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D.C. Area Tops in Fraud Complaints

Reports to FTC Up 17% Nationwide in 2004

By Jonathan Krim
Washington Post Staff Writer
Wednesday, February 2, 2005; Page E01

If the number of complaints received by the Federal Trade Commission are any guide, consumers nationwide, and particularly in the Washington metropolitan area, are getting little relief from fraud and Internet-related crime.

According to an FTC report released yesterday, residents of the Washington region -- including parts of Maryland, Virginia and West Virginia -- led the nation's metropolitan areas last year in filing consumer fraud complaints to the agency.

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Topping the list were reports of fraudulent Internet auctions. Others included complaints about shop-at-home and catalogue sales, Internet services and computers, foreign-money offers and prizes and lotteries.

Separately, the agency catalogued increasing numbers of complaints about identity theft, which occurs when a consumer's financial accounts or credit are compromised by someone using stolen personal data to pretend to be the consumer. The Phoenix metropolitan area led the nation in complaining about these crimes to the agency.

Overall, the FTC took in 635,173 fraud and identity theft complaints last year, an increase of 17 percent from 2003 and 57 percent from 2002. Those filing the complaints estimated that fraud cost them $548 million, the report said.

Officials were quick to note that more complaints does not necessarily mean more crime.

Betsy Broder, assistant director for planning and information, said that the FTC has been actively publicizing its complaint database, which is then used by the agency and law-enforcement agencies to develop cases against scam artists.


But the FTC data tracks closely with other law enforcement and computer-security surveys, which generally show Internet-related crime growing in volume and sophistication.

For example, "phishing" schemes -- in which computer users are induced to provide financial information or other private data by fraudulent e-mail or Web sites that seem to be from legitimate companies -- are a continuing problem.

According to the industry-sponsored Anti-Phishing Working Group, the number of e-mail phishing attacks grew by an average of 38 percent a month over the last six months of 2004.

Meanwhile, Internet auction fraud accounted for 71 percent of complaints referred to the Internet Fraud Complaint Center, a joint effort of the FBI and the National White Collar Crime Center.

Although identity theft complaints rose for the third straight year at the FTC, Broder said complaints about new accounts being opened by criminals in the name of innocent consumers declined. Those accounts, and the damage they can inflict on consumers' creditworthiness, are the hardest to detect and resolve, she said. Complaints about money being siphoned out of existing accounts, however, more than doubled from 2002.

The agency received 184 consumer fraud complaints for every 100,000 residents in the Washington region, compared with 172 per 100,000 residents in Silicon Valley, which came in second. At the bottom of the list of metropolitan areas, at 90 complaints per 100,000 citizens, was the Memphis area.

Broder said there might be more complaints locally because the commission is better known here, especially among federal employees.

Nationwide, the agency logged a total of 388,603 fraud complaints, an increase from previous years. Of those, 205,568 were Internet-related.

More than half the complaints were registered by people between the ages of 18 and 39.


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