December 12, 1996 6:30 PM ET

Back to the future: Pyramid schemes infiltrate the Net
By Jim Kerstetter

  NEW YORK -- A three-hour hunt for scams on the Internet earlier this week turned up more than 500 sites that may be fronts for illegal pyramid schemes, Federal Trade Commission officials said here today at Internet World.

Federal, state and local agencies found the suspect sites Monday during their "Internet Pyramid Day" project. Their goal: to cut down on the burgeoning Internet scam business.

"Ten years ago, pyramid scams were all but a thing of the past," said Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, at a press conference. "Today we have a new marketplace, the Internet, which is hot and high-tech. And here come the old pyramid scams again, disguised in electronic garb and New Age jargon and trying to make a comeback."

Officials estimate that complaints to the FTC and the Council of Better Business Bureaus have jumped more than 80 percent in the past year. Much of that can be attributed to World Wide Web sites, some of which may be run offshore in order to avoid prosecution.

The FTC didn't prosecute this time around, but it did log information for future cases and advise the site managers to take their questionable pitches offline.

An E-mail advisory said in part: "It does not matter if a scheme calls new participants investors, members or distributors, nor does it matter if a scheme purports to offer products like newsletters, vitamins or phone cards."

The FTC has posted information and a demonstration of an online scam site at www.ftc.gov/pyramid.

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