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Feds demand Obama scam ads crackdown

Facebook and Google get pat on head

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US federal regulators are telling online advertisers like Google and Facebook to crack down on scam artists that are promising users a personal slice of Obama's $787bn economic stimulus package.

Fraudster ads and emails have mushroomed in recent weeks tempting debt-laden patsies with the quick fix of "free" stimulus grant money – all they need to do is provide personal information, download software, or provide a small down payment. It's a typical online scam at heart, but the ruse using Obama as bait has attracted special attention from the US Federal Trade Commission.

A typical stimulus scam ad

Eileen Harrington, acting director of the FTC's Bureau of Consumer Protection, warned in a press conference on Wednesday that stimulus scam ads are now being plastered on social networking sites, streaming video sites, search engines, and more. She said the FTC has already reached out to Facebook and Google to start blocking the ads and both have been cooperative. When asked if other websites have been less congenial, Harrington said she's not going to name them now, but they "will be hearing from us."

"I would hope that this would really be a showcase opportunity for online media companies to do meaningful ad screening," she said. "We spent a lot of time at the Federal Trade Commission educating advertisers how to screen for and remove problematic ads, and this one should be a no-brainer."

She said a typical example of the stimulus scam is located at presidentobamagrants.com (the website is currently down, and we don't suggest you go there anyway). The site promises $25,000 in free grant money to pay off personal debts once you sign up. The catch is in the terms of service contract, which most users tend to click through without reading. By signing up the users agrees to an initial $1.99 charge for a trial membership. But if you don't cancel in 40 days, the user gets billed a fee of $99 for full membership. After that, there's an extra $49.95 charge every month for access to the website's "resources." Signing up also automatically enrolls the user into 21 day trial of a second program – which charges $29.95 per month if not canceled.

"These websites tout free money for you, but as the saying goes, the devil is really in the details," Harrington said.

Facebook received a special nod from the FTC for being quick to pull stimulus-related scam ads. At the press conference, Harrington brought along Joe Sullivan, Facebook's top lawyer, who said the website began noticing ads five weeks ago, before the Commission contacted the company. Sullivan said the scams were spotted through a combination of Facebook's own vetting process and the website's "thumbs up / thumbs down" user feedback function on advertisements.

Google also received a nod from the FTC, although the language Harrington used was that the search engine said it's "committed to investigate stimulus-related ads that violate its anti-scam policy." Obviously, the scope of ads being served by Google is much larger than Facebook's, but Obama stimulus grant ads are still quite prevalent as of today.

The FTC said it won't discuss whether it's currently going after any of the fraudsters, although Harrington noted the Commission has "broad authority to take action against unfair advertising practices." She said some of the remedies the agency could seek range from prohibiting certain claims in the ads, shutting down the websites, or ordering that money be returned to customers.

Whether the federal hammer is dropped or not, the FTC wants ad-serving websites to take the initiative.

"It doesn't benefit anyone to go to a legitimate website and get pitched by scam artists," Harrington said.

The FTC warns unwary surfers that the stimulus package doesn't include any grants for personal financial assistance. Lists of actual government grants are also published online for free. The agency's consumer alert on stimulus scams is located here. ®

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