State AGs Fail to Adequately Protect Online Consumers
New report from the Center for American Progress and Center for Democracy and Technology finds that state attorneys general receive thousands of complaints of online fraud and abuse but have launched relatively few cases in responseWashington, D.C. — State attorneys general received thousands of consumer complaints of online fraud and abuse in 2006 and 2007 and yet, with the exception of several notable standouts, brought few significant cases in response, according to a report released today from the Center for American Progress and the Center for Democracy and Technology, Online Consumers at Risk and the Role of State Attorneys General.
Most states supplied the authors with a top 10 list ranking consumer complaint categories (Internet-related and other). In 2007, 24 out of 30 states that provided rankings reported an Internet-related category within their top 10. Eight states ranked Internet-related complaints among their top three most common consumer complaints, including four states that ranked Internet-related complaints at the top of the list.
For 2007 and 2006, 20 states provided the number of consumer complaints associated with each category—the others merely provided rankings without giving the number of complaints. In both years, these states reported roughly 20,000 Internet-related complaints.
The Federal Trade Commission also provides data for all 50 states on consumer complaints related to Internet fraud. These data are compiled from a variety of sources, including 13 state attorneys general. In 2007, the FTC reported 221,226 Internet-related fraud complaints, up almost 16,000 from 2006 and more than 24,000 in 2005.
“These numbers are startling, but they may even understate the problem,” said Reece Rushing, director of regulatory and information policy at the Center for American Progress. “Consumers are often unaware, and thus may not report, when they are victimized by online threats such as spyware or phishing. We must take action against these threats to protect consumers and preserve confidence in Internet commerce.”
As described in the report, several attorneys general, in particular those in New York and Washington state, brought important cases on behalf of online consumers. New York Attorney General Andrew Cuomo, for example, recently announced groundbreaking settlements with Priceline, Travelocity, and Cingular, which advertised using Direct Revenue, a company that surreptitiously installed adware on consumers’ computers. In Washington, meanwhile, Attorney General Rob McKenna reached a recent settlement with the operators of several websites that lured more than 13,000 Washington consumers to divulge personal information that was then sold to third parties.
Despite these successes, however, most attorneys general have not given high priority to online fraud and abuse.
