The U.S. Experience in Handling Consumer Complaints
FTC Complaint Database and its Use in Enforcement
2 June 2008 Brian Huseman
The views expressed are those of the speaker and not necessarily those of the FTC or any other person.
The FTC Complaint Database
The FTC is the primary consumer protection agency in the U.S., but we are small. The US has a population of more than 300 million persons, but the FTC has about 1100 employees. Even though we are small, the FTC has jurisdiction over the advertising and sale of most products and services that are sold nationally.
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The FTC Complaint Database
Because we are small in relation to the number of consumers, the size of our economy, and the number of products and services that are sold nationally, the FTC has to focus our limited consumer protection resources on issues causing the most significant problems to consumers. The FTC encourages consumers to tell us about problems with products and services.
This helps the FTC to be proactive, and responsive to consumer problems.
Consumer complaints are a valuable resource in identifying scams, patterns, and trends in consumer fraud and identity theft. In 2007, the FTC received over 800,000 consumer complaints.
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The FTC Complaint Database
How Consumers Complain to the FTC Consumers complain to the FTC in several ways.
Consumers can go to the one of several FTC's websites and fill out a complaint form. Consumers can call the FTC's toll-free numbers, and speak with an information specialist who takes down complaint-related information. Consumers can send a complaint to the FTC via US mail.
Consumers can forward Spam messages they receive to the FTC.
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The FTC Complaint Database
How Consumers Complain to the FTC
Federal and state consumer protection entities also forward complaints they receive. These include the 50 state Attorney Generals, the U.S. Postal Inspection Service, and the U.S. Social Security Administration. Certain non-government consumer organizations forward complaints to the FTC. These include some of the U.S. Better Business Bureaus, the National Consumers League’s National Fraud Information Center, and the Xerox company.
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The FTC Complaint Database
How Consumers Complain to the FTC
Certain agencies from other countries forward complaint information to the FTC. These include PhoneBusters in Canada. All consumer complaints, regardless of their source, end up in our database
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The FTC Complaint Database
How Consumers Complain to the FTC
When consumers speak with an information specialist, or when they fill out a complaint form on the FTC's website, consumers are asked to provide information about themselves, the company or individual about which they are complaining, and transaction information. Consumers voluntarily provide us with this information – none of it is mandatory (e.g., they can submit anonymous complaints). Also, the information is unverified; we do not know if it is accurate.
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The FTC Complaint Database
How Consumers Complain to the FTC
We collect complaint-related information that is of greatest use to law enforcement. What was the problem? How was the product or service advertised? Broadcast ad? Print ad? Face-to-face Sale? Spam? Telemarketing? How did the consumer pay for the product? Cash? Credit card? Bank check? Money transfer?
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The FTC Complaint Database
How Consumers Complain to the FTC
On our econsumer.gov website, created with consumer protection agencies that belong to the International Consumer Protection and Enforcement Network (“ICPEN”), we collect complaints about crossborder ecommerce fraud. Econsumer.gov complaint forms are available in English, Spanish, French and German. General consumer information is available in these languages as well as Polish and Korean.
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The FTC Complaint Database
The Consumer Response Center
The FTC also operates a Consumer Response Center ("CRC"). Consumer information specialists work at the CRC. They speak with consumers who call the FTC's toll-free telephone numbers. The consumer information specialists respond to requests for information on consumer fraud, identity theft, telemarketing problems, and other areas of law within the FTC's jurisdiction. Currently, we receive over 35,000 contacts per week from consumers asking for information or filing complaints by the web, telephone, mail and in person.
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The FTC Complaint Database
The FTC's consumer complaint database is the only national consumer fraud, identity theft and Do-Not-Call complaint repository in the United States. We have several subsets of complaints within our database: General consumer complaints, including complaints about fraud. Complaints about Identity Theft. Consumers complaining that a telemarketer called them even though they had registered their telephone number on the FTC’s Do-Not-Call Registry. We have a separate database containing Spam messages forwarded to us by consumers.
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The FTC Complaint Database
Consumer Sentinel Network
The Consumer Sentinel Network is a secure, restricted portal through which external users can access various subsets of complaint records in our database. External users who have received authorization to access our database include federal, state, and local law enforcement officials, and staff from certain agencies in other countries. Membership in the Consumer Sentinel Network is free. Currently, more than 1,700 member agencies belong to the Consumer Sentinel Network, including 23 agencies in ICPEN.
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Consumer Sentinel Leading Partners and Data Contributors
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The FTC Complaint Database
Consumer Sentinel Network’s Role in Law Enforcement
By providing a central repository for consumer fraud, identity theft and National Do Not Call Registry complaints, the Consumer Sentinel Network allows law enforcers to interact, share information and ideas, and leverage their individual agency’s resources and abilities. Consumer complaints are a valuable resource in identifying scams, patterns, and trends in consumer fraud and identity theft.
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The FTC Complaint Database
Consumer Sentinel Network Complaint Data Consumer Sentinel’s database currently contains millions of individual consumer fraud and identity theft complaints collected by the FTC and external data contributors. Law enforcers can focus searches for complaints by company or suspect name, address, telephone number, consumer city and state, language spoken, types of scams, financial institutions involved, police report number, comments, URL, and more.
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The FTC Complaint Database
Other Tools on Consumer Sentinel
Law enforcement alerts Auto query Trend and ad hoc reports National Tape Library index Law enforcement contact information Reference materials
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The FTC Complaint Database In the Future
Find complaints faster and more easily Store search results in 100 MB of online storage space on Consumer Sentinel Search within searches Gather related complaints using keywords in the search results
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The FTC Complaint Database
Sharing Complaints
The FTC shares fraud data with law enforcement officials from U.S., Canadian and Australian federal, state and local agencies, including the 50 state Attorneys General. The FTC shares Identity Theft complaints with U.S. and certain Canadian law enforcement agencies. We share Do-Not-Call complaints with certain U.S. agencies. ICPEN member agencies can access cross-border complaints that have been filed through the www.econsumer.gov site.
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The FTC Complaint Database
Sharing Complaints
The FTC’s database contains millions of complaints about fraud, identity theft, and Do-Not-Call registry violations. The Consumer Sentinel Network allows law enforcers to share information about investigations and targets. By sharing the complaint data with law enforcers, the FTC is able to leverage its resources as well as those of its partners.
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The FTC Complaint Database
National Do-Not-Call ("DNC") Registry The DNC Registry is a central database of telephone numbers of consumers who choose not to receive telemarketing calls. Consumers are able to register their name online or by telephone. Registration is free. There are more than 160 million consumer telephone numbers on the Registry.
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The FTC Complaint Database
National Do-Not-Call ("DNC") Registry Consumers who receive telemarketing calls after they have registered their telephone numbers are able to lodge complaints either online through an FTC website, or by telephone. The complaints are entered into the FTC's complaint database and can be accessed through the Consumer Sentinel Network by U.S. law enforcement agencies. There are several million DNC complaints.
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The FTC Complaint Database
The Spam Database
The FTC maintains a separate database of Spam that consumers have forwarded to the FTC. Consumers forward an average of 270,000 pieces of Spam per day. In 2007, the FTC received almost a 98 million pieces of Spam. FTC staff can sort and review Spam by certain criteria. The Spam the FTC has received has formed the basis of several research studies the FTC has conducted on Spam and lawsuits filed in federal court.
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Categorizing Complaints
Must be easy for complaint-takers to code Large enough to capture multiple incidents but small enough to be meaningful Organizing information makes complaint data relevant
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FTC 2007 Top 10 Complaint Categories
1. 2.
3. 4. 5.
Identity theft Shop at home/catalog sales Internet services Foreign money offers Prizes/sweepstakes/ lotteries
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7. 8. 9.
10.
Computer equipment and software Internet auctions Health care Travel, vacations and timeshare Advance-fee loans and credit protection/repair
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Defining the Categories
Shop at home/catalog sales: Problems such as undisclosed costs, failure to deliver on-time, nondelivery, and refusal to honor a guarantee, with purchases made via the Internet, telephone, or mail Prizes/Sweepstakes and Lotteries: promotions for “free” prizes for a fee; foreign lotteries and sweepstakes offered through the phone, fax, e-mail or mail; etc.
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The FTC Complaint Database
How the FTC Uses the Complaint Information
Information in the complaint databases lets us know when new kinds of fraudulent practices appear in the marketplace that need FTC attention. EXAMPLE: The FTC has devoted substantially more resources to fighting identify theft after learning of the growing number of complaints in this area. In addition, FTC staff who are investigating a business can search the appropriate databases to see if complaints have been filed against that business, and if so, the reason for the complaints.
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The FTC Complaint Database
How the FTC Uses the Complaint Information
In some instances, we call the complaining consumer to get more information about what the business does. Many times, we use consumers who have filed complaints with the FTC in the cases we file in federal court to prove law violations.
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Identity Theft Clearinghouse: How It Helps Investigators
Initiate new investigations
Multiple victims report same suspect name or address. Additional addresses and phone numbers related to those leads.
Strengthen ongoing investigations and prosecutions additional victims and witnesses
Additional addresses and phone numbers used by suspect. Additional defrauded companies.
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Steps in Choosing Case Targets
1. Strategic Planning 2. Goals in Picking Cases 3. Selecting Targets
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Strategic Planning and Case Selection
Complaints
Strategic Plan
Policy Analysis
Action Plan
- Enforcement Cases - Consumer Education - Business Education - Industry Rules - Self-Regulation
Political Considerations
Priorities 1. _______________ 2. _______________ 3. _______________ 4. _______________ 5. _______________
Budget Limitations
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Strategic Planning and Case Selection
Strategic Plan
Priorities 1. _______________ 2. _______________ 3. _______________ 4. _______________ 5. _______________
- Highest Consumer Injury
- Requires Least Resources - Health and Safety - Economic Injury
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Overview of Strategic Planning
Gather Views of Stakeholders
Politics; consumers; business; etc.
Break down different areas
Credit, National Advertising, Internet, etc.
Decide goals and enforcement methods
Some areas may require tools other than cases
Then decide on what kinds of case and who will bring them
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Selecting Cases
Effective consumer protection focuses on a nation’s consumers as a whole, rather than on individual consumers. Pick cases carefully to achieve the agency’s goals.
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Goals to Achieve with Cases
Define a practice as illegal to provide business guidance Learn about emerging practices Maintain general level of compliance with laws Enhance consumer confidence in marketplace Stop practices that cause the most injury to the largest number of consumers
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Considerations in Choosing
Look at types of consumer injury involved Whether other agencies or private action could resolve problems What remedies can we employ? Novel legal issues What resources will be needed?
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Sources of Cases
Complaint Database lets us identify what kinds of deceptive or fraudulent practices consumers are troubled by. In addition, we learn about potential practices from other sources:
Informal ad review; News media; Referrals from businesses; and Questions from other parts of the government.
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Deciding Who to Investigate
Identifying targets for investigation: Often, there are several entities engaged in a similar practice. When given a choice of targets, focus on companies that likely caused the greatest amount of consumer injury from the practice.
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Thinking Through Case Ideas
Break down the whole transaction
How did the consumer first get contacted? What were they told? How did they pay? What did they actually get? What happens if they complain? Would a consumer who understood the offer have paid money?
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What Information Will be Needed?
Decide at outset steps needed to investigate
Business records Consumer complaints Records from third parties Do we contact the company directly?
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What Remedies are Needed?
Stop the practice Informational remedies needed? Should there be a fine or penalty? Should consumers get their money back? Should the company continue to operate? Should there also be a criminal case?
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U.S. Experience in Handling Complaints and Enforcement
Brian Huseman bhuseman@ftc.gov +1 202-326-3320
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