Race Between FTC Regulations And Ecommerce –

The FTC Building
By faungg via Flickr

E-commerce is big no matter where you live: Alabama, Colorado, Delaware, Arkansas, Connecticut, Mississippi. Since the early 1990s when commerce was first allowed on the web, the Internet has become a singular pathway to an endless array of products and services. Consumers want to know they are protected online, and the Federal Trade Commission has been entrusted with that duty. But should consumers feel satisfied that we are indeed protected from ill-intentioned scammers?

The Rise in E-fraud

The rapid growth of e-commerce guarantees a rise in e-fraud. In the last 40 years, the FTC has sued dozens of companies that broke their privacy and security promises, telemarketers that violated the Do Not Call list, and more than a hundred scammers peddling spam and unsolicited spyware. But e-fraud is getting even more complicated. The FTC recently settled with Epic Marketplace about their “history sniffing” of web browsers. Epic tracked online activity so they could do a better job of creating targeted ads. When certain websites were visited, Epic stuck around in the browser histories running software to see if people were looking at sites about fertility, impotence, and credit repair, among others. Unsurprisingly, the FTC wasn’t too keen on Epic’s opaque behavior.

Another recent lawsuit against a software business and seven rent-to-own companies showcased scammers who, without permission, installed software on rented computers. This software gave them unlimited access to sensitive personal information. Ultimately, Detective Mode logged every keystroke including usernames, passwords, Social Security numbers. Webcams could be activated, and the computers could be remotely turned off and located physically. The FTC’s issue? All of this was done without full disclosure to the computer renters.

At the FTC’s pressing, even Internet titans like Google and Facebook have made promises to honor their privacy agreements by hiring outside vendors to monitor their adherence.

Think of e-fraud the same way as you think of a burglar in the 1970’s digging around in your kitchen trash when you’re sleeping. It makes sense that the person shouldn’t be in your kitchen, shouldn’t be looking through your trash, and certainly shouldn’t help him or herself to any items that happen to be laying on the table.

Computer privacy applies the same common sense rules, but behind-the-scenes activity is often a mystery. It’s easy to know your kitchen intruder is performing a criminal activity, but it’s harder to know when someone’s sniffing around in your browser history or using your credit card.

Regulating E-Commerce

Regulating and measuring different forms of e-commerce fraud and abuse is a mighty task. Just as the police can not proactively stay ahead of every speeding driver, neither can the FTC eliminate fraud prior to it occurring. However, consumers are protected by laws such as the Gramm-Leach-Bliley (GLB) Act, which requires companies that collect personal information to explain their info-sharing practices and to protect sensitive data. And a Consumer Privacy Bill of Rights Blueprint was released in February 2012 that outlines personal privacy and how congress seeks to protect it.

The FTC released a report in March 2012 stating their recommendations for businesses to operate with privacy as the default setting. While this might make logical sense to the consumer, we’re not the ones who are being asked to build privacy into the infrastructure of our e-commerce operations, a very expensive undertaking. The FTC’s report outlines the transparency with which information should be collected. Before anyone collects, shares or sells your info, you should know.

In a proactive effort, the FTC has released an online safety portal and has an E-Commerce Guide that provides an overview of applicable rules and regulations. Plus the FTC is requesting Congress enact some baseline privacy laws. While Congress considers legislation such as a Do Not Track bill, the FTC has continued to encourage accelerated self-regulation by e-commerce companies. If businesses self-regulate now, implementation of new laws won’t be too far from their previous best practices.

Protect Yourself

While you’re waiting for the FTC to catch up to e-commerce, be proactive. Here are a few basic tips and tools to protect yourself from predatory e-commerce:

  1. Be proactive with your online safety. Know why your computer thinks for you, or make sure it doesn’t. If you’re wondering why the new running shoe you’ve been searching for suddenly appears in the ads on your Facebook page, you need to know about cookies. Cookies are little pieces of information that your computer saves that makes your Internet experience a little faster, savvier. You can opt out of cookies or control how they’re used. And if you don’t want anyone sniffing around in your web history, protect yourself by always having the most updated web browser, using private browsing mode, or by deleting your browsing history. Keeping your email spam filter on is equally important. If you get a suspicious email, forward it to
  2. If you’re on a public computer, don’t assume it’s protected. And if you’re on a public wi-fi spot, make sure it’s secure so that any information you send is encrypted. You can do this by looking for “https” anytime you’re on a website – the “s” stands for secure.
  3. Secure your computer against malware. Malicious software can be installed on an electronic device (even your cell phone). Malware can monitor or control your computer activity – it can even turn your computer into a paper weight. Avoiding malware means keeping your anti-virus, anti-spyware software, and your firewall up to date. Set your computer to auto update, and don’t click on anything unless you know what it is and where it came from.
  4. Avoid scams ( by people who are taking advantage of the uninformed. Just recently the FTC hammered six companies who were part of a huge scam that tricked people into believing their computers were infected with malware, and then unnecessarily charging them hundreds of dollars to help fix this fictional problem.

If you feel like you’ve been a victim of e-commerce fraud, make sure report it. Not only will you protect yourself, you’ll protect others.