GO
Loading...

INTERVIEW-U.S. FTC's top anti-scam cop: Fraud, mobile payments in our sights

WASHINGTON, Feb 26 (Reuters) - American consumers are wide open to some of the most sophisticated scam artists ever as vast troves of their personal information are collected by data brokers and sometimes sold with no questions asked, according to the Federal Trade Commission's consumer protection chief.

Jessica Rich, director of the FTC's Bureau of Consumer Protection, also told Reuters the commission was looking closely at the mobile device market, and especially at scams involving mobile payments and apps, but would continue to investigate data breaches and bread-and-butter ploys such as fraudulent credit repair and mortgage foreclosure relief schemes.

In these areas and others, lead generators and data brokers give the scam artists needed information that help them target vulnerable populations, including the elderly, young people or people who don't speak English well.

"You've got ubiquitous data collection. Everywhere people go, basically their data is collected. You have ever-present mobile and connected devices. And those two are related," Rich said in a wide-ranging interview in her office at the commission's downtown Washington headquarters.

"You have increasingly behind the scenes entities (data brokers). The idea that consumer-facing privacy policies are going to solve it all is getting really ridiculous," said Rich.

FTC investigators believe that a phantom debt scam operation based in Atlanta and Cleveland, which a court shut down at the FTC's request in October, got information about possible victims from data collectors who either failed to secure their information or sold it.

GOING MOBILE

Rich, 51, is a graduate of New York University School of Law who has been with the FTC as a staff attorney for more than two decades. She was named to her current role in June 2013.

Rich has been the public face of the FTC recently, as it cracked down on scams including deceptive auto dealer advertisements, robocalls that fraudulently pitched medical alert devices to seniors, businesses that tricked consumers into paying for useless work-from-home schemes, and skin creams that falsely claimed to help the user lose weight.

The agency currently has cases under investigation that are related to mobile payments, Rich said.

In mid-January, it reached an agreement with Apple Inc over money that children spent through mobile apps. Apple agreed to refund at least $32 million to parents whose children spent hundreds, and in a few cases, thousands of dollars playing games like "Tap Pet Hotel" without their parents' permission or knowledge.

Another growth area for FTC's enforcers is mobile device apps, which can promise more than they deliver. For example, an app emerged that promised to treat acne with colored lights, but did nothing.

The agency also looks at data breaches, but only to determine if the company breached failed to properly secure data.

Rich recently testified to a Senate Banking Committee panel on safeguarding consumers' financial data that followed massive credit and debit card thefts at the retailer Target Corp and other stores, where she provided a broad overview of the commission's activities.

"We do an initial look into a lot of data breaches but we don't necessarily do further investigation," Rich told Reuters, but declined to discuss specifics of the Target case.

"What we look at when we are investigating is ... whether the company implemented reasonable protections. Because (not having appropriate protection) that's the violation," said Rich.

The FTC has brought 50 cases related to breaches since 2002 but, Rich said, "We looked into far more breaches than we brought cases."

One breached company, Wyndham Worldwide Corp which lost more then 600,000 credit card numbers, is fighting the FTC, saying the commission does not have jurisdiction over data security. Rich declined to comment on that pending case, beyond saying that the agency was confident of its arguments.

Lastly, Rich said that the agency would press ahead with investigations into industries that could be in the consumer scam Hall of Fame - credit repair, mortgage relief fraud and weight loss.

"Those areas are just rife with fraud," she said.

(Reporting by Diane Bartz; Editing by Ros Krasny and Andrea Ricci)