Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Operator settles alleged mobile cramming scheme for $1.2M, (Aug 5, 2014)

By Greg Hammond, J.D.

Andrew Bachman has agreed to surrender over $1.2 million in assets to settle FTC charges that he was the operator of a massive mobile cramming scheme. Bachman is a purported owner and officer of Tatto, Inc., which previously reached a $150 million settlement with the Commission in June 2014, regarding the same scheme (FTC v. Tatto, Inc., File No. 112 3181, Case No. 2:13-cv-08912-DSF-FFM).

The Commission’s complaint alleges that Bachman and Tatto operated a scam in which they billed consumers for text message-based subscription services without consumers’ authorization or purchase of such services. The subscriptions—which included “love tips,” “fun facts,” and celebrity gossip alerts—typically placed monthly charges of $9.99 on consumers’ bills. According to the FTC, the charges allegedly appeared under confusing names, and frequently went unnoticed by consumers. However, when consumers did notice the charges, they often were unable to obtain refunds, the Commission alleged.

“Ensuring that consumers are protected in the growing mobile environment is a top priority at the FTC,” stated FTC Bureau of Consumer Protection director Jessica Rich. “This settlement shows that we are committed to making sure that bad actors do not profit from taking advantage of consumers’ confusion about their mobile phone bills.”

According to the settlement, Bachman has agreed to a $97 million judgment that will be partially suspended based on his inability to pay. However, he will be surrendering over $1.2 million in assets, including the contents of four bank accounts, two vehicles, shares in various startup companies, and a number of jewelry items. In addition, Bachman will be permanently prohibited from: (1) billing or facilitating any billing or charges on any telephone bill; (2) making any false or misleading representations regarding any product, service, or a consumer’s obligation to pay for charges; and (3) causing any consumer to be billed for a product or service without having first obtained their express informed consent.

The Commission approved the proposed stipulated order with a vote of 5-0.

Companies: Tatto, Inc.

News: ConsumerProtection FederalTradeCommissionNews