X-rated Websites Accused Of Credit Card Fraud

As a result of an investigation that uncovered millions of dollars in credit card fraud, State Attorney General Spitzer and the Federal Trade Commission today filed a complaint in United States District Court in Manhattan against a major adult entertainment website network.

The complaint alleges that individuals who surf x-rated websites and who provide their credit card numbers as part of an age verification process often find unauthorized charges on their cards of as much as $90 per month. Individuals then face a protracted battle with the websites to stop recurring billings.

"The adult entertainment industry is ripe for scam artists who bank on the fact that people will be too embarrassed by their online activities to complain about unauthorized charges," Spitzer said. "This case shows the massive level of fraud in the industry."

The network of more than 60 adult sites drew attention because customers disputed more than one-third of the $188 million in sales that the websites generated between 1997 and October of 1999. The total amount of fraud could be significantly higher because the websites continue to operate.

Spitzer said the defendants in this case attempted to hide their identity by billing under different company names. Even when customers identified the source of the credit card charge, they often could not reach a customer service representative or were denied full refunds.

Visa U.S.A. recently refused to process charges for the network because of the tremendous number of complaints, but the defendants continue their credit card billing operations from Guatemala.

The Attorney General's Complaint was filed in the United States District Court in Manhattan. The case is being handled by Assistant Attorney General Stephen Kline of the Internet Bureau, under the Supervision of Bureau Chief Caitlin Halligan.