FTC Cramming lawsuit started in 1999, but moves ahead further in 2012. The FTC seeking return of $52 Million for bogus phone bill cramming fees ended with $5.2 Million in charges. Found after Auditel’s review of FTC court cases and documents for many years following the case.
To skip ahead, to May 8, 2012 FTC Press Release, The FTC alleged that by putting the bogus charges on consumers’ phone bills, BSG violated the terms of a 1999 settlement with the agency. FTC prohibits unauthorized billing, misrepresentations to consumers, and billing for vendors who fail to clearly disclose the terms of their services. The contempt action is the FTC’s fourth action addressing extensive cramming by BSG entities. In addition the FTC previously obtained two other cramming orders against BSG companies: Nationwide Connections Inc., which addressed $34.5 million in charges for collect calls that never occurred, and Enhanced Services Billing Inc., which addressed crammed charges for enhanced services.
The FTC by filing a motion to show case against defendants: in short, BSG Entitities.
Wherefore, BSG, formerly known as Hold Billing Services changed its name to HBS Billing Services Company (“HBS”) and HBS, Inc. merged into Thurston Communications Corporation (”Thurston Corp”). June 2005, Thurston Corp. changed its name to Billing Services Group North America, and maintained ownership of the subsidiary clearinghouses, HBS and ESBI. The entities that comprise BSG include Billing Services Group Limited, Billing Services Group North America, Inc., BSG Clearing, HBS, ESBI, BCI and ACI Billing Services, Inc. (the “BSG Entities”
“Defendants and their Representatives were permanently restrained from billing, or collecting, from a Line Subscriber any Telephone-Billed Transaction. Unless the charge for such Telephone-Billed Transaction was expressly authorized by the Line Subscriber.”
On April4, 2012, the FTC filed a Motion to Show Cause requesting that the BSG Entities be held in contempt for violation of the 1999 Order. On March 26, 2013, the District Court conditionally granted the FTC’s request that the BSG Entities show cause why they should not be held in contempt. The ruling was subject to further consideration and recommendation of a magistrate judge. 6. Magistrate Judge Bemporad held an evidentiary hearing from November 4, 2013 to November 14,2013. On April 4, 2014, Magistrate Judge Bemporad issued a Revised Report and Recommendation. The report gave the defendants a finding of contempt granted in part and denied in part.
Judgment was entered in favor of the FTC and against the Defendants in the amount of $5.2 million.
- The Report stated that “ESBI wrongly permitted unauthorized billing” by voicemail services operated by Cindy Landeen, and that “Landeen was billing without authorization on a large scale.”
- The Report found that BSG Entities billed consumers without authorization for the three Landeen voicemail products.
- The BSG Entities did not substantially comply with pre-billing due diligence, monthly monitoring, and testing procedures. Specifically, the BSG Entities didn’t independently authenticating that the billing information was accurate.
- BSG didn’t verify proof of authorization by verifying the veracity or accuracy of such proof.
FTC Cramming resulted in BSG Entities in civil contempt.
Enhanced Services” means products or services directly offered to any individual consumer. These services are unrelated to the completion of a call. Such as web hosting, directory listings, and voicemail and email services.
Telecommunications Services” means common carrier transmission. Such as collect calls, third-party billed calls, and long distance services billed as monthly recurring charges.
“Local Exchange Carrier” or “LEC” means the entity providing local telephone service from which Line Subscribers receive their telephone bill.
Claims” means any and all past, present and/or future claims. Demands, obligations, requests, suits, actions, rights of action, liabilities, losses, damages, and liens. Administrative proceedings, governmental actions, settlements and causes of action. At law, equity, admiralty or otherwise. Whether arising out of tort, contract, statute, regulation, assignment, subrogation or otherwise. Including but not limited to those for any damage, loss, cost or expense of any kind or nature. Whatsoever, whether known or unknown, filed or unfiled, asserted or as yet unasserted. Claimed or unclaimed, which exist or may in the future exist.