FTC seeks return of $52M in crammed telephone charges placed by Billing Services Group
The Federal Trade Commission (FTC) has asked a federal court to order Billing Services Group Ltd. to pay $52.6 million for allegedly placing millions of dollars in unauthorized charges on consumer landline phone bills, the agency announced today.
The FTC is seeking a contempt ruling against BSG, the nation's largest third-party billing firm.
The agency alleges that BSG and related companies placed over $70 million in charges for unauthorized services on over 1 million telephone lines, from 2006 through 2010. San Antonio, Texas-based BSG placed the allegedly bogus charges on behalf of "known" phone crammer Cindy Landeen, in violation of a previous, permanent court order against such activity.
"BSG made it possible for con artists to steal people's hard-earned money by placing charges on phone bills for services they never ordered or used," FTC Bureau of Consumer Protection chief David Vladeck said in a statement. "Under previous federal court orders, BSG cannot profit from the fraud of others and then deny responsibility for the harm they made possible."
The FTC said the crammed charges stemmed from nine so-called "enhanced services," including voice mail, video streaming, job skills training and directory assistance that were never requested by consumers.
BSG, incorporated in Bermuda, has refunded about $17.4 million of the $70 million in crammed charges. The FTC, on April 4, asked a federal court to order the company to refund all of the money from the unauthorized charges.
In a statement, BSG said the FTC has misrepresented facts in the matter, noting that information cited in the FTC's motion was obtained through the FBI's investigation of Alternate Billing Corp., which, BSG said was formerly a client, not an entity of BSG.
"This Motion represents an incomplete and inaccurate representation of the facts and leaps to false conclusions. Apparently, the FTC's view is that, because BSG settled litigation 13 years ago, BSG is liable for contempt whenever a service provider is able to evade the compliance measures implemented by BSG, regardless of BSG's diligence and good faith," the statement said. "The bottom line is that the FTC is trying to blame BSG for the acts of another party.
In its motion to the U.S. District Court for the Western District of Texas, the FTC argued that by billing crammed charges, BSG violated the terms of its September 1999 settlement with the FTC that barred the company from placing unauthorized charges on consumers' telephone bills.
"BSG billed for these unauthorized services despite numerous red flags," the 22-page motion reads. "BSG conducted no meaningful pre-billing due diligence and failed to adequately monitor or address the services' deceptive marketing, enormous complaint volume, and near-complete lack of usage."
At its monthly meeting in April, the Federal Communications Commission (FCC) adopted an anti-cramming rule that requires third-party charges to be listed separately on landline bills. Additionally, landline carriers that allow subscribers to block third-party charges must inform customers they can do so--at the point of sale, on monthly bills and on the company's website.
The case is Federal Trade Commission v. Hold Billing Services et al., No. SA-98-CA-0629-FB, W.D. Texas (San Antonio).
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