Protect music and sports fans from ticket industry abuses

Originally posted on the Public Citizen Consumer Law & Policy Blog.

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

When Beyonce recently announced her highly-anticipated “Mrs. Carter Show” tour, fans waited eagerly for the moment tickets went on sale. But at the magic moment, thousands of fans were disappointed to learn the show had sold out in seconds.

Was this just a simple case of too much demand for too little supply, just luck of the draw since not everyone could “win” in the contest for a limited number of tickets?  But the reality of today’s ticket marketplace is neither that simple nor that fair.

In fact, the ticketing procedures for the multibillion dollar sports and entertainment industry have become the antithesis of the fair marketplace that consumers have a right to expect, especially when so many concerts and games take place in taxpayer-subsidized facilities.

Instant sellouts like Beyonce’s occur in part because a large number of tickets are set aside for paid fan club and premium credit card “pre-sales” and for industry insider VIPs, leaving thousands of regular fans disappointed each time.  Sometimes, those pre-sale and VIP tickets are the ones that end up on resale websites. And ordinary fans are left with the sinking feeling that they never did have a chance to buy those tickets at face value in the first place.

Wireless cramming: The tip of a very large iceberg

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

Wireless cramming is at the top of the Federal Trade Commission’s agenda today, as government officials, advocates and industry representatives gather to discuss the issue and potential solutions at the FTC’s Mobile Cramming Roundtable. I am honored to present at the event, along with a number of other experts on the topic. For those loyal readers unable to watch the live webcast, I can sum up my comments thusly: Wireless cramming is a big problem and is only going to get worse without action by regulators to protect consumers.

Cramming fraud has been around for decades. Beginning in the late 1990s, enterprising scam artists learned that they could get small charges placed on consumers’ landline phone bills. With doctored “authentications” and poor policing by the phone companies and billing aggregators, scammers made millions of dollars. As consumers increasingly adopted wireless phones, the scam artists moved to those bills. Wireless cramming is proving to be just a lucrative for the fraudsters. In its first enforcement action against alleged wireless cramming outfit Wise Media, the FTC stated that the company made millions of dollars in less than two years of operation.

Wise Media is likely just the tip of a very large iceberg. While there is precious little data about the scope of the wireless third-party billing market generally and the cost of wireless cramming on consumers, we can make some educated estimates based on the data that is available.

Introducing the all-new Fraud.org!

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

NCL is proud to announce the relaunch of its anti-fraud education and advocacy campaign, Fraud.org. Today’s announcement is the culmination of nearly a year of work by the League to update its signature anti-fraud program to address the continued challenge of fighting rampant online and telemarketing fraud.

For more than 20 years, anti-fraud education and advocacy have been at the center of NCL’s mission. In 1992, under the leadership of former NCL President Linda Golodner, NCL launched the Alliance Against Fraud, a coalition of groups from the governmental, business, non-profit, and labor communities all united around the common goal of educating and empower consumers to avoid telemarketing scams. This collaboration led to the creation of the National Fraud Information Center, which operated one of the first consumer hotlines dedicated to counseling consumer victims of telemarketing fraud.

In the mid-1990’s millions of consumers were getting online for the first time via home dial-up connections and early broadband networks. This provided fertile ground for scam artists to use the new communications medium to reach millions of potential victims. In 1996, in response to the dramatic growth in Internet-based scams, the League launched Internet Fraud Watch and the original incarnation of Fraud.org. Then, as now, the program was designed to help consumers find up-to-date information on emerging scams and connect them with law enforcement and consumer protection agencies. In the 2000’s the NFIC/IFW (rebranded as NCL’s Fraud Center) regularly published educational brochures, Web content, and anti-fraud educators’ toolkits to help consumers and the agencies that work with them to fight back against fraud.

A new decade has brought new leadership and new challenges to the Fraud Center. With the vast majority of the U.S. population connected to broadband and carrying mobile phones, con artists have never had a more lucrative audience for their schemes. According to estimates from the Financial Fraud Research Center, the annual cost of consumer financial fraud in the U.S. is approximately $50 billion, on par with the annual gross output of the radio and television broadcasting industry. There is a global community of scam artists, as networked and tech-savvy as any Silicon Valley entrepreneur. Their global reach makes it especially difficult for American law enforcement to prosecute the con artists. As billion-dollar scams like the Bernie Madoff case illustrate, even savvy consumers remain vulnerable to fraud.

In the face of this, NCL has not been idle. In 2012, under Executive Director Sally Greenberg, the League launched Fraud Alerts – a monthly email service designed to directly alert consumers to emerging scams and empower them with tips on how to avoid being defrauded. Through the Alliance Against Fraud, NCL will in the coming months redouble its efforts to identify emerging scams and develop new tools to help consumers avoid becoming fraud victim statistics. Today, NCL continues that mission with the relaunch of its anti-fraud campaign. Focused on its iconic Web site, Fraud.org, NCL remains committed to consumer education and empowerment in the fight against fraud.

Through a complete overhaul of its design, the new Fraud.org will make it even easier for consumers to find the information they need to avoid scams. The new user experience includes:

• An updated search function to help consumers search for scams in multiple ways, enabling them to go directly to a specific type of fraud or, using a more advanced search, identify the type of scam they’ve been exposed to if they aren’t sure;
• Content that is easily shareable via social networks so that consumers can quickly pass along fraud warnings to friends and loved ones in need;
• The ability to sign up for regular Fraud Alerts to help consumers stay abreast of emerging scams before they become victims; and
• As always, consumers who have been victims of fraud or been approached by scammers can file complaints through our secure online complaint form. These complaints are then shared with our network of law enforcement and consumer protection partners.

Even with these new resources, the League can’t do it alone. Fraud.org depends on partner organizations and individual consumers to join in the fight against fraud. That’s why we continue to encourage consumers to come forward and report scams via the secure online complaint form on Fraud.org. We are also seeking to expand the membership of the Alliance Against Fraud, so that, through a growing coalition of like-minded partners in the fight against fraud, our concerns will be better heard by policymakers who can help make a difference.

The relaunch of Fraud.org isn’t just about a new Web site. It’s about rededicating ourselves to the notion that no one deserves to be a victim of fraud. With the new resources of Fraud.org and the collective power of the Alliance Against Fraud, we stand a real chance of putting a dent in the pain that scam artist inflict on consumers every day. We hope you love the new site! Check it out today.

Manti Te’o a victim of a romance scam?

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

The bizarre tale of Manti Te’o’s relationship with a fictitious person going by the name of “Lennay Kekua,” has captivated more than just the sports world over the past 24 hours.  While many of the details of the episode remain unclear, Te’o’s story bears many of the hallmarks of the romance/friendship scam complaints that NCL’s Fraud Center receives on a regular basis. This type of fraud is especially attractive to scammers for one simple reason: it pays. In 2011, victims of these scams reported losing an average of $5,500, making romance/friendship scams the single most costly type of scam reported to NCL. These types of scams were the 7^th most-reported scam to NCL in 2011.

Manti Te’o’s story bears many of the hallmarks of romance/friendship scams reported to NCL, including:

• The relationship is exclusively virtual – It has been reported that Te’o never met “Lennay Kekua” in person. Most of their interactions were apparently over the Internet or via telephone calls. Numerous in-person meetings were reportedly arranged, but “Kekua” never arrived.
• Use of others’ photos to gain trust – Reportedly, the perpetrator of the scam against Te’o used photos pulled from another person’s Facebook and Instagram accounts. This is a common tactic used by romance/friendship scammers to make their online persona more believable and thereby gain the victim’s trust.
• “Tragic” event – “Kekua” told Te’o that she had been in serious car accident and then discovered that she had contracted leukemia. In the complaints that NCL receives about romance/friendship scams, it is not unusual that a supposedly “tragic” event is reported as an excuse to ask for money from the victim (often for fictitious “hospital bills”).

The goal of most fraudsters in romance/friendship scams is to gain the trust of their mark and eventually persuade them to send money. It is unknown whether Te’o ever sent money to the fictitious “Lennay Kekua.” However, it seems plausible that a scammer who discovered that their mark was highly-touted NFL prospect would continue to string the victim along even if the scammer was not getting paid immediately.

Much of the sad story of Manti Te’o and “Lennay Kekua” remains to be told. More details are sure to emerge in the coming days and weeks.  What this episode does illustrate is that no one, not even star football players, is immune to being taken in by skilled scammers.

Hopefully, the publicity this story generates will give other victims of these types of scams the courage to report these scams. Unfortunately, fraud is notoriously underreported, and in the case of romance/friendship scams likely even more so. Victims are understandably embarrassed and often go to great lengths to avoid facing the reality of the crime. Only by reporting the fraud can the criminal perpetrating these be brought to justice. To report a romance/friendship scam or another other instance of fraud, use NCL’s secure online complaint form. Complaints received by NCL are shared with our network of more than 90 federal, state, local and international law enforcement and consumer protection partners.

 

Newtown charity scams show no event too tragic for fraudsters

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

It seems almost unimaginable that someone would try to take advantage of the Newtown school shooting to defraud consumers. Unfortunately, in this tragedy as with others, scam artists are all too willing to stoop to a new low.  According to a report from Jeff Rossen and Avni Patel of NBC’s “Today” show, a scam artist in the Bronx posed as the aunt of Newtown victim Noah Pozner in a ploy to collect donations for a fictitious charity fund. While the scammer in this case was later arrested, the high-profile of the Sandy Hook Elementary tragedy is sure to generate other charity scams.

Unfortunately, such scams have become a predictable part of most major natural disasters or other tragedies. They cropped up in 2004 after the Indonesian tsunami, in 2005 after Hurricane Katrina, in 2010 after the Haiti earthquake, and earlier this year after the Aurora theater shooting, to name but a few. In each case, unscrupulous con artists took advantage of the natural inclination of good Samaritans to help others in times of need. Charity scammers are adept at setting up fake Web sites, sending out telephone solicitations, and using email and direct mail to try and create a sense of trust with their victims. Rarely does any money donated to these outfits make its way to the intended charitable causes.

Charity scams are doubly damaging, since they not only cost victims money, but they also deprive legitimate charities of badly needed contributions. Consumers who are approached to donate money to a charity should be sure to check out the charity ahead of time before giving. Web sites like Charity Navigator and the Better Business Bureau’s Wise Giving Alliance are good places to start when researching a charitable organization.

Unfortunately, these aren’t foolproof ways to protect oneself from charity scams. Scammers often pose as legitimate charities such as the Red Cross or UNICEF, even going so far as to set up Web sites or Facebook pages that look like the real organization’s sites. They may include the logos of respected organizations in emails or other solicitations to make themselves seem more legitimate. If you receive a solicitation to support a particular charitable organization, even one you may have heard of before, it’s usually a good idea to contact the charity directly (either via the Web or a listed telephone number for the group) and make your donation that way.

A good rule of thumb to remember is that major news events, especially ones with victims that tug at our heartstrings, are sure to bring out scammers. While it’s right to want to support others in their time of need, make sure and donate smartly to avoid becoming a victim of a charity scam. For more information on spotting and avoiding charity scams, click here.

NCL symposium examines consumer issues and the next Congress

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

The freshman class of the 113^th Congress will feature 12 new Senators and 67 new Representatives. For consumer advocates, this is an opportunity to introduce ourselves to these new lawmakers and develop relationships that can help promote our economic and social justice mission on the Hill. Freshman like Senator-elect Elizabeth Warren have long been heroes to the consumer movement, but others such as Senator-elect Heidi Heitkamp and Members-elect Kevin Cramer, Joseph Kennedy III, and George Holding all have experience in regulatory agencies and in the legal system where consumer issues arise.

The incoming members of the 113^th Congress will have a full agenda when it comes to consumer issues. Even before the next Congress, the Lame Duck session of the current 112^th Congress is tackling the so-called “fiscal cliff” of tax increases and spending cuts mandated by the Budget Control Act of 2011.

It is in this context that NCL convened our inaugural Consumer Issues Symposium on Wednesday, November 14 to examine the future of three important consumer issues in the lame duck session and the coming 113^th Congress. We chose to focus the event on three issues near and dear to NCL’s heart – food safety, sequestration and privacy. The goal of the event was to examine not only the future prospects for consumer-focused legislation in Congress, but also to highlight the real-world impact of these policy areas on consumers.

For example, the sequestration cuts envisioned as part of the “fiscal cliff” will require numerous federal agencies to significantly scale back their activities. When the USDA’s Food Safety and Inspection Service is projected to take an $86 million haircut, what does that mean for the safety of America’s food supply? Likewise, in a scenario where the federal Low-Income Home Energy Assistance Program is on track to take a $285 million budget hit, how will consumers living through the cold winter months adjust?

The event, organized in partnership with the law firm of Kelley Drye, was a great success. (Historical note: One of Kelley Drye’s name partners was Nicholas Kelley, son of Florence Kelley, the first General Secretary of NCL). It featured more than a dozen expert speakers from Executive Branch, Congress and advocacy organizations, including FTC Commissioner Julie Brill, FDA Deputy Commissioner Michael Taylor and former Congresswoman and CPSC Commissioner Anne Northup. Photos from the event are currently viewable on NCL’s Facebook page.

 

Get ready for Frankenstorm scams

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

Many consumers on the East Coast are battening down the hatches in preparation for the so-called “Frankenstorm” that is on track to pummel the Mid-Atlantic and Northeast states this weekend and early next week. Once the storm passes, however, a new type of threat is sure to pop up – scam artists.

After practically every natural disaster, fraudsters pop up with cons ranging from charity scams to bogus home-repair offers.  Before your power goes out, be sure to check out our consumer guides on these two scams:

Top 10 red flags of home repair scams

Tips for spotting charity scams

Bonus! If you’re considering escaping to somewhere with normal weather for a little R&R, check out our consumer guide to travel scams before you leave.

Finally, if you’ve fallen victim to or been approached by any scam artist, be sure to report it to NCL’s Fraud Center at www.fraud.org.

 

Live event today! Chat with the pros about managing personal finance online

NCL live online event @ 2:30 pm Eastern today!
Personal financial management tools: opportunities and challenges for consumers

Event details

• When: Today! September 27, 2012, 2:30pm Eastern
• Where: The event will be broadcast live on NCL’s YouTube channel and at nclnet.org
• Who: Confirmed panelists include: John Breyault, NCL (moderator); Sophie Raseman, U.S. Treasury Department; Ken Sun, Mint.com/Intuit; Phil Christian, Chase; Mark Schwanhausser, Javelin Strategy & Research; Linda Sherry, Consumer Action; and Ron Shevlin, Aite Group
• Who should attend: Personal finance reporters, bloggers, policymakers, consumer advocates, and consumers interested in personal finance issues
• To RSVP for this free event, click here

Join NCL’s chat with the pros and learn more about the benefits and concerns with online personal financial management tools (PFMs).

Far too many consumers face aggressive financial fees, inadequate savings, and piles of debt. One way that consumers are addressing this is by adopting online tools to help them manage their personal finances. It is estimated that 26 million consumers will be using PFMs by 2015.

What challenges and opportunities do those tools create?

Questions that will be explored by an expert panel of analysts, advocates, regulators and PFM industry representatives include:

• Given the large amounts of sensitive financial data that consumers are sharing via PFMs, what are the benefits they are getting from these tools?
• Are PFMs helping consumers pay less in fees, save more money and get out of debt faster?
• How are consumers’ financial management habits being affected by the new breed of mobile and bank-affiliated PFMs?
• Does the government have a role in ensuring consumers can use PFMs safely and effectively?

Panelists will take questions from our online audience on YouTube and via the Twitter.

Ask your questions in advance of the chat — or follow it via the Twitter hashtag: #eTool$

This event was made possible thanks to an unrestricted educational grant from Chase Blueprint®.

This September 19, remember: ‘It Can Wait’

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

“My aunt was in a car accident. She was texting and driving and drove off the edge of a bridge that didn’t have any guard rails. Her skull was crushed in and she was killed instantly. That haunts me every day. I want to take the pledge for her, and for my family and friends. #itcanwait” – Kelsey, TN

Today is September 19, 2012. While it may seem like any other Wednesday, it’s a special day for consumers concerned about the rising numbers of serious accidents attributed to texting while driving.  The quote above comes from a consumer who wrote in to ItCanWait.org, a website created by AT&T in partnership with more than a dozen community organizations (including NCL) to raise awareness about the dangers of texting while driving.

The numbers are frightening.  A 2009 Virginia Tech study found that operators of heavy vehicles or trucks are more than 23 times as likely to risk a crash or near-crash as non-distracted drivers.  A study by the Centers for Disease Control and Prevention founds that 58 percent of high school seniors said they texted or emailed while driving. About 6,000 deaths and half a million injuries are attributed to distracted driving per year, according to the U.S. Department of Transportation.

Clearly, texting while driving is an issue that continues to pose a major threat to consumers, despite the significant numbers of states and localities that have outlawed texting while driving.  Despite these laws, thousands of drivers continue to get hurt due to distracted driving, and particularly texting while driving.

More needs to be done to educate consumers about the dangers of distracted driving. This is why NCL is proud to support AT&T’s “It Can Wait” consumer education campaign.  If you haven’t already done so, head over to ItCanWait.org and sign the pledge to refrain from texting while driving.  Today is “Pledge Day,” so encourage your friends to support the campaign by sharing information about the campaign on Facebook and tweeting about it with the #itcanwait hashtag.

Remember, no life is worth risking over a text message. As Val from Texas put it:

Life >>>>> A silly little text message #itcanwait

‘CN U PIK ME UP FRM SOCCR, MOM?’ – NCL survey examines pre-teens and cell phones

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

In addition to lunch money, friendship bracelets and the occasional frog for teacher’s desk, today’s pre-teens are just as likely to carry a cell phone in their backpacks.  According to a new survey released today by NCL, nearly 6 in 10 (56 percent) of parents of tweens have purchased a cell phone for their tween-aged (8-12) children.

Why the focus on pre-teens?  According to a 2007 survey by C&R Research, 46 percent of children ages 9-11 had cell phones.  Today’s report shows that cell phone penetration rates among this demographic continues to climb.

In response to this development, over the past twelve months, NCL has worked to provide parents of younger children the tools they need to make an informed buying decision.  Parents of pre-teens clearly have different priorities to consider regarding cell phone use than parents of teenagers.  In addition, more than 30 percent of American households now have cell phones as their only phones.  These market developments have left many parents scratching their heads as to how they deal with this brave new world of kids and phones.

That’s why NCL has developed a parent’s guide to pre-teen cell phone use.  We also have tips for parents on how to take advantage of parental control technologies to manage kids’ cell phones.  Indeed, NCL’s survey found that among parents whose cell phones bills were higher than expected, investigating parental controls was the preferred method to control costs (62 percent), higher than setting a monthly budget (38 percent), cancelling the phone (23 percent) or switching to an unlimited service plan (22 percent).

It’s never a good idea to go grocery shopping without a list (or on an empty stomach), because you’re likely to buy things you don’t really need.  The same principles are at work when it comes to buying a cell phone. A rough game plan developed before you start shopping can help you stay within budget and get a phone that fits for your kids. Our pre-teen cell phone guide has some suggested questions to ask yourself before you head in to the cell phone store and your child’s eyes get wide at the site of the latest iPhone or Android superphone.

Armed with a good idea of what kind of phone works for your child and how much you want to spend, parents can (hopefully!) avoid sticker shock from pre-teen cell phone use.

Now if they could just make a consumer guide for getting kids to eat their broccoli and stop picking on their kid brothers …