UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. COMMUNICATION CONCEPTS & INVESTMENTS, INC., also doing
business as CROWN COMMUNICATIONS; CIVIL NO. COMPLAINT FOR Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), for its Complaint alleges: 1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and the Telephone Disclosure and Dispute Resolution Act of 1992 ("TDDRA"), 15 U.S.C. § 5701 et seq., to obtain preliminary and permanent injunctive relief, restitution, disgorgement, and other equitable relief for defendants' unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992, 16 C.F.R. Part 308 ("900-Number Rule"). 2. Subject matter jurisdiction is conferred upon this Court by 15 U.S.C. §§ 45(a), 53(b), 57b, and 5711, and 28 U.S.C. §§ 1331, 1337(a), and 1345. 3. Venue in this district is proper under 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1391(b) and (c). THE PARTIES 4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. § 41 et seq. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits deceptive acts or practices in or affecting commerce. The FTC also enforces the 900-Number Rule, which regulates the advertising, operation, billing, and collection of pay-per-call services accessed by dialing 900-numbers and 800-numbers. The 900-Number Rule also prohibits charging for information conveyed during a call to an 800-number without a valid presubscription agreement or comparable arrangement. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and the 900-Number Rule and to secure such equitable relief as is appropriate in each case, including restitution for injured consumers. 15 U.S.C. §§ 53(b), 57b, and 5711(c). 5. Defendant Communication Concepts & Investment, Inc. ("Crown I"), which also does business as Crown Communications, is a Florida corporation having its office and principal place of business at 1334 N. State Road 7, Margate, Florida 33093. Crown I transacts or has transacted business in this district. Crown I is engaged in the sale of audiotext services, such as adult entertainment services and psychic services, accessed through telephones. 6. Defendant Crown Communications Two, Inc. ("Crown II"), is a Florida corporation having its office and principal place of business at 1334 N. State Road 7, Margate, Florida 33093. Crown II transacts or has transacted business in this district. Crown II is engaged in the sale of audiotext services, such as adult entertainment services accessed through telephones. 7. Defendant Global Collections, Inc. ("Global") is a Florida corporation having its office and principal place of business at 1334 N. State Road 7, Margate, Florida 33093. Global transacts or has transacted business in this district. Global is a debt collection agency, and has attempted to collect debts on behalf of Crown I and Crown II. 8. Defendant Lawrence Levinson aka Larry Levinson is an officer or director of Crown I, an officer or director of Crown II, and an officer or director of Global. His principal place of business is 1334 N. State Road 7, Margate, Florida. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of Crown I, Crown II, and Global, including the acts and practices set forth in this complaint. He transacts or has transacted business in this district. 9. Defendant Jordan Levinson is an officer or director of Crown I and an officer or director of Crown II. His principal place of business is 1334 N. State Road 7, Margate, Florida. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of Crown I, Crown II, and Global, including the acts and practices set forth in this complaint. He transacts or has transacted business in this district. 10. Defendant Bruce Levinson is an officer or director of Crown I and an officer or director of Crown II. His principal place of business is 1334 N. State Road 7, Margate, Florida. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of Crown I, Crown II, and Global, including the acts and practices set forth in this complaint. He transacts or has transacted business in this district. COMMERCE 11. At all times material to this complaint, defendants’ course of business, including the acts and practices alleged herein, has been and is in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS’ BUSINESS PRACTICES 12. Since at least 1996, defendants Crown I and Crown II (collectively "Crown") have advertised, offered, and sold audiotext services -- audio information or entertainment programs offered over the telephone -- to consumers throughout the country. The audiotext services offered and sold by Crown include adult entertainment services, psychic services, and adult chat lines. In some instances, for example, Crown solicits consumers to call adult chat lines to "get matched free" with "local singles." Crown’s audiotext services are accessed by consumers by dialing various 800-numbers or toll numbers. 13. One way consumers access Crown’s audiotext services involves the use of a return telephone call. The caller calls an advertised 800-number for the service. A recorded voice informs the caller that in order to access the desired service, he must hang up the phone and someone will call him back. Soon afterward, the calling party receives a telephone call. The person calling back may ask the consumer if he wants the service he has requested. If he says "yes," he is connected to that service. In some instances, the caller may receive several telephone calls over a period of hours as a result of making only the initial 800-number call. The charge for the service subsequently appears on the bill sent to the individual financially responsible for the telephone line (the "line subscriber") as a collect call from England or from Florida. 14. Another way in which consumers access Crown’s audiotext services starts with the caller dialing an 800-number. A recorded voice directs him to press one or more specific keys on his phone to be transferred to an adult entertainment or chat line. If he does so, he is connected to the service of his choice. The charge for the service then appears on the line subscriber’s bill as an international long-distance call. 15. The information regarding the purchase of Crown’s audiotext services (date, time, telephone number, length of call, cost, and taxes) is captured by means of an automated number identification ("ANI") system. ANI technology, similar to “caller ID” service, identifies the telephone number from which a call to Crown’s 800 or other toll-free numbers originates, but cannot identify the caller, and cannot determine whether a caller is the line subscriber for the line from which the call originates. Crown transmits this information to its billing agents (sometimes known as "aggregators"), generally Telephone Billing Services, Inc. ("TBS"), Network Access, Inc. ("NA"), or Long Distance Billing Company, Inc.("LDBC"). Working on behalf of numerous vendors like Crown, billing aggregators process billing data they receive from their vendors into the appropriate electronic format and then submit this information on a monthly basis to the line subscriber’s local telephone company (“Local Exchange Carrier” or "LEC"). The LECs, in turn, prepare and send to line subscribers their monthly billing statements, including charges for services of vendors like Crown. These charges are listed in two places. First, page one of the bill summarizes all monthly charges, including the audiotext service provider’s charges. Second, the bill contains a separate statement detailing the charges for each billing agent. Even though callers are purchasing audiotext services, these purchases are listed on line subscribers’ bills as telephone calls -- sometimes as collect calls from England or Florida, or direct-dial calls to Toronto, Canada. 16. In numerous instances, when the line subscriber receives his bill, he does not understand why he is being billed for an international long distance call or a collect call he knows nothing about. In numerous instances, the audiotext services for which the line subscriber is billed were not accessed from the line subscriber’s telephone. In other instances, the line subscriber is charged for information services ordered from his phone, but without his authorization. A line subscriber questioning bills for these calls typically telephones either his LEC or the billing agent at the telephone number on the page of the bill containing the “third party" charges. If he calls his LEC, he is usually referred to the billing agent. The billing agent’s representative explains that the calls are charges for audiotext services, such as calls to adult entertainment lines, adult chat lines or for psychic lines. The billing agent claims that its records show that the disputed telephone calls came from the telephone at the line subscriber’s house, and that, therefore, the line subscriber owes for the cost of the call. 17. In numerous instances, the line subscriber will tell the billing agent that his or her telephone was not involved in the calls for which he or she was charged. In these instances, the line subscriber may state that no one was at home, that the calls for which he or she was charged overlap with other calls for which he or she was billed, or that no one in the household or anyone else with access to the telephone made the calls or accepted (if collect) the calls for which the line subscriber was billed. In other instances, the line subscriber may tell the billing agent that he did not authorize the purchase of the audiotext services. In numerous instances, despite the line subscriber’s denials of responsibility, the billing agent continues to insist that its records show that the line subscriber’s phone was used, and that therefore the line subscriber must pay the bill. 18. In numerous instances, the consumer then recontacts his LEC. In some of those instances, the LEC removes the disputed charge and returns the charge to the billing agent. In some of those instances, the billing agent then returns the charge to Crown as the audiotext provider. 19. If the charge is returned to Crown, that firm often uses its in-house collection agency, Global, to collect the charge from the line subscriber. In its collection letters, Global states that "Your number was tracked electronically through caller ID and telephone billing services" (emphasis in original) and "You are responsible for your phone activity! This amount could be entered on to a TRW credit report in your name." (emphasis in original). VIOLATIONS OF SECTION 5 OF THE FTC ACT COUNT I (All Defendants) 20. In numerous instances, in the course of their business as described above, defendants have represented, expressly or by implication, that:
21. In truth and in fact, in numerous instances:
22. Therefore, defendants’ representations as alleged in Paragraph 20, are false and deceptive, and violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT II (The Crown Defendants) 23. In numerous instances, in the course of their business as described above, Crown bills line subscribers for services which it represents, expressly or by implication, to be directly dialed and collect telephone services. 24. In truth and in fact, in numerous instances, the services for which line subscribers are billed by or on behalf of Crown are not telephone services, but, in fact, are audiotext services, such as adult entertainment services, psychic services, and adult chat lines. 25. Therefore, Crown’s representations as alleged in Paragraph 23, are false and deceptive, and violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT III (The Crown Defendants) 26. In numerous instances, Crown solicits consumers to call its 800 or other toll-free numbers through the use of advertisements that represent, expressly or by implication, that callers to Crown’s 800 or other toll-free numbers will "get matched free" with "local singles." 27. In truth and in fact, callers to Crown’s 800 or other toll-free numbers do not get matched free with local singles. Rather, the "matching services," which are delivered via return calls to the line subscriber of the telephone line used by the caller to call Crown’s 800 number, cost approximately $3.99 per minute. Moreover, Crown’s return calls are not from "singles" in the geographic area of the recipient of Crown’s services. 28. Therefore Crown’s representations set forth in Paragraph 26 are false and deceptive in violation of Section 5(a) of the Federal Trade Commission Act. DEFENDANTS’ VIOLATIONS OF THE 900-NUMBER RULE 29. The Commission’s 900-Number Rule, 16 C.F.R. Part 308, became effective on November 1, 1993, and implements the requirements of the TDDRA, 15 U.S.C. § 5701 et seq. The 900-Number Rule prohibits any person from using an 800-number in a manner that would result in (a) a charge to the calling party for completing the call; (b) connecting or transferring the calling party to a pay-per-call service; (c) a charge to the calling party for information conveyed during the call unless the calling party pays by credit card or has a presubscription or comparable arrangement to be charged for the information; or (d) a collect call back to the calling party. 16 C.F.R. § 308.5(i). COUNT IV (The Crown Defendants) 30. Section 308.5(i) of the 900-Number Rule prohibits "[a]ny person ...from using an 800-number ...in a manner that would result in: (4) The calling party being called back collect for the provision of audio or data information services..." Section 308.5(i)(4). 31. In a significant number of instances, after dialing a Crown 800-Number or other telephone number widely understood to be toll-free, a caller is instructed to hang up and await a return call. A short time after hanging up, the caller accepts a return call providing the desired information service or audiotext service. The line subscriber is later billed for a collect call. The Crown Defendants have thus used an 800-Number or other telephone number advertised or widely understood to be toll-free in a manner that has resulted in the calling party being called back collect for the provision of audiotext services or information services. CONSUMER INJURY 32. Consumers throughout the United States have suffered and continue to suffer substantial monetary loss as a result of defendants' unlawful acts or practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 33. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement, and restitution to prevent and remedy any violations of any provision of law enforced by the Commission. 34. Section 19 of the FTC Act, 15 U.S.C. § 57b, and Section 5711 of TDDRA, 15 U.S.C. § 5711, authorize this Court to grant such relief as the Court finds necessary to redress injury to consumers or other persons resulting from defendants’ violations of the 900-Number Rule, including the refund of money. PRAYER FOR RELIEF WHEREFORE, plaintiff, the Federal Trade Commission, requests that this Court, as authorized by Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and pursuant to its own equitable powers:
Respectfully submitted, DATE: _________________ _________________ _________________ Attorneys for Plaintiff |