Operators of Massive Cramming Scheme to Surrender $10M

The operators of a massive mobile cramming scheme will surrender more than $10 million in assets to settle Federal Trade Commission charges. The assets include bank accounts, jewelry, real estate in Los Angeles, Beverly Hills and Chicago, and several cars.

Lin Miao and corporate defendants - Tatto Inc., Shaboom Media LLC, Bune LLC, Mobile Media Products LLC, Chairman Ventures LLC, Galactic Media LLC, and Virtus Media LLC - are permanently banned from placing any charges on consumers' phone bills, making any misrepresentations about a product or service or a consumers’ obligation to pay and are banned from charging consumers for a product or service without their express consent.  

The settlement includes a monetary judgment of more than $150 million, which is partially suspended based on Miao’s inability to pay the full amount after he turns over nearly all of his and the companies’ assets.

The FTC's complaint alleged that Miao and the defendants pitched text message services offering "love tips," 'fun facts" and celebrity gossip alerts, but placed charges for these services – typically $9.99 a month – on consumers’ bills without their permission - a practice known as mobile cramming. They also allegedly used deceptive websites designed to collect consumers’ mobile phone numbers that would then be billed for the services.

The charges appeared on consumers’ phone bills under confusing names such as "77050IQ12CALL8663611606" and "25184USBFIQMIG" and in many instances, consumers did not notice the variations in the amount of their bills from month to month.

When consumers did notice the charges and attempted to seek refunds, the process was often highly cumbersome, with some promised refunds from the defendants never arriving or consumers receiving only partial refunds from their phone company, according to the FTC.  

Among the assets Miao and the corporate defendants must surrender under the terms of the settlement are:

    •    the contents of 14 bank accounts and one life insurance policy, less $5,000;
    •    five real estate properties, including three in Chicago and one in each in Los Angeles and Beverly Hills;
    •    four vehicles, including a 2013 Mercedes SUV, a 2014 Range Rover SUV, a 2011 Audi and a 2008 Bentley; and
    •    numerous items of jewelry, including three Patek Phillippe watches, a Tiffany watch, two Tiffany rings with 10 and eight carat diamonds, a pair of six-carat Tiffany  earrings and a Tiffany necklace, bracelet and diamond bracelet.

The FTC filed its complaint against the defendants in December 2013.

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