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Update: FTC Enforcement Activity and the Internet The FTC has made a regular practice of holding "surf days," during which the staff surfs the Internet in search of potential violations and fraud. Ronald R. Urbach e-mail this article URL At the end of September, the FTC's Bureau of Consumer Protection marked a milestone of sorts, as it announced its 100th enforcement action targeting deception on the Internet. While the case was unusual in that it dealt with the "hijacking" of legitimate Web sites so that visitors were redirected to pornographic sites, it capped a year in which we have seen the FTC expand its focus from the more flagrant scams and frauds of small-time operators to the less obviously unlawful marketing practices of well-known corporations and retailers. The Commission began imposing its brand of law and order on the "wild west" atmosphere of the Internet just over five years ago, when it brought its first Internet case, FTC v. Corzine, in September 1994. In that case, the defendant was running advertisements on America Online offering a credit repairkit that he claimed could be used to legally establish a new credit file. Since that first case, the FTC has become more sophisticated in its regulation of Internet commerce. The FTC has made a regular practice of holding "surf days," during which the staff surfs the Internet in search of potential violations and fraud. In May, the FTC created the Internet Advertising Group, a special ten-person unit within the Bureau of Consumer Protection's Division of Advertising Practices to monitor online advertising intensively over a yearlong period. The FTC has also built a new state-of-the-art computer lab to back up its Internet enforcement efforts. However, until this last year, most of the FTC's Internet cases have involved fairly ordinary instances of consumer fraud -credit repair scams, deceptive business opportunities, get rich quick pyramid schemes and miracle weight-loss drugs. But this year, for the first time, more mainstream Web sites and retailers have found themselves the subject of FTC regulatory action. During the last year, Wal-Mart and Burlington Coat Factory Warehouse were taken to task for allegedly mislabeling clothing in their online catalogs, Liberty Financial Co.'s "Young Investor" Web site was accused of falsely promising confidentiality to children who filled out a survey, and Dell Computer and Micron Electronics were charged with placing misleading lease advertisements on their Web sites. All ultimately entered into consent agreements with the FTC. The FTC's newfound willingness and ability to go after not just the most nefarious Internet outlaws, but also the more subtle transgressions of well-known companies such as these, suggests that the Commission has reached a new level of confidence and sophistication in its regulation of the Internet. The FTC's 100th Internet case, however, deals with one of the more outrageous Internet scams to date. According to the complaint, the defendants copied as many as 25 million Web pages from sites as diverse as the Harvard Law Review and the Japanese Friendship Garden, and inserted coded instructions in the copycat sites to redirect any surfer coming to the site to another Web site that contained sexually-explicit, adult-oriented material. The copycat sites also "mouse trapped" consumers by disabling their browser's "back" and "exit" commands, so that once hijacked, Internet surfers can not easily escape from the pornographic site. The FTC has already obtained a preliminary injunction in federal court and is seeking a court order to permanently purge this scam from the Internet. It seems likely to succeed. © 2000 Davis & Gilbert LLP       Davis & Gilbert LLP • 1740 Broadway • New York, NY 10019 tel: 212.468.4800 • fax: 212.468.4888   Privacy Policy • Terms & Conditions