A federal court has temporarily halted a mobile phone cramming scheme that piled more than $100 million in charges on consumers mobile phone bills without permission. The Federal Trade Commission is seeking to permanently shut down the operation.
The FTC charged that the defendants used deceptive practices, including fake Web sites with bogus offers of "freebies" or gift cards, to trick consumers into providing their mobile phone numbers. The defendants then placed monthly subscription fees for a variety of promised services on consumers mobile phone bills without their authorization.
The services described in the complaint included subscriptions for text messages sent to consumers mobile phones that contained short celebrity gossip alerts, fun facts, horoscopes and other items. The subscriptions typically cost consumers $9.99 or $14.99 per month and were set to renew automatically each month.
The defendants in the case are: MDK Media Inc.; Tendenci Media LLC; Mindkontrol Industries LLC; Anacapa Media LLC; Bear Communications LLC; Network One Commerce Inc.; Makonnen Demessow Kebede; Sarah Ann Brekke; Christopher Thomas DeNovellis; Wayne Calvin Byrd II; James Matthew Dawson; and Casey Lee Adkisson.
According to documents filed in court by the FTC, the defendants kept cramming charges on to consumers mobile phone bills even after wireless carriers terminated their billing privileges. For example, two mobile carriers terminated MDKs billing privileges because of its high refund rates and its association with deceptive Web sites. Still, MDK continued cramming through use of a fake business name.
The complaint alleges that the defendants violated the FTC Act through their deceptive tactics and by unfairly billing consumers for unauthorized services.
The U.S. District Court for the Central District of California issued a temporary restraining order against the six companies and six individual defendants, halting the operations and freezing their assets pending litigation.
"This scheme demonstrates the kind of widespread harm that mobile phone cramming can inflict on American consumers," said Jessica Rich, director of the FTCs Bureau of Consumer Protection. "It also shows why weve made it a priority to crack down on this problem."
According to the complaint, some consumers were crammed for multiple months before noticing the charges and, even after significant effort, were unable to obtain a full refund.
The FTC on Tuesday released a report highlighting steps mobile carriers and other companies should take to prevent consumers from being victimized by mobile cramming.
Last month, the operators of a massive mobile cramming scheme agreed to surrender more than $10 million in assets - including bank accounts, jewelry, real estate in Los Angeles, Beverly Hills and Chicago and several cars - to settle charges.
Yet another action against mobile cramming took place last December.