FTC Gets Judge to Halt $19M Phone Bill 'Cramming' Scam

Credit card scamA U.S. district judge has ordered a halt to operations of an Internet services company that allegedly bilked thousands of consumers and small businesses by “cramming” unauthorized charges on their phone bills.
The Federal Trade Commission successfully sought the preliminary injunction, pending a trial, against Inc21 and its affiliated companies. They sold Internet services, including website design services, website hosting, Internet directory listings, search-engine advertising and Internet-based faxing, for charges ranging from $12.95 to $39.95 a month, the FTC alleges.
The scam took in $19 million over five years, the FTC said.
U.S. District Judge William Alsup wrote in his ruling: “It was Inc21 who orchestrated this overall scheme and set in motion an army of telemarketers who committed fraud. Even if Inc21 did not approve of the fraud (and it seems likely that it did approve), the fact remains that Inc21 is responsible for organizing this engine of fraud and reaping its profits.”
The company hired off-shore telemarketers to call prospective customers, sometimes offering a “free trial,” without explaining that customers would have to opt-out of certain charges.  In other cases, they would call and say they were just verifying their business contact information.
The FTC alleges that cramming victims:

  • were never contacted at all;
  • were told they were contacted only to verify business information;
  • declined Inc21′ s offer of Internet services; or were told they would receive a free trial offer, but not informed that they would be charged if they did not cancel.

The FTC has charged the defendants with unfair and deceptive acts, in violation of the FTC Act and the Telemarketing Sales Rule.
The defendants named in the FTC suit are: Inc21.com Inc., doing business as Inc21, Inc21.net, Inc21 Communications, Global YP, NetOpus, Metro YP, JumPage Solutions, GoFaxer.com and Fax Faster.com, Jumpage Solutions, Inc., GST U.S.A., Inc., Roy Yu Lin and John Yu Lin officers and directors of Inc21.
To see the legal documents on this case, click here.

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