Online gambling can put consumers at risk

While our attention has been drawn to casino and racino issues, we wager that most Forum readers haven’t given much thought to the casino in their living room or den. Online gambling is big business, and a big risk for unwary consumers because it is fraught with risk and peppered by fraudulent enterprises.

To gamble or not is a personal choice. But aside from any moral or philosophical issues, risks exist online.

Fraudulent gaming sites are accepting bets, not paying off, and disappearing with players’ cash; young people are illegally using their parents’ credit cards; and identity thieves are gaining access to credit cards and bank accounts and using them to gamble at innocent consumers’ expense.

A California woman who thought she was using play money recently accumulated $60,000 in credit card debt playing blackjack, roulette, and slot machines online. A New Hampshire soccer mom topped that with a $75,000 debt. A teenager in Wisconsin lost $35,000 on her mother’s credit card. A retired teacher in Arkansas was victimized by identity theft and found himself facing a $47,000 online gambling debt.

There will likely be many more victims since the number of gaming sites have increased from 40 in 1997 to thousands in 2003.

Organizations across the country have filed class-action suits against Visa International, MasterCard International, and American Express, challenging the credit card companies and their issuing banks’ right to collect gaming debts. They argue that the companies are participating in an illegal racketeering enterprise.

The U.S. Congress has also pursued legislation to outlaw or effectively control online gambling abuses.

Such actions are attempts to curb an industry which last year raked in an estimated $3 billion in online revenues. Critics maintain that if credit card companies aren’t involved, there won’t be any Internet gambling.

But offshore gambling operations run out of countries such as Antigua and the Dominican Republic won’t be affected and now even some of the major U.S. casinos have taken their gambling business online with CyberCasinos. This signals a shift in strategy by land-based casinos that, after years of calling for the prohibition of wagering on the Web, are now opposing congressional controls.

Even if additional legislation is passed, enforcement is as much an issue. Too often the bureaucracy is handed laws to enforce, but not allocated the resources to do so effectively. And when it comes to offshore operations, our government is primarily powerless and several U.S. online gaming companies already have moved their Web sites to “safe” countries. Organized crime also has discovered this lucrative opportunity. Some U.S. banks have refused to process online gambling transactions through credit cards and bank accounts. Always one step ahead of the game, companies are using other forms of electronic payment, including E-cash, smart cards, and debit card systems.

But lawsuits and legislation aren’t the real answer. Consumer awareness and personal responsibility are the only effective protections. Watch your habits, don’t let your credit cards or account numbers fall into the wrong hands (including your kids). If you want to play, make certain you know if it’s for Monopoly money or real cash, set a limit to what you will spend, and only go to gaming Web sites that are legitimate and can demonstrate that they actually pay off.

Volunteer opportunities: As requests to Forum and COMBAT increase, so does the need for volunteers willing to help their neighbors. If you have problem solving, administrative, secretarial, or writing skills, call 947-3331 (mailbox 3). And to receive warnings when scams are afoot, go to ProtectME@consumerprotect.org and add your e-mail address to the Maine Fraud Alert Registry.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast COMBAT-Maine Center for the Public Interest, Maine’s membership-funded nonprofit consumer organization. Individual membership costs $25; business rates start at $125 (0-10 employees). For help and information write: Consumer Forum, Bangor Daily News, P.O. Box 1329, Bangor 04402-1329.