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FTC, Canada bust internet scammers

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Working with Canadian law enforcement, the Federal Trade Commission is trying to shut down a Canadian-based online scam it says is worth US$450 million.

The scam has snared consumers in at least five countries – the US, the UK, Canada, Australia and New Zealand – by promising “free” or “risk-free” trials either of snake-oil cures or dodgy work-from-home schemes, the FTC says.

Other rackets operated by Jesse Willms through ten companies he controlled included access to government grants, free credit reports, and penny auctions*, the US regulator alleges.

People who signed on for the offers were usually asked for credit card details to cover shipping fees. They then found themselves paying through the nose, with credit charges showing up for the “free” offers, and frequently, recurring monthly charges (usually US$79.95).

“The defendants use the lure of a ‘free’ offer to open an illegal pipeline to consumers’ credit cards and bank accounts,” FTC Bureau of Consumer Protection director David Vladeck said.

In addition, the FTC alleges the Willms companies used false or misleading information to persuade merchant banks to keep their merchant facilities operating in spite of rising chargeback rates and consumer complaints.

The scams were promoted using popup ad marketing and spam.

Other defendants in the FTC’s Federal Court complaint include Peter Graver, Adam Sechrist, Brett Callister, and Carey Milne. Companies named in the complaint include Circle Media Bids, Coastwest Holdings, Farend Services, JDW Media, Net Soft Media, Sphere Media, and True Net, all registered in Canada. ®

*Penny auction: for those not familiar with this racket, the user buys the right to place one-cent bids for between US$0.50 and US$1. Each bid raises the price of an item by one-cent, but bidders have paid the bid purchase price for every bid they placed. ®

Internet Security Threat Report 2014

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