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Tuesday, May 8, 2012
FTC Seeks $52 Million For Bogus Phone Charges
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The Federal Trade Commission is seeking a civil contempt
ruling against the nation's largest third-party billing
company, alleging that it placed more than $70 million
in bogus "cramming" charges on consumers' phone bills in
violation of a previous court order.
The FTC is asking a federal court to make Billing
Services Group Ltd pay more than $52.6 million, the
total amount that the company billed consumers and
failed to refund.
The FTC alleged that Billing Services Group (BSG) placed
charges on nearly 1.2 million telephone lines on behalf
of a serial phone crammer. The charges were supposedly
for "enhanced services," such as voicemail and streaming
video, that consumers never authorized or even knew
about. "BSG made it possible for con artists to steal
people's hard-earned money by placing charges on phone
bills for services they never ordered or used," said
David Vladeck, Director of the FTC's Bureau of Consumer
Protection. "Under previous federal court orders, BSG
cannot profit from the fraud of others and then deny
responsibility for the harm they made possible."
Billing aggregators act as intermediaries between
third-party vendors and the local phone companies by
contracting to have the local telephone companies
collect charges for the vendors' services from
consumers. "Cramming" is the placement of unauthorized
charges on phone bills.
In its contempt motion, the FTC said BSG failed to
investigate either the highly deceptive marketing for
the services or whether consumers even used them. BSG
kept billing for these services despite voluminous
complaints from consumers and even after major telephone
companies refused to do so, the FTC's motion stated.
According to the FTC's motion, from 2006 through 2010,
BSG illegally billed consumers for nine crammed
"enhanced services," including three voicemail services,
one streaming video service, two identity theft
protection services, two directory assistance services,
and one job skills training service. In one example
cited in the FTC's motion, a BSG subsidiary charged
consumers for voicemail services without their consent,
as demonstrated by "voluminous consumer complaints,
astronomical refund rates," and the fact that almost
none of the consumers who were billed ever used the
services.
The FTC's contempt motion noted that BSG billed tens of
thousands of consumers for voicemail boxes each month
from July 2009 through March 2010, but consumers used
only 209 mailboxes during that time. The motion also
stated that BSG billed over 250,000 consumers for a
streaming video service, but only 23 total movies were
streamed, some of them by the crammers' employees.
Despite overwhelming evidence of cramming, BSG billed
consumers more than $30 million for the voicemail
services and more than $12 million for the video
service. |
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