Awash in a Sea of Fraud: No Guns, No Action

By Steve Baker, International Investigations Specialist, 
Better Business Bureau of Chicago, Omaha, Dallas, Oakland, and St. Louis

Every day we and our friends and neighbors are robbed over the phone or through emails and the Internet.  Victims almost never meet the fraudsters in person. Why does this continue and what can be done?  Although consumer education is useful, most of these thieves are only going to stop if they believe there is a real risk of going to jail – and maybe not even then. 

There are, of course, hard-working law enforcers who pursue cases, but most police are used to situations where the witnesses, victims, and perpetrators are all in their jurisdictions.  Most look for perpetrators by following the money. When law enforcers find trails that lead outside the US, many either give up or pass the information along to federal agencies, which face similar difficulties.  Even when suspects are identified, extradition is often something prosecutors are not familiar with, and it can take months or years to bring someone back to the U.S.  Fraudsters have also learned to use “mules,” such as romance fraud victims, to receive the money and send it on to them.  Thus many, perhaps most, prosecutions, are of these intermediaries who have gone beyond unwitting assistance to providing active help in committing crimes.

It is hard to convince criminal enforcers to take action unless there are “guns, drugs, or blood.”

The International Mass Marketing Fraud Working Group is one of the few groups that regularly meets to share information and work together.  Originally organized by the Justice Department, it includes law enforcers from the US, Canada, UK, Netherlands, Spain, and Nigeria, with other countries taking part periodically.  It fills a real need because many fraud schemes operate worldwide, making coordination and information sharing critical.
     Here are some other steps I believe are needed:

1. Make mass marketing fraud a higher priority. There's an old bromide that says that it is hard to convince criminal enforcers to take action unless there are “guns, drugs, or blood.”  In the mass marketing fraud arena individual losses are often not large, and there is not enough recognition that they are cumulatively very large or that the frauds are very large and well organized.
   
2. Good intelligence on the fraud problem.  This means not only collecting complaints but actively and systematically analyzing them to identify active fraud operations, people who are regularly receiving money from fraud victims, and other details.  Actionable intelligence about potential investigations could then be pushed out directly to appropriate law enforcers.  The FTC has done wonderful work in developing the Consumer Sentinel database, but, in my view, the FTC lacks effective leadership in making use of this information. In addition, the Internet Crime Complaint Center (IC3) receives complaints.  Both have databases available online to law enforcement.  IC3 seems to do more to analyze the information coming in.  But the two databases should share with one another and, again, more could be done to analyze this information.
   
3. More training for law enforcement.  In my experience, state and local enforcers have very limited knowledge about fraud or how to address it effectively.  Even on the federal level there is not very much general training, and the investigative agencies could do far more to share experiences and coordinate. Local and federal law enforcement often doesn't know about national databases, including the FBI's Internet Crime Crime Complaint Center (IC3) and the FTC's Consumer Sentinel.  There should also be a one stop place in the U.S. for investigators to contact where they can ask questions and get advice on how to proceed.
4. National strategies across agencies are needed to target the major types of fraud and take coordinated action.  Strategic planning, based on solid intelligence, would go a long way towards addressing these issues. Also useful would  be an annual fraud conference in the U.S., similar to those in Canada, to share information.  And the International Mass Marketing Working Group should be expanded and used to (again) develop intelligence, train, share information and plan strategically.
5. The extradition process should be streamlined and simplified. The current process of working through DOJ, the State Department, and their counterparts in other countries is cumbersome at best, and it is possible fraud cases are much lower priority than other crimes. It is sufficiently daunting that many enforcers likely never try.  There is also a need for much more international cooperation.  

Although consumer education is useful, most of these thieves are only going to stop if they believe there is a real risk of going to jail – and maybe not even then."

About the author
C. Steven Baker

C. Steven Baker recently retired from the Federal Trade Commission, and is now doing studies on fraud issues for the Better Business Bureau (BBB).  He puts out the weekly Baker Reports newsletter that focuses on mass marketing fraud, an issue he's followed and worked on as a law enforcement official for 35 years. You can reach him at Sbaker109@comcast.net or sbaker@chicago.bbb.org. To sign up for the Baker Fraud report, go to Sign up for weekly reports or pass along to a friend or colleague

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