The Federal Trade Commission needs more power to prevent Internet fraud, a top agency official told lawmakers Thursday.
"We want to be able to very carefully define what are fraudulent and deceptive practices," said Eileen Harrington, associate director of marketing practices for the FTC's Bureau of Consumer Protection.
Though industry officials have urged the government not to impose new controls on electronic commerce, Ms. Harrington predicted most consumers would shun Internet transactions without better fraud controls.
For instance, just as the FTC was given authority to regulate the 900- number pay-per-call industry, she said the agency should have the power to require that on-line customers receive pricing information before incurring any bills and have the right to dispute unauthorized charges.
To prevent bank fraud on the Internet, American University law professor Walter Effross said banks should be required to link their Web sites to the site operated by the Federal Deposit Insurance Corp. Any banking site not containing the FDIC link could then be identified as an unlicensed institution. If any unauthorized operations were linked to the FDIC, agency officials could easily track them down, Mr. Effross explained.
But Everett C. Johnson, chairman of electronic commerce assurance services for the American Institute of Certified Public Accountants, said it is too soon for new regulations.
Private-sector initiatives, including one developed by his organization, can protect consumers from Internet fraud, he said.
The institute has developed a service called CPA WebTrust, in which a certified public accountant examines a company's Web site and Internet sales practices. Sites that comply with the CPA WebTrust standards would be allowed to display the institute's seal of assurance.
To pass, a business must ship products when promised, disclose its billing procedures, and only provide personal information to third parties with permission from the customer.
Rep. Billy Tauzin, chairman of House Commerce's telecommunications subcommittee, said Congress would be forced to act if fraud appeared to be dampening the growth of Internet transactions. "Criminals are threatening the future of electronic commerce."
