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State Policing Cyberfraud

Tribune photo by KATHY MOORE

Julia Harris, an assistant attorney general in the Tampa office, said it’s easy for people to get complacent when using the Internet.

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By JEROME R. STOCKFISCH The Tampa Tribune

Published: November 30, 2007

TALLAHASSEE - She's not fanatical about astrology, but JoAnn Carrin thought it might be fun to have a daily horoscope text-messaged to her cell phone.

She still doesn't remember exactly when or how she signed up - she said she "clicked on something" - and the horoscopes, touted as free, began to arrive.

"Three months later, I started getting the bill," Carrin said. "I'm going, 'What is this?' It took me a while to figure out, and by the time I did, I was out $30 or $40."

Carrin is no easy mark. She was director of communications for the attorney general's office under Charlie Crist, and Crist took her with him down the hall when he was elected governor. She now serves as director of the Office of Open Government in the Crist administration.

Her troubles exemplify how more and more Internet companies are ignoring consumer protection laws. Now, Crist's successor as attorney general, Bill McCollum, has established a unit in his office's economic crimes division to tackle the growing problem of Internet marketing fraud.

"It's a big issue for us," McCollum said. "There are real problems with the ability of anybody, especially youngsters, to understand that these [services] are not free, there's something else to it."

There likely will always be a certain amount of lawlessness in cyberspace, which McCollum refers to as "the wild West." But the attorney general's CyberFraud Task Force vows to make online transactions safer for Florida consumers - and it is already having some success.

This month, the attorney general's office filed suit against one Internet marketing company, accusing it of advertising free services, then slipping monthly charges onto the user's phone bill. The office reached a settlement this month with a second company accused of the same thing.

"The Internet is not going away," said Julia Harris, an assistant attorney general in the Tampa office who is one of 10 attorneys statewide focusing on cyberfraud. "People are very comfortable using the Internet, and unfortunately, it's very easy to get complacent when they should be using caution. You just don't know who's on the other side of that transaction."

How Services Trap Consumers

A common offense is getting a consumer to sign up for a "free" cell phone service such as a ring tone, wallpaper, joke of the day or horoscope. Any search-engine request for "free ring tones" typically turns up millions of such offers.

Typically, the service's home page prominently displays the word "free" or "complimentary." But elsewhere, often on a different page, or lower on the same page requiring the viewer to scroll down, is a jumble of fine print indicating the service costs $9.99 a month for some wireless providers, $19.99 a month for others.

An industry agreement allows providers of ancillary services to include their charges on the main carrier's phone bill. When a consumer enters their phone number on one of the spurious Web sites, the damage is done.

There are several traps for consumers: They are misled that the service is free. They are not notified when the charge appears on the phone bill, so many don't realize they're being socked monthly. When the charge does appear, it is often with an innocuous explanation - "delayed data products and service usage charges" in Carrin's case.

"A lot of people don't know what to complain about," said Sandi Copes, spokeswoman for the attorney general's office. "A lot of people don't read their bills line-by-line, and don't recognize the service provided. This is a new form of victimization - people often don't realize they're paying $9.99 a month."

State Sues Internet Marketers

The state maintained the transactions violate the Florida Deceptive and Unfair Trade Practices Act. On Nov. 7, McCollum announced that his office had reached a $1 million settlement with Internet marketer Azoogle U.S., a New York-based provider of cell phone products. The agreement was expected to serve as a model for the way cell phone content is to be marketed online, requiring the true cost of ring tones and other services to be displayed clearly. The $1 million penalty to the state was to go to future investigation and enforcement efforts.

On Nov. 15, McCollum announced his office is suing another marketing company, Buongiorno USA Inc., which bills itself as one of the world's largest providers of cell phone services. The suit, filed in Leon County Circuit Court, asks for a permanent injunction, potentially millions of dollars in penalties and restitution to customers.

The suit states that thousands of Floridians have been victimized.

Although McCollum has beefed up policing of cyberfraud, a focus on online crime stretches back to Crist's tenure as attorney general. In April 2005, a judge halted the operators of a massive computer e-mail spam operation. The 65,000 e-mails sent by the perpetrator linked recipients to more than 75 Web sites engaged in fraudulent or illegal businesses.

Later that year, Crist settled a civil suit against a Nassau County man who set up Web sites seeking relief for Hurricane Katrina victims. The man never intended to forward the proceeds.

Reporter Jerome R. Stockfisch can be reached at (850) 222-8382 or jstockfisch@tampatrib.com.

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