Money & the Law: Organization battles consumer fraud across globe
It probably won’t surprise you to know that consumer fraud is not unique to the United States. Thanks in large part to the borderless phenomenon known as the internet, consumer fraud is international in scope.
With that thought in mind, I was interested to learn there is an organization in place dedicated to combating consumer fraud at the international level. This organization, the International Consumer Protection and Enforcement Network (ICPEN), has been around since 1992. Its primary activity these days is to host a website, econsumer.gov, which provides an online platform connecting some 65 participating countries and accommodating nine different languages.
The ICPEN website allows consumer fraud victims to file reports wherever they may be. It also has a link, controlled by the United States Federal Trade Commission and known as the Consumer Sentinel Network, allowing government agencies to securely share information in pursuit of combating the spread of new consumer fraud threats wherever they might arise.
ICPEN has no enforcement authority. Enforcement is left to the consumer protection agencies of participating countries. The hope, however, is that the expeditious reporting of a scam appearing in one country will allow other countries to be on the lookout for the scam and act quickly to curtail its spread. In any event, if you think you’re a victim of a consumer fraud crossing international borders and want to be a good international citizen, you should go to econsumer.gov and file a report.
Another consumer protection item I recently came upon and thought you should know about is a proposed new trade regulation rule coming from the Federal Trade Commission, to be known as the Rule on the Use of Consumer Reviews and Testimonials. Under authority found in the Federal Trade Commission Act, the FTC has created numerous trade regulation rules having the effect of laws passed by Congress.
This time around, the FTC decided it needed a new tool in its toolbox to combat the widespread and growing use of deceptive product endorsements and testimonials. (One organization that attempts to keep track of this activity, The Transparency Company, has estimated 8.5% of consumer reviews are fake.)
The new rule will, among other things, prohibit the writing or selling of reviews or testimonials by someone who doesn’t actually exist or who has no actual experience with a product or service. The rule will prohibit review hijacking — using a review written for one product or service for a different product or service.
The rule will also curtail the buying and selling of reviews, both positive and negative. And it will stop insiders of a company from writing reviews of the company’s products or services. Companies will be prohibited from setting up a website claiming to be a source of independent opinions when in fact the company controls the content of the site.
The rule will prohibit the use of legal threats, intimidation or false accusations as a means to suppress negative reviews. And the rule will prohibit businesses from selling false indicators of social media influence, such as a fake number of online followers.
The public comment period for the new rule ended Sept. 30, so the FTC should now be working on minor tweaks, with a release of the final rule down the road in a few months. Per Samuel Levine, director of the FTC’s Bureau of Consumer Protection (not to be confused with the FTC’s competitor, the Consumer Financial Protection Bureau), the new rule “should help level the playing field for honest companies.”
Jim Flynn is a business columnist. He is with the Colorado Springs firm Flynn & Wright. He can be contacted at moneylaw@jtflynn.com.
Money & the Law columnist Jim Flynn. THE GAZETTE FILE
