Mobile phone bill crammers get stuffed with $10 million property forfeiture

Actual FTC judgment was for more than $150 million but the usual “inability to pay” excuse came up

As is often the case in these events, it seems like the penalty should have been more but still, the Federal Trade Commission this week said the operators of massive mobile phone bill cramming operation will surrender $10 million in assets to settle the case.

While the $10 million is nothing to sneeze at, the settlement was actually for more than $150 million, but it was partially suspended based on the defendant Lin Miao’s “inability to pay the full amount after he turns over nearly all of his and the companies’ assets,” the FTC said

Still, among the assets Miao and the corporate defendants will be required to surrender under the terms of the settlement are:

  • The contents of 14 bank accounts and one life insurance policy, less $5,000;
  • Five real estate properties, including three in Chicago and one in each in Los Angeles and Beverly Hills;
  • Four vehicles, including a 2013 Mercedes SUV, a 2014 Range Rover SUV, a 2011 Audi and a 2008 Bentley
  • Numerous items of jewelry, including three Patek Phillippe watches, a Tiffany watch, two Tiffany rings with 10 and eight carat diamonds, a pair of six-carat Tiffany earrings, and a Tiffany necklace, bracelet and diamond bracelet.

The FTC filed its complaint against Miao, along with the corporate defendants Tatto, Inc., Shaboom Media, LLC, Bune, LLC, Mobile Media Products, LLC, Chairman Ventures, LLC, Galactic Media, LLC, and Virtus Media, LLC, in December 2013.

The FTC complaint alleged that Miao and the 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 FTC said.

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, according to the FTC.

Meanwhile the FTC issued some advice on how to spot and avoid cramming charges on your mobile bill:

  • Check your phone bill each month. It’s easy to ignore a billing statement after you’ve set up automated online payments. But taking time to read your statement online or the bill in the mail will help you detect fraudulent charges, and save you money.
  • Treat websites that ask for your mobile phone number with caution. Phony websites advertising free prizes (think Justin Bieber tickets) in exchange for your mobile phone number, or other personal information, could be setting you up for a cram. Consider a block on third-party charges. Many phone carriers offer third-party blocking service for free.
  • Know your mobile phone carrier’s policy on refunds for fraudulent charges. Some carriers have a 60-day period for refund requests. Even if you’ve detected a years’ worth of fraudulent charges, the phone carrier may offer to refund only a part of it.

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