Surely you Jesta: Jamster jammed for mobile cramming

You thought Angry Birds get peeved at those annoying green pigs?  That's nothing compared to consumers’ reaction when they found unauthorized charges “crammed” onto their cell phone bills for phony virus scans that showed up when they played Angry Birds on their Android devices.  To settle an FTC lawsuit, Jesta Digital LLC — you may know them as Jamster — will give refunds to a significant number of consumers, pay an additional $1.2 million, and change the way they do business.

The FTC says the company used bogus virus warnings like this on the free version of the Android Angry Birds app to lure consumers into running phony anti-virus scans:

Does the little green guy on the banner look familiar?  The FTC thoughts so, too, and says his resemblance to the Android robot logo wasn’t a coincidence.

When consumers clicked on the "warnings," Jamster ran them through a series of screens with headlines about mobile security and protecting their device from viruses.  But let’s take a look at just one example of what the FTC says was really going on.

On some phones, the viewable “above the fold” part of the screen had banners that read BLOCK MOBILE VIRUS NOW and PROTECT YOUR ANDROID TODAY, along with more graphics of that green robot and a smaller button labeled SUBSCRIBE.  According to the complaint, consumers had to scrutinze the fine print to find the part about the $9.99 monthly charge for ringtones and other content.

That’s just one example outlined in the pleadings of how the FTC says Jamster duped consumers.  Moreover, even if people simply hit the PROTECT YOUR ANDROID TODAY button, Jamster went ahead and charged them for ringtones.

Oh, and what about that so-called anti-virus software?  When people tried to install it, the download often failed.

The complaint also illustrates consumer protection concerns about certain aspects of mobile billing.  Jamster charged people by using a method known as Wireless Access Protocol — or WAP — billing.  Unlike other methods, WAP billing allows for the capture of a consumer’s phone number so it can be used for billing.  That means charges can show up on people’s cell phone bills even if they didn’t take affirmative steps to expressly authorize and approve the transaction.

The FTC’s complaint includes some interesting excerpts from corporate emails that suggest the company knew its sales tactics weren't always on the up-and-up.  One Jesta official claimed to be “anxious to move [the company’s] business out of being a scam and more into a valued service.”

Under the order, the company will give automatic refunds to many people billed as a result of the bogus virus warnings, scans, and "malware" protection.  Other consumers — those charged between August 1, 2011, and December 7, 2011 — can apply for a refund by calling Jamster at (866) 856-5267 or e-mailing info@jamster.com.

If you're following what's going on in the mobile industry, you'll want to read tomorrow's blog post about lessons businesses can take from the case.