Facebook, Google helping feds stop online stimulus scams

WASHINGTON--President Obama's economic stimulus plan has already spurred activity in at least one online industry, though not one the administration was hoping to encourage.

Deceptive Web sites, advertisements, and e-mail campaigns have cropped up across the Web in recent weeks, luring consumers into scams by promising them federal grant money from the stimulus package, the Federal Trade Commission said Wednesday.

The FTC is investigating these scams and is reaching out to the private sector for help. Google on Wednesday morning committed to investigating stimulus-related ads that violate its anti-scam policy, and Facebook has pulled ads for stimulus funds from its site, in accordance with a new advertising policy it implemented this week.

The deceptive sites and ads "have literally mushroomed up almost overnight," Eileen Harrington, the acting director of the FTC's Bureau of Consumer Protection, said Wednesday.

Scammers have created sites with domains like PresidentObamaGrants.com and OfficialStimulusGrants.com, Harrington said, and include pictures of President Obama and Vice President Biden. The sites prompt consumers to enter a credit card number to pay a small fee in return for a list of grants supposedly available for things like mortgage payments. Those small fees, however, are often nothing more than a down payment on a "negative option" agreement that could cost someone thousands of dollars over the course of a year if not canceled.

"These Web sites tout free money for you," Harrington said. "But as the saying goes, the devil is in the details. Buried deep within the Web site is the fact that they'll charge you a lot of money."

Advertisements for these sites have started on appearing on social-networking sites, video-streaming sites, and search engines. While Google and Facebook have been cooperative, Harrington said not all sites have been responsive to the FTC's request for help, though she declined to name any such sites. She also said the FTC has been in communication with network advertising groups about the problem, though she once again declined to name which ones.

"We've spent a lot of time educating advertisers how to screen for ads and this one should be a no-brainer for them," she said.

Facebook started noticing the suspect stimulus-related ads on its site about four to five weeks ago, before the FTC contacted the company, said Joe Sullivan, senior counsel for Facebook. Through Facebook's own ad screening and the "thumbs down" function that lets users give feedback on ads, it was able to identify the problem. Facebook launched a new policy this week to prohibit ads on its site with any obscure recurring billing schemes.

Spammers are also targeting consumers through e-mails that encourage consumers to click on a link within the message or to fill out attached forms to find out more about receiving stimulus funds. Clicking on the links or the attachments, however, can result in identity theft or in harmful software being downloaded to one's computer.

The FTC will not discuss ongoing investigations publicly, but Harrington said the deceptive negative-option marketing campaigns found on many of the fraudulent stimulus sites fit the profile of scams the FTC has already challenged in many law enforcement actions.

"The FTC has broad authority to challenge deceptive and unfair practices," she said.

Either through court proceedings or administrative challenges, the agency could take actions that could result in any number of consequences, such as prohibiting the use of certain ads or requesting that money be returned to consumers.