The Web site touting the magical weight-loss potion NordiCaLite is what Bernstein calls a "teaser site." It's one of a dozen such sites that her office has set up on the Web. And it's part of a broader strategy to use the Internet to fight fraud, rather than enable it.
Part of that strategy is a project called Surf Days. When the FTC identifies a particular problem -- say, privacy violations or large-scale online peddling of fake jewelry -- it enlists other law-enforcement officials in a little desktop reconnaissance. The FTC and its counter- parts pick a date and a time, then drop whatever they're doing and spend three or four hours surfing the Web. When they see a violation, they preserve that page for evidence. And they send the site's owners a toughly worded email from the government, warning them that deceptive claims are illegal. In March, one Surf Day -- dubbed GetRichQuick.Con -- coordinated 150 agencies in 28 countries. They found more than 1,600 questionable sites.
But Bernstein knew that if scammers saw traffic from "ftc.gov," they might grow suspicious. So she established an Internet Lab -- eight computers with high-speed connections and sophisticated surveillance software -- that allows staffers to surf anonymously. Lawyers and investigators can establish fictitious email accounts and use credit cards that cannot be traced back to the government. Think of it as the new economy's version of plain-clothes-police work.
Bernstein's team also set up a massive database of consumer complaints called Consumer Sentinel, which allows the FTC and law-enforcement agencies throughout the United States, Canada, and Australia to search for names, companies, or types of fraud. What Lexis-Nexis is to lawyers, Consumer Sentinel is to fraud fighters.
Bernstein also groups small cases together for maximum press coverage and gives them great names like Operation Field of Schemes. ("Don't you love that one?" she says with pride.) And she can deliver a sound bite as well as anyone inside the beltway: "You shouldn't need a PhD to figure out the cost of a PC," she said in June, announcing an action against computer retailers who advertised "free" computers that came swaddled in hidden costs. Last year, in another fraud case, she glared into the camera and told the online world's scammers and schemers, "Clean up your act, or close down your site." As a public official, she is a TV producer's dream: John Wayne's persona stuffed into Jessica Tandy's person.
Fraud is pretty tough to fight. Its perpetrators are crafty. Its victims are often too embarrassed to complain. On the Internet, where perpetrators can mask their identity and leave few physical footprints, the job is even tougher. The FTC is not the only government office charged with combating online bad guys. The FBI, the Secret Service, and the Securities and Exchange Commission also have Internet units. And Internet fraud is not the agency's only role. The FTC also works to keep the marketplace fair by enforcing antitrust rules and cracking down on sellers who swindle buyers in the offline world.
But just as more of commerce itself is making its way onto the Net, so are more instances of commerce running afoul of fairness. For example, in 1997, the FTC received 107 complaints about online-auction fraud. Last year, that number grew to more than 10,000. In July, the agency fined seven online retailers that in 1999 promised goods by Christmas but delivered them late, without ever notifying customers of the delay. The era of big government may be over, but the era of the giant marketplace has just begun -- which means that in the new economy, the age of the smart, savvy government regulator may be dawning.
As for the era of Jodie Bernstein, says the woman herself: "I really am going to have to retire one of these days. But I'll stay here as long as the chairman does." And after that? "Sometimes I threaten to get a job at Bloomingdale's. I've always loved retail."
Daniel H. Pink (dpink@fastcompany), a Fast Company contributing editor, is the author of the forthcoming book Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live (Warner Books).
At the top of the Federal Trade Commission Web site, the agency's mission is proudly displayed: "Working for consumer protection and a competitive marketplace." Visitors to the site can file a complaint over the Web, but the site also features a number of tips and tactics that consumers can employ to protect themselves. Here, adapted from those materials, are eight ways to protect yourself from online flimflammers.
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