The operator of a massive mobile cramming scheme agreed to surrender more than $1.2 million in assets to settle Federal Trade Commission charges. The assets include several bank accounts, two luxury cars, shares in a number of startup companies and multiple luxury watches.
Andrew Bachman, under terms of the settlement, is permanently banned from placing any charges on consumers phone bills and making any misrepresentations to consumers about a product or service or a consumers obligation to pay. He also is prohibited from charging consumers for a product or service without their express consent. The settlement further includes a monetary judgment of more than $97 million, which is partially suspended after he turns over nearly all of his assets based on Bachmans inability to pay the full amount.
Among the assets Bachman must surrender under the terms of the settlement are:
the contents of four bank accounts, less $4,500;
two vehicles: a 2012 Ferrari 458 Italia and a 2012 Mercedes G550 SUV;
shares in a number of startup companies; and
jewelry items, including three Audemars watches, one Patek Phillippe watch, and four Rolex watches.
The FTC filed its complaint against Bachman in December 2013, alleging that he and a number of other 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.
A settlement with a number of the other defendants in the case was announced in June.
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 - were permanently banned in that settlement from placing charges on phone bills and from making misrepresentations about a product or service or a consumers obligation to pay. They also were 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 Miaos inability to pay the full amount after he turns over nearly all of his and the companies assets.
The case against corporate defendant Bullroarer Inc. is still in litigation.
"Ensuring that consumers are protected in the growing mobile environment is a top priority at the FTC," said Jessica Rich, director of the FTCs Bureau of Consumer Protection. "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."