Business impersonation scams have always been a thorn in the event industry’s side, and they’re just getting worse. That’s why some of the event industry’s heavy hitters testified their support for a proposed FTC policy designed to rein in business impersonation fraud.
Business impersonation fraud is rampant in the events industry — and it’s getting worse every year. While you may not know it by that name, you very likely have had it happen to you or an event organizer you know. Think bad actors posing as your official housing bureau to sell distant and sub-par — or perhaps nonexistent — hotel rooms with high booking fees and cancellation penalties, and fraudsters posing as the event organizer to sell attendee lists, which likely are about as real as unicorns. Others just spoof your name, steal your logo and pose as your organization, abusing the trust attendees have with your organization to steal identities and credit card information.
In just the past year, these types of impersonation scams have cost consumers $2.6 billion, about twice as much as in the previous year, according to the Federal Trade Commission (FTC). Hearing the increasingly loud demands for relief, the FTC last year proposed a new rule that “would codify the well-understood principle that impersonation scams violate the FTC Act, as do those who provide impersonators with the means to harm consumers. The proposed rule would allow the Commission to recover money from, or seek civil penalties against, scammers who harm consumers in violation of the rule.”
At an informal virtual hearing held May 4, some of the event industry’s heaviest hitters took to the screen to explain just how bad the business impersonation problem is for this specific market segment.
First up was Stuart Ruff-Lyon, Chief Events and Sales Officer with the Risk Management Society (RIMS). Saying, “The damage caused by these impersonators is real and easy to demonstrate,” he spoke of a fraudster who convinced a RIMS exhibitor with an official-looking email that included the organization’s official logo and name to book housing that, when they arrived at the show, proved not to exist. “It not only caused financial harm and significant inconvenience for the exhibitor, but also real reputational damage for RIMS,” he said. He added that there was no real recourse after the fact. “The impersonators are virtually impossible to track down and limited judgments that have been awarded against them are difficult to enforce.” Even before the fact, if the event organizer is alerted to the scam, the usual recourse of a cease-and-desist letter doesn’t help. “In many cases, the impersonators will simply change their email address” and continue scamming, he said.
Tommy Goodwin, Vice President of Government Affairs with the Exhibitions and Conferences Alliance (ECA), also testified in support of the proposed FTC rule in no uncertain terms. “As you just heard the scammers use the events name, logo, organizers name and others in their email signatures to create the illusion that their efforts are conducted with the approval of the event organizers,” he said at the hearing. Goodwin cited three examples, including one from the Radiological Society of North America (RSNA), which was “alerted to no fewer than 36 fraudulent sites that were illegally advertising housing, registration or attendee-list-selling services for its 2023 annual meeting.”
These example, he said, “illustrate why FTC’s proposed rule is both necessary and urgent.”
David Grossman, Vice President, Regulatory Affairs with the Consumer Technology Association, which organizes the monster consumer technology show CES, also spoke to the pressing need for the proposed rule. “Our customers reported at least 60 different instances of email solicitations related to CES, and 10 additional reports coming in the month leading up to this year’s show. Many of these emails purport to be selling CTA’s attendee lists, which CTA does not sell or otherwise make publicly available.” He added, “Fraudsters have also attempted to commit CES exhibit space fraud, victimizing startups seeking to showcase their products. In one case, a bad actor impersonated CTA employee to bill thousands of dollars from a potential CES exhibitor in exchange for nonexistent booth space.” Another common fraud CTA is seeing more of now is website domain scams.
“CTA supports making clear that a party can violate the FTC Act by providing the means and instrumentalities for such fraud, including actors that intentionally create misleading collateral, such as fake credentials or the design imposter websites,” he said. However, he added, “We are concerned that the proposed rule does not explicitly include a knowledge requirement and could be misinterpreted to impose strict liability on a platform that unwittingly passes along another entity’s false claims to third parties that then deceive consumers to be consistent with the discussion in the NPRM. CTA encourages the FTC to make clear that the proposed rule only applies to entities that have knowledge or that consciously avoid knowing that they’re making representations being used to commit impersonation fraud under sections 460 1.2 or 460 1.3.”
This point also was reiterated by some of the other interested parties who testified at the hearing, including William MacLeod, Esq., Kelley Drye & Warren, LLP. As an attorney who handles advertising investigations and disputes, he also thinks the proposed rule is overly broad and could inadvertently be applied to advertising that, while it does include impersonations, does not intend to deceive anyone. “This rule would make it easier to catch con artists…unfortunately, it also authorizes penalties for honest marketing” and needs to be clarified. The point also was re-emphasized by Neil Chilson, Esq., a Senior Research Fellow at the Center for Growth and Opportunity and a former Chief Technologist with the FTC. “While it seems unlikely that this FTP would spend its resources pursuing cases that the courts would reject out of hand,” it would be best to clarify the language up front, he said.
Two of the event industry’s own associations also spoke at the hearing. Nicole Bowman, CEM, VP of Marketing and Communications for the International Association of Exhibitions and Events (IAEE), reiterated the main concerns the proposed rule would address. “Business impersonation fraud is a multi-layered crime because it affects not only trade show organizers who spend countless hours and legal dollars for cease-and-desist letters to no avail. But it also affects the tens of millions of professional attendees and exhibitors who are victims of fake websites, phone calls and email outreach where they have given their personal information for hotel bookings, and other event-related services,” she said.
At IAEE’s own annual trade show annually, staff receives no less than 75 attempts each year,” she said, adding that “Our show is one of roughly 9,600 that take place every year in the U.S. The magnitude of this multi-layered crime is staggering.”
Michelle Mason, FASAE, CAE, President and CEO of the American Society of Association Executives, said that ASAE’s interest in the proposed rule “centers around reputation and economic damage to associations” and is “pleased that the proposed rule includes nonprofit organizations under the ‘business’ definition.” The existing solutions, including cease-and-desist letters, are so ineffective that ASAE no longer advises its members pursue them. “They are just a waste of time in time.” As long as these scammers and other bad actors are allowed to scam with no real consequences, “our community and our economy remain at risk,” she said.
The informal hearing followed a letter sent in March that emphasized many of these same points. Signed by more than 230 event organizers, the letter stated, “With millions of Americans expected to attend in-person conferences and events this year, continued impersonation scams such as those involving hotel bookings, the sale of attendee lists, and event space fraud, remain an on-going threat to the reputations of each of our organizations. We implore the Commission to proceed to adopting a final rule as soon as possible.”
Another upcoming opportunity to make event organizers’ voices heard on this and other key challenges, ECA will conduct its annual Legislative Action Day on June 1.
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