Company That Placed Crammed Charges on Consumers’ Phone Bills Settles FTC Contempt Charges

A phone billing company will pay $5.2 million to resolve Federal Trade Commission charges that it violated a court order that settled earlier charges of phone bill cramming by the FTC.

The proposed settlement agreement resolves FTC contempt charges that the Billing Services Group (BSG) defendants violated a 1999 settlement order with the agency that prohibited them from unauthorized billing, misrepresentations to consumers, and billing for vendors who fail to clearly disclose the terms of their services.

For years, the BSG defendants operated as a phone billing aggregator, passing charges from third parties to telephone companies for placement on consumers’ telephone bills. Under the settlement order announced today, the BSG defendants admit that they violated the 1999 order by permitting unauthorized billing. The BSG defendants further admit that they failed to vet charges before processing them and that they did not investigate consumer complaints about unauthorized charges.

Under the proposed stipulated final order the BSG defendants will be banned from placing charges on consumers’ phone bills for enhanced services such as email or voicemail, and prohibited from placing unauthorized charges on any type of consumer bill. In the defendants’ current business, which involves providing wireless intermediary services to telephone companies and Wi-Fi providers, the proposed order will require them to monitor their servers’ traffic for possible fraud.

The proposed order imposes a $5.2 million judgment, to be paid in 10 payments every 90 days. Under the proposed order, if the defendants fail to make a payment, the court will impose a judgment of $17 million.

The Commission vote approving the proposed stipulated final order was 3-0. It was filed in the U.S. District Court for the Western District of Texas, San Antonio Division.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

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