Complaint Review: Federal Trade Commission

The Federal Trade Commission should pursue Alyon Technologies for the same reasons that are listed below. Read about Federal Trade Commission v. Verity International, Ltd.

TECHNOLOGY

Amount at Issue: $1,600,000 Stage: Pay Out

Federal Trade Commission v. Verity International, Ltd.
Consumers Recover $1.6 Million for Unauthorized Telephone Bills for Adult Entertainment

The court has approved the parties' $1.6 million settlement in a legal action by the Federal Trade Commission (FTC) against telephone billing companies Integretel, Inc. and eBillit, Inc. The action claimed that the defendants participated in an illegal scheme misusing the international telephone billing system to charge consumers for "videotext" services--Internet-based "adult" entertainment--that the consumers never purchased or authorized. The $1.6 million will be held in escrow by the FTC until litigation against related companies is finished.

Through the scheme, thousands of consumers were billed an average of $127 apiece for services that they did not even know had been accessed through their phone lines. The charges for the videotext services were described as international telephone calls to Madagascar. Under the terms of the settlement, the defendants will waive any claim to $1.6 million in payments collected from consumers for these videotext services.

In many instances a consumer was completely unaware that charges had been incurred based on his or her phone number--charges that had been incurred by someone else who used the consumer's computer and phone line without permission. In addition, when consumers called the defendants' customer service number to dispute the bills, they were falsely told that the charges were valid and that they legally obligated to pay them.

The FTC investigation revealed that "dialer" software downloaded from teaser adult Web sites was causing charges to be billed to consumers' phone numbers. According to the FTC, the dialer program allowed Internet users to access the adult content without any means of verifying that the user was the telephone line subscriber or was authorized in any way to incur charges on the line subscriber's bill.

Once the dialer software was downloaded, it disconnected the consumer's modem from its usual Internet service provider, dialed an international phone number to Madagascar and reconnected the modem to the Internet from some overseas location. The line subscribers then began incurring charges on their phone lines for the remote Internet connection at the rate of $3.99 per minute.

PRIVATE
PRIVATE, California
U.S.A.