The US Federal Trade Commission has shut down an internet
pyramid scheme that defrauded consumers out of $2.9m. The action
followed a strenuous investigation into Five Star Auto Club Inc.
which operated a web site offering great incentives, in particular
an individual's “dream vehicle”, in return for small payments.
The Federal Court ruled that the scheme worked in such a way
that consumers very rarely received the rewards offered by the web
site. Last month it issued a final order which prohibits the
individuals responsible for the web site from ever running a
pyramid or multilevel marketing strategy again. They were also
ordered to repay the $2.9m that they had fraudulently obtained from
consumers using their web site.
Other recent actions brought against misuse of the internet include
the US Securities and Exchange Commission shutting down a
fraudulent “virtual stock exchange”. That incident led to charges
against 120 people in 11 different states.
Concerns over the threat of such ploys to consumers are
highlighted by the National Consumers League which seeks to protect
consumer interests. They have released figures showing that more
than $3.2m was lost through internet fraud last year.
