Memorandum on Protecting Consumers From Fraud

Memorandum for the Attorney General

Subject: Protecting Consumers from Fraud

My Administration has taken unprecedented steps to safeguard consumers through vigorous law enforcement and prevention, but we must continue to do more. For example, we have announced new initiatives on Internet fraud and identity theft that call on law enforcement to step up their efforts on behalf of consumers. In addition, as part of my 21st Century Crime bill, I announced several new measures that will help protect elderly Americans from fraudulent activities. My crime bill will give the Department of Justice new authority to block and terminate telephone service to illegal telemarketers. In addition, it will give Federal prosecutors new tools to protect nursing home residents from abuse and neglect; to fight health care fraud; and to safeguard retirement and pension plans.

Consumers are often unaware of where to receive assistance. A recent Postal Inspection Service survey found that 12 percent of respondents admitted to being a victim of fraud, but that 25 percent of all respondents did not know where to go for help if they were the victim of telemarketing or mail fraud.

Today I announced the "kNOw Fraud" project, which is a public-private partnership of the United States Postal Service, the American Association of Retired Persons, the Council of Better Business Bureaus, the Department of Justice, the Federal Trade Commission (FTC), the National Association of Attorneys General, and the Securities and Exchange Commission (SEC). Even though violent crime rates are at record lows, illegal telemarketing fraud costs Americans an estimated $40 billion every year. Project "kNOw Fraud" will help arm consumers with needed information so that they can protect themselves from telemarketing fraud. This initiative shows how Government can serve the public when working in close coordination to vigorously enforce consumer protection laws and keep the public informed about new scams and how to avoid them.

Federal agencies such as the FTC and the SEC also have initiated important consumer protection initiatives in order to thwart fraudulent activities. The FTC's Consumer Response Center takes consumer complaints and inputs them into a centralized database, the Consumer Sentinel, which is available for use by Federal, State, and local law enforcement agencies across the country and in Canada. Since its launch, Consumer Sentinel counts some 214 partner organizations that have contributed an estimated 200,000 complaints to the database, allowing law enforcement officials to ascertain whether a complaint is an isolated incident or part of a wider pattern of activity. Last year, the SEC's Office of Investor Education and Assistance handled more than 60,000 consumer complaints and inquiries, many of which dealt with telemarketing or online fraud. In addition, the SEC's website warns the public about fastbreaking scams and tells consumers how to investigate investment opportunities.

Recognizing the need for closer coordination, earlier this year you directed the Council on White Collar Crime to coordinate and bolster the consumer protection activities of the Department of Justice, the FTC, the SEC, the Postal Inspection Service, and others. To further these efforts, I direct you to report back to me within 6 months with a plan (1) to better prevent consumer fraud activities and (2) improve coordination among the Federal Government's consumer protection activities to ensure that each agency's expertise is considered. In creating this plan, you should consult with all interested parties, including other Federal agencies and offices, including the FTC and SEC; State and local law enforcement; and consumer agencies and consumers. This plan also should build on efforts of the private sector, including nonprofits, to protect consumers.

These steps, taken together, will help to protect consumers from fraud and also help to save consumers millions of dollars in the next millennium.

WILLIAM J. CLINTON