by Terry Gardiner

This story is dedicated to helping consumers understand the pitfalls and problems involved with internet business fraud, whether it is from retail or private party transactions. I know from experience that examples demonstrating how real consumers were bilked or defrauded by cyber pirates and web thieves will help other consumers see exactly how fraudulent activities work on the internet.

Learning when to act and when to wait for late internet orders is also a part of this consumer education. The following actual reports from the archives of the Webguardian Consumer Protection Website files have been solved or are continuing investigations. The names, places and dates have been changed in keeping with the Webguardian anonymity policy and all reportees have approved the use of their story in this article.

Internet Fish
Webguardian received a report on Jan 15, 1998 from Peter M. in Vermont. Peter described ordering 6 different species of live tropical fish online from Fish World. The transaction involved the shipment of six tropical fish via UPS, to be received in good health. Peter gave the company his credit card number online at a secure website and waited for his fish.

The fish arrived in 2 days and all was well, however 3 of the fish died the next morning. Peter was understandably upset. The Fish World guarantee stated that “if the fish die within 14 days, they will be replaced free of charge”. Peter called Fish World immediately and informed the customer rep that he was mad, that he wanted a full refund, and he was sending the dead fish back! The rep told Peter there were no refunds, not to send the fish back and to reorder the fish. Peter said, “No way, I’m calling the credit card company to stop payment on this bad transaction!” The rep said that if and when Peter contacted the credit card company all discussion would stop with Fish World and Peter would have to deal with the credit card company only. This made Peter mad, so he called his credit card company. The credit card company told him the transaction deduction had already been made by Fish World and there was nothing they could do, because this account did not qualify for their special refund protection guarantee plan. Peter contacted Webguardian for some help.

In his report, Peter supplied Webguardian investigators with his Fish World account number, the transaction details, and the Fish World phone number. The investigator called Fish World and asked to check the status of Peter’s account. Fish World said that Peter’s account was open with a credit for 3 fish and they were waiting to hear from him. Webguardian emailed Peter with the news and he emailed back saying he probably did not understand the simple replacement policy, but he would be happy to call and get the new fish. He successfully ordered and received his new fish, case closed!

The Moral of this Story Is:
Have a clear understanding of the product warranty and return policy, copy your order number and the company customer service phone number, and print a copy of the website order form and your contract. Finally, if a problem arises, stay calm and call the customer service rep and ask him to please help you resolve the problem. As always, if none or the above works: contact Webguardian

The Queen of Deceit Holds Court in the Newsgroups
On November 29 and December 1, 1997 Webguardian received 3 very similar reports. To sum them up, a woman named Margaret in Liverpool, England was posting ‘wanted to buy’ and answering ‘for sale’ messages in 3 different Usenet newsgroups: rec.food.cooking, rec.arts.disney.merchandise and rec.arts.barbie.merchandise. She would post a message asking trusting consumers in America to buy a specific item (in a special store) for her “mum’s birthday” or for her “sick daughter”. She needed the items right away and promised to pay for air mail shipping. The items were in the $50-$100 price range, so our reportees (thinking they were doing a good international deed) would immediately purchase and mail the merchandise to fulfill Margaret’s request.

When no payments were received in the fashion Margaret promised, our reportees became alarmed! They tried contacting her many times by email with no response, until finally each one received a simple email stating that Margaret had moved, was no longer at the company email address (she posted) and had no forwarding address. Even more painful were the postings that the 3 reportees began seeing in the newsgroups by other cyber consumers who had been defrauded by a woman in England named Margaret! The 3 reportees even tried to follow her paper trail by questioning the old email address owners. They were told the name of the town she moved to, but there was no record of her in the new location.

When Webguardian was contacted by the 3 reportees, we were unable to do an extensive local investigation to locate Margaret, having no volunteer investigators in England at this time. Webguardian then contacted Scotland Yard and located several ombudsmen (local public officials who investigate for private parties) who the reportees could turn to in England for help. This investigation is still ongoing and our computer investigators are watching the newsgroups for the ‘Queen of Deceit” to surface again!

The Moral of this Story Is:
DO NOT BUY ANYTHING IN THE NEWSGROUPS!! The Usenet newsgroups are unsecured bulletin boards for posting news and information only! They are inviting because some of the groups are of a product/collector nature and offer items for sale. Remember, these newsgroups are not regulated and no government agency is tracking them.

A footnote from this report for you to learn from: One of the ‘Queen of Deceit” reportees did not learn the dangers of cyber pirates who lurk in the newsgroups soon enough. She went back to the newsgroup rec.arts.cosmetic.merchandise and purchased something else. She mailed a money order to a P.O. Box, which was cashed promptly. As we would expect, she never received anything. Unfortunately, she had to file another report with Webguardian.

Credit Card Charges From Nowhere
On July 24, 1997 Webguardian received a report from Kathy in Arizona. She reported that for the past 4 months her credit card account was receiving charges by a company she had never dealt with or heard of. As soon as she recognized the charges, she called the credit card company, who traced the charges to a company named L.Blanco International, located in Germany. The credit card company had no phone number or address for L.Blanco and told Kathy that the deductions were made through a string of banks in Europe. They also told her that they were not equipped to handle this type of fraud, and a bulletin was posted to tell victims like Kathy to contact Webguardian.

Webguardian internet specialists worked on finding L.Blanco International by searching European data bases, telephone directories, and tracking services. No trace of L.Blanco was found . The fraudulent company most likely was maintaining a shadow website operating as a bank charge name only. At that point Webguardian directed Kathy to the FBI and Interpol and her case is pending with those services.

The Moral of this Story Is:
Even if you never use your credit card online, cyber thieves can hack into credit card data bases of Internet Service Providers or any online organization and download hundreds of credit card numbers and buyers’ names. Whenever possible, pay ISPs and online companies by check or money order. Some ISPs like MindSpring will charge you a dollar a month to use this method of payment because it costs them more “manpower” to process paper instead of the electronic numbers of your credit card, but that one dollar is a small price to pay for peace of mind. This definitely applies to all unsecured transactions on the internet. If you must use your credit card the new secure order forms which use the SSL or SET encryption protocols are safe. Be sure the company you order from is using one of these encryption systems on their order forms.

You Just Can’t Trust Anybody
On December 17, 1997 Webguardian received a report from Tom in Iowa. Tom reported an online order he made for stereo speakers from the website of Stereo Speaker City in San Diego, California.The website advertised several high end speakers at great prices with a 30 day unconditional money back guarantee. Tom asked for the technical specifications on a pair of speakers he picked out. Stereo Speaker City subsequently auto-faxed him the data. Tom then called the company that actually built the speakers to validate the technical data, and found that the data matched. Feeling confident he had covered all bases, Tom ordered the speakers.

The speakers arrived after Tom’s money order was cashed. Much to his dismay, the speakers that were shipped were not the ones he had ordered! He became infuriated and called the customer service rep listed at the website. Tom got nowhere with this call because the rep hung up when Tom expressed his anger over the phone. He then sent several flaming emails to Stereo Speaker City with no result. All he really found out was that the customer service rep, the salesman, and the owner were all the same person: a man named Hector. At this point Tom couldn’t get a refund, the real speakers he ordered, or any response from Stereo Speaker City. Since he lives in Iowa and the company warehouse is in San Diego, it wasn’t practical for him to check the place out. Consequently, he contacted Webguardian for help.

The investigators quickly found out from Tom that he had never checked the local Better Business Bureau or the city business license department for info on Stereo Speaker City (Webguardian asks that the consumer does this when making large purchases from an unknown website in a far away location). Through emails and local contacts Webguardian found that Stereo Speaker City was a garage operation with no city business license to operate. Webguardian had Tom contact the local police department at the San Diego warehouse location to handle the situation. Currently, the police are helping Tom and Webguardian is standing by for the successful resolution of this issue!

The Moral of this Story Is:
When dealing with unknown and untested website only businesses, you must check the local Better Business Bureau for any bad reports, and the local city hall for a business license. Contact Webguardian if you can’t find the BBB or city hall address. Additionally, ask for a list of satisfied customers. Quality business operations will gladly supply you with such a list.

How about Free Airline Tickets?
On August 7, 1997 Kim reported an email he had received the day before. The headline was “Free Airline Tickets.” Being curious (like most of us would be) Kim clicked on the headline and opened the letter. The email was from a website design company advertising its design and web hosting service, offering free airline tickets with your order! It sounded good, so Kim read on. The company really wanted you as a customer and if you ordered right away you could even get more free goods, the best of which would be their Kidde Porn package!

Kim contacted Webguardian about this illegal pornographic email. The investigation team knew that it was from a bulk email delivery system called ‘Spamming’. This method is used by small fringe/questionable web sites who buy large email lists from bulk email companies. The bulk email companies buy their email lists from ISPs and/or any online organizations you might register with and supply your email address to (example: you want to read a newspaper’s website. In order to access the publication, they want you to register and answer a few questions, one of which is always your email address). Another way the bulk emailers get your email address is when you visit the USENET newsgroups and give your email address in a post or xpost (post, xpost is when you offer a question or comment in a specific newsgroup). The bulk emailers cruise the newsgroups and gather all good email addresses.

Webguardian investigated the web site Kim reported and found it to be offensive. It was reported to an organization that tracks spammers and sometimes prosecutes them. Webguardian suggests that you never open or respond to unsolicited emails and if you respond with a “remove me” email this will alert the spammers that they have found a “live” email address and the price for your email address goes up in the bulk email resellers lists.

The Moral of This Story Is:
Use the free internet email sites, such as Hotmail. This free email service can be accessed from any computer that is logged on the internet and offers free Spam blocking! This service is likely to become very popular.

Conclusion
The internet is a great tool for surfing the world: For news, ideas, information and new products. As the net grows the fraudulent underworld of retail rip-offs, Usenet con artists, and Spammers will also grow, we can only hope that through internet consumer education and smart shopping techniques, we all can be surfing a safe information superhighway that we dream about. If you need help or more information please visit Webguardian.