Features

Dot cons

National | Old scams repackaged for the information age are finding some success on the Internet; satellite companies bring broadband to rural America; and promising technology doesn't always mean quick riches

Issue: "A legal coup?," Nov. 25, 2000

BUYERBEWARE.COM
The Internet is great for business, even shady business. The Federal Trade Commission's list of America's biggest online scams shows that old-time con games have a new life: Want a great vacation cheap? Want to succeed in business without working? Want a quick cure for whatever ails you? Crooks offer all these elusive dreams direct to your e-mail account, to the chagrin of outgunned law enforcement agencies. The FTC prepared a fact sheet called "Dot Cons" that lists the top rip-offs. Most of them are the sort typically found in telemarketing, classified ads, and door-to-door sales. The agency took action against one company that allegedly participated in online auctions without delivering the goods or offering refunds. Other operators sold access to cyberporn, and then ran up unauthorized charges on users' credit cards. This year, government prosecutors have brought 251 lawsuits against online scammers, the FTC reported, representing just a fraction of all illegal activity. The agency proposes a new international network of consumer protection agencies, but the Web is just too big. Its buyer-beware advice to online consumers is much more practical: Read the fine print, be wary of exaggerated claims, and make sure you can find the company's name, street address, and phone number. Don't fence me in
Want a fast Internet connection but can't get a cable modem or DSL? Some companies are betting on satellites to deliver Web pages to people outside major metropolitan areas. While dialup Internet access is about as universal as phone lines, high-speed broadband access is beyond the reach of millions. Cable modem service requires upgraded lines; DSL requires close proximity to telephone company central offices. That opens outlying suburban and rural areas to satellite Internet service. Hughes, a division of General Motors, is moving quickly to capitalize: The company's DirecTV is marketing two-way DirecPC that lets users surf the Web via satellite. The customer's computer is hooked to a rooftop dish, which sends signals to DirecPC, which in turn sends computer data back and forth across the Net like a normal Internet service provider. This service may not be cheap. The current one-way DirecPC costs $149.99 for the dish and modem, plus another $49.99 for the most popular service plan. Competitor EchoStar will offer a Microsoft-backed service called StarBand, which will run $69 a month. For those who can't live without it, the additional price may be worth it. Telecommuters will be able to work far, far away from urban crowds. Market researchers at The Carmel Group estimate that satellite service will attract more than 3 million subscribers over the next five years, a lucrative niche. That's not counting the potential for service outside the United States. High-tech flameout?
Even those visionaries who possess revolutionary technology can still get stuck in real-life troubles. One of the high-tech boom's strangest stories involves Pol Hauspie and Jo Lernout, two pioneers in the world of voice recognition software. This month they resigned their day-to-day responsibilities at the Belgian company they founded, Lernout & Hauspie Speech Technology, amid scandal. The U.S. Securities and Exchange Commission had already launched an investigation into the company's financial statements, and company shareholders who suffered big losses sought damages in court. Lernout & Hauspie-employing more than 1,100 linguists and holding 50 patents for various products-built tools that help computers recognize words and grammar, allowing machines to accept oral commands from users, and translate foreign languages and convert text into human-sounding speech. Language technology promises to be huge, as users spend more and more time untethered to their desks and make use of high-tech devices without keyboards and mice. Small wonder Microsoft and Intel invested in Lernout & Hauspie. Optimism was high about the company as it grew and absorbed two other leaders, Dictaphone and Dragon Systems. What happened? The Wall Street Journal reported that regulators have a series of questions, such as how Lernout & Hauspie's revenue from Korea and Singapore leaped from $300,000 in 1998 to $143.2 million last year. As the founders were resigning, the company announced it would have to restate its financial results for 1998, 1999, and the first half of 2000. Nasdaq quickly halted trading on their stock. The next day lawyers filed a class-action lawsuit on behalf of shareholders, who saw their shares lose 95 percent of their value. But Lernout & Hauspie's technology will likely survive regardless of what happens to the company.

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