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The Federal Trade Commission (FTC) has settled with an Internet scammer who used auction sites to "sell" computers and musical equipment that he never delivered. The settlement bars for life Morgan Engle of Atlanta from selling goods or services through Internet auction sites.
Engle also agreed to pay $5,820 for consumer redress and to post a $35,000 performance bond before engaging in any telemarketing activities.
In April, the FTC targeted Engle as part of Operation Bidder Beware, a law enforcement crackdown by the FTC and 29 state attorneys general targeting Internet auction fraud. That initiative resulted in 57 criminal and civil law enforcement actions and a related consumer education campaign. Auction fraud is the single largest category of Internet related complaints in the FTC's Consumer Sentinel database, which logged more than 51,000 auction complaints in 2002.
The FTC filed suit against Engle in U. S. District Court in Atlanta, charging that he advertised computers and musical instruments and equipment for sale on various Internet auction sites. As the bidding progressed, he sometimes circumvented the auction house process by e-mailing consumers or telephoning them to encourage the purchase and discuss payment terms and delivery details. But he rarely delivered the goods and rarely provided refunds, according to the FTC.
The agency alleged that Engle's practices violated the FTC Act and the Mail Order Rule. The settlement ends the litigation.
The FTC alleges that in one case, which has not been settled, the defendants combined auction fraud with serial identity theft to conceal their identities and divert the blame to the identity theft victim. In that case, the FTC charges that, since early 1999, one operator constantly changed his Internet auction account name to conceal the fact that although he accepted payment, he did not deliver the promised merchandise.
According to the FTC, in 2001, he added a new wrinkle. While he allegedly continued to advertise and accept payment for merchandise he never delivered, he embarked on serial identity theft. The FTC claims that he set up bank accounts and post office boxes in other people's names, and directed that payment be sent to them.
Consumers and law enforcers believed the identity theft victims were the ones who had bilked the consumers out of their money. According to the FTC, his identity theft victims were people with whom he had feuded, people whose identity information he and an accomplice had taken from the records of a suburban Chicago hotel, and even a dead man. A U.S. district court in Chicago has ordered a halt to the scam and frozen the defendant's assets to preserve them for consumer redress.