Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Seeks Injunction Against Telephone Bill “Cramming” Operation, (Jan 22, 2013)

By Tobias J. Gillett, J.D., LLM.

The FTC has filed a motion for preliminary injunction, as well as a complaint seeking a permanent injunction and other equitable relief, in the federal district court in Missoula, Montana against nine companies and four individuals allegedly involved in an operation that inserted more than $70 million in false charges onto consumers’ telephone bills, the FTC has announced (Federal Trade Commission v. American eVoice, Ltd., FTC File No. 122 3008).

According to the FTC’s complaint, the four individuals engaged in a practice known as “cramming,” adding unauthorized charges to bills, through their companies American eVoice, Ltd.; Emerica Media Corp.; FoneRight, Inc.; Global Voice Mail, LTd.; HearYou2, Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions, Inc.; and Voice Mail Professionals, Inc.

The companies would inform telephone billing aggregators that consumers had authorized the companies to place charges on their telephone bills ranging from $9.95 to $24.95 per month for purported voice mail or fax mail services. The billing aggregators would then forward the charges to the consumers’ local exchange carriers (LECs), which would apply the charges to the consumers’ telephone bills.

Although the defendants or the LECs would often issue a refund for up to three months, the defendants would issue a refund for more than three months of charges only when required by the LECs, or after repeated requests by the consumers. Many other consumers would not notice the charges, and would continue paying them.

The operation caused consumers to pay over $70 million in excess charges, with the defendants netting over $26 million after returns, refunds, service fees, and other expenses, according to the FTC. These funds were allegedly funneled to a purported non-profit organization run by the individual defendants called Bibliologic Ltd., and then back out of Bibliologic into the businesses and to criminal defense lawyers employed by one of the individuals.

The complaint alleged that the defendants’ actions violated Section 5 of the FTC Act. In its motion for a preliminary injunction, the FTC requested the court to halt the billing operation, freeze the defendants’ assets, to require the defendants to produce an accounting, and to provide other relief. In addition, the complaint requests a permanent injunction preventing further violations of the FTC Act, providing restitution of funds and disgorgement of “ill-gotten assets” and awarding costs and other relief.

Companies: American eVoice, Ltd.; Emerica Media Corp.; FoneRight, Inc.; Global Voice Mail, LTd.; HearYou2, Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions, Inc.; Voice Mail Professionals, Inc.

News: ConsumerProtection FederalTradeCommissionNews