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BizReport : Internet : November 30, 2000

Exclusive Interview with Jodie Bernstein, FTC

Despite the Internet's benefits, the medium has also become a haven for con artists and new forms of consumer fraud. One agency charged with fighting fraud is the Federal Trade Commission, which has become a clearinghouse of sorts to find and root out Internet scams. All of this traces back to Jodie Bernstein, the 74-year-old director of the Consumer Protection Bureau.

by Michael Grebb, Special Correspondent

From almost her first day on the job in May of 1995, Bernstein has shifted the agency's focus to the Internet. At first, staffers had doubts that the FTC could tackle this new medium, but Bernstein made it a priority. Since then, the FTC has filed over 164 Internet cases against 563 companies and individuals.

Aside from intellect, Bernstein is known for her charm and sense of humor. Her struggle to see over the podium in the FTC's auditorium prompted the agency over the summer to purchase a lectern she can lower using a special electronic switch. Staffers jokingly refer to the apparatus as the 'Jodium.' But don't be fooled. Bernstein is tough, and she knows Washington from having worked at several different agencies since the seventies, including the FTC. Back then, she served under her current boss, FTC Chairman Robert Pitofsky, who asked Bernstein back to the agency when he took the chairman's job in 1995. These days, a large, regal desk in Bernstein's office overlooks a statue garden and the Smithsonian castle--yet, associates say she hardly ever sits at it, preferring to work from a conference table across the room. Bernstein laughingly describes herself as `an old hondler`--Yiddish for `negotiator.' And she says she'll never retire.

MG: When you first came to the FTC, there were doubts about whether the Internet was something you could tackle.

JB: The interesting thing was that there were people who were wondering, do we have authority? Do we have jurisdiction? But it only took us five minutes or so to say, `This is a new medium, but what's the difference?' Now, at least half of every day I'm dealing with Internet issues.

MG: Is the Internet really no different than other media used for fraud?

JB: Well, there are differences. The Internet is the first medium with interactive capacity. And it's global--the geographic boundaries are meaningless. That's a major difference. But we've seen every old fraud that ever existed, first in the marketplace, reappear on the Internet. Everything we saw in the fifties, sixties, and seventies is there. One of the first scams we took action against was run by a guy out of his house, and he was able to operate it as a global enterprise. That's the difference. Of course, some of the newer kinds of scams use the technology. But scams such as chain letters, and get-rich-quick and pyramid schemes--we hadn't seen those for years. And with the Internet's new expanded reach and the ability to get to so many people, they are back and they can reach a lot more people and get a lot more money faster.

MG: And the Internet obviously makes it easy to cover one's tracks, perhaps more so than other mediums such as television. Is it harder to catch scams on the Internet?

JB: Yes, it is. To counter that, we have invested in high-tech equipment to give ourselves the capacity to get to those folks, and to shut them down. And we've been able to do that with some pretty high-powered hardware and special software at use in our computer lab. And investigating Web sites from the lab gives us anonymity. We can get after scammers pretty quickly, and they don't know who we are. That's key. And we're increasingly involved in training our law enforcement colleagues in this country and in Europe about how to find fraud on the Net, how to find out who's perpetrating it, how to preserve evidence and how to take law enforcement action quickly.

MG: And aside from the computer lab, you also have Consumer Sentinel, a consumer complaint database accessible by 240 different law enforcement agencies online.

JB: Yes. It's a pretty darned sophisticated database.

MG: Does that mean everyone at the agency has had to become a `techie'?

JB: Not really. You have to be able to keep up with what's happening--and our database and our lab help us do that--but the legal tools are about the same. You have to know what the scam artists are doing, and you have to be as current as you can. We concentrate on having the technical capacity here. We've trained the staff of the Bureau of Consumer Protection so we have the technical ability to work on Internet scams and to recognize the scams that are out there and and can move on them quickly.

MG: You share jurisdiction on some of these issues with other agencies. Are there ever turfs wars?

JB: I think we've had good luck with that. Building relationships is the way to avoid turf battles. It's all about relationships. We do a lot of work with the states and with other federal agencies. That helps a lot. With Consumer Sentinel available to law enforcement across the country, the hope is that we won't have to bring every case. There are others who will. We will develop them jointly. We work across lines and put people together to work on the issues.

MG: It all sounds quite daunting. Do you ever plan to retire?

JB: I don't think so. I'm having such a good time. I saw a piece on TV this morning about why people are suited for different kinds of work. The guy they had on took tolls at a toll booth, and he loved his job. He does the same thing all day long. They asked him if he was ever going to retire. `Oh, no!', he said, `I just love this.' That amused me, so I thought, if he isn't going to retire, why should I?

Tags: fraud, FTC

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