Four months later, he's still waiting -- and fuming.

"I've phoned their customer service number countless times, but mostly I've just been hung up on or disconnected," he said. "If this was a traditional retailer, I could go to the shop and stand in front of them and demand satisfaction," he said. "But in cyberspace, I feel I don't have any control."

The number of online fraud complaints leaped from 1,280 in 1997 to 7,752 last year, according to the Internet Fraud Watch, a consumer watchdog group in Washington. Susan Grant, who directs the organisation, expects to tally well over 10,000 complaints this year.

A number of consumer groups, such as the Internet Fraud Watch and Better Business Bureau Online, are popping up to educate the public about the perils of conducting business in cyberspace. For the most part, these groups believe in the power of the Internet and the convenience it offers consumers. They just want to make sure people are aware of the risks and take the proper precautions.

One piece of advice is to question out-of- this-world claims made on Web sites. "If it's too good to be true, it probably is," said Pat Wallace, president of the Bay Area chapter of the Better Business Bureau, based in Oakland.

The most flagrant piece of Internet fraud Wallace has encountered was a Web page hosted by a fly-by-night company called National Research Inc. The site was offering 12,000 free computers and all consumers had to do to receive one was send $20 to a certain post office box in Muskegan, Michigan.

"This was a pure scam," said Wallace. "They were cashing $20 cheques from anyone they could, and then they dropped off the face of the Earth."

Cash and cheques are the worst way to purchase goods and services over the Internet, according to experts. Cash, checks or money orders don't offer the same protection that a credit card does. Once a cheque or money order is cashed, there is little to no chance of restitution. Credit cards [make] up a minuscule 8 percent of all fraudulent transactions, while cheques and money orders made up 38 percent and 33 percent, respectively.

In an effort to make Internet shopping less risky for consumers, the BBB (Better Business Bureau Online) two years ago unveiled an online reliability program. As part of the program, a representative from the agency visits each company, no matter how big or small, at its place of business to determine whether it can indeed deliver on what it promises on the web site.

"We need to meet the people and ascertain the company has a real physical presence, and is not just a bunch of screens," said Steve Salter, project director for BBBOnLine.

So far 3,700 companies, such as Lands End, Staples, eBay and CDNow have received the seal of approval, while several hundred others have been turned down.

CYBERSHOPPING TIPS
  • Do business with companies you already know and trust.
  • Don't judge reliability by how nice or flashy a Web site may seem.
  • Look for the company's physical location, including the mailing address and phone number.
  • Determine the level of the company's security measures and privacy policies before submitting credit card or personal information.
  • Be extra cautious about deals that seem too good to be true.
  • Pay by credit card, not cash or cheque.
  • Print out a copy of your order and confirmation number for your records.
  • Know your rights. The same laws that protect you when you shop by phone or mail apply when you shop in cyberspace.