FTC puts $1.9M kink in phone bill crammers' wallets

Three companies that placed more than $30 million in bogus collect call charges on consumers' telephone bills today have agreed to pay $1.9 million for consumer redress in a settlement with the Federal Trade Commission.

The three companies - BSG Clearing Solutions North America, ACI Billing Services, and Billing Concepts - control more than 85% of the billing aggregation market, in which aggregators contract with local telephone companies to bill on behalf of third parties, the FTC said. The $1.9 million restitution agreement is in addition to the almost $35 million the FTC is collecting from the person the FTC considers the ringleader of this scam, Willoughby Farr of Nationwide Connections. The aggregators worked hand-in-hand with Nationwide, the FTC said. Farr earlier this month agreed to a lifetime ban as part of a federal court order settling FTC charges that he directed a massive unauthorized the billing scam for more than two and a half years.

Today's settlement would prohibit the companies from misrepresenting that consumers are obligated to pay for telecommunications charges that have not been expressly authorized. It also would be barred from billing or submitting any telecommunications charges for billing on a consumer's telephone bill unless such charge has been expressly authorized.

The FTC defines cramming as unexplained charges on phone bills for services you never ordered, authorized, received, or used. Sometimes a one-time charge for entertainment services will be crammed onto your phone bill. Other times, monthly recurring charges are crammed onto your phone bill. Cramming of monthly recurring charges falls into two general categories: club memberships, such as psychic clubs, personal clubs, or travel clubs; and telecommunications products or service programs, such as voice mail, paging, and calling cards.

The FTC said the aggregators would be in compliance with the proposed court order's prohibitions against unauthorized billing if it takes all necessary steps before billing on behalf of new clients and while billing for existing clients to ensure it does not engage in the unauthorized billing of telecommunications charges. The settlement bars BSG from selling or renting consumers' personal information obtained from Nationwide and requires BSG to create and maintain billing and consumer complaint records for eight years and submit various compliance reports to the FTC for five years.

The FTC still has a case pending against other principals in this case: Yaret Garcia, Erika Riaboukha, and Qaadir Kaid. One other defendant Mary Lou Farr, has already settled with the FTC.

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