Cramming Defendant Permanently Banned from Billing on Local Telephone Bills

Willoughby Farr, the owner of three companies that billed more than $30 million in bogus collect call charges to millions of consumers throughout the country, has been banned from all billing on local telephone bills. Farr agreed to the lifetime ban as part of a federal court order settling Federal Trade Commission charges that he directed a massive unauthorized billing scam for more than two and a half years.

The FTC charged Farr and other defendants with billing consumers for telephone calls that never occurred, alleging that consumers were billed for phony collect calls, including calls to telephone lines dedicated to modems and fax machines, and to homes and businesses where no one was present. These bogus charges, usually between five and eight dollars each, typically were “crammed” in the back of telephone bills, which represented that the charges were billed by OAN Services on behalf of defendant Nationwide Connections, Inc., or by Integretel on behalf of defendants Access One Communications, Inc. and Network One Services, Inc. Farr owned defendants Nationwide Connections, Access One Communications, and Network One Services (collectively, “Nationwide”) and masterminded Nationwide’s deceptive and unfair billing scheme.

In February 2006, at the FTC’s request, a federal judge halted the defendants’ operation with a temporary restraining order, appointed a temporary receiver over Nationwide, froze the assets of Nationwide, Farr, and co-defendants Mary Lou Farr, Yaret Garcia, Erika Riaboukha, and Qaadir Kaid, and barred all of the defendants from engaging in unauthorized billing. In March 2006, the court entered a preliminary injunction order that, among other things, appointed a permanent receiver over Nationwide and extended the asset freeze over the defendants’ assets. In September 2006, after holding Farr in contempt for transferring assets in violation of the asset freeze, the court expanded the receivership to cover all of Farr’s personal assets.

The FTC also has charged the billing aggregators that billed on Nationwide’s behalf – Billing Concepts, Inc., ACI Billing Services, Inc., and BSG Clearing Solutions North America LLC (which billed consumers using the d/b/a “OAN Services”), and The Billing Resource d/b/a Integretel – with deceptive and unfair billing in violation of the FTC Act. The FTC’s case against them and Garcia, Riaboukha, and Kaid is still pending. Defendant Mary Lou Farr previously settled with the FTC.

On December 14, 2007, the court entered an order of default judgment against Nationwide for $34,426,696.85, which represents the amount of consumer injury. The judgment also orders the court-appointed receiver to wind down the three companies that Farr controlled.

The settlement with Farr bars him from billing on a consumer’s local telephone bill; benefitting from, having any ownership in, or having any connection with, any business engaged in such billing; and being an employee, officer, or director of, or advisor to, any business involved in such billing. He and his representatives are barred from making any misrepresentation that a consumer is obligated to pay any charge that has not been expressly authorized, and from selling or renting the name, address, account number, or other identifying information of any consumers who were billed.

The settlement contains a monetary judgment of $34,547,140, which will be partially satisfied by Farr’s transfer to the Commission of all but $7,500 of his frozen assets. The assets, which must be paid to the Commission, have an estimated value of $475,000 and include three homes and various luxury items. The settlement also contains standard record keeping provisions to allow the FTC to monitor compliance with its order.

The Commission vote to authorize staff to file the stipulated final order was 5-0. The settlement was filed in the U.S. District Court for the Southern District of Florida and has been approved by the court.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.