OPERATOR WHO CRAMMED UNAUTHORIZED CHARGES FOR WEB SITE SERVICES ONTO PHONE BILLS ORDERED TO PAY $4.1 MILLION OVER FTC CHARGES

A U.S. district court has ordered a halt to the illegal operations of an defendant who crammed unauthorized charges for Web site services onto the phone bills of hundreds of thousands of small businesses and non-profit organizations. The Federal Trade Commission charged that the operation violated federal law and, following a trial, District Judge Kenneth M. Hoyt ordered the defendant to permanently halt the unlawful practices and give up more than $4.1 million in ill-gotten gains.

In June 2006, the FTC charged a group of interrelated businesses and individual defendants with cramming unauthorized charges onto the phone bills of small businesses and nonprofit organizations for Web site services that, in many cases, they had not requested and did not know they had. The agency alleged that the operators used telemarketers to make cold calls to small businesses and non-profits, and offered a “free”15-day trial of a Web site design. The consumers were told there was no charge or obligation and that the Web site would be cancelled automatically if it was not approved by the consumers. The defendants made “verification recordings” that implied that the consumer agreed to be billed for the offer after the free trial, when they did not. Whether the consumers agreed or not, their phone bills often were charged. When consumers called to dispute the charges, the operators told them they had “verification recordings” of an employee authorizing the charges.