At the request of the Federal Trade Commission, a federal judge has halted a massive fraudulent billing scheme that has collected more than $25 million in bogus collect call charges from hundreds of thousands of consumers. The FTC charged three companies and their principals with deceptive and unfair billing practices for “cramming” – the unauthorized billing of charges on phone bills – since at least January 2004.
"Charging consumers for bogus collect calls is stealing," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection." The Federal Trade Commission will not tolerate crooks who cram unauthorized charges onto phone bills."
The FTC’s complaint alleges that, in many instances, the defendants initiated phony collect call charges, such as calls to telephone lines that were dedicated to computers and fax machines, and to phones where no one was present. In addition, some consumers'caller ID logs had no record of collect calls for which they were billed.
The FTC charged the defendants with violating Section 5 of the FTC Act by representing that consumers owed money they did not owe, and by causing consumers to be billed for collect phone calls they neither received nor authorized. According to the FTC’s complaint, the defendants claimed that they submitted charges for billing on consumers'bills on behalf of long distance service providers, although the defendants have few, if any, long distance carriers as clients. The defendants' charges typically were buried on the last page of consumers'phone bills, with each charge typically in the range of $5 to $8.
On February 27, Senior Judge Kenneth Ryskamp ordered an ex parte temporary restraining order freezing the assets of Nationwide Communications Inc., Access One Communications Inc., Network One Services Inc., and their principals, Willoughby Farr, Mary Lou Farr, Yaret Garcia, Erika Riaboukha, and Qaadir Kaid. The order appointed a temporary receiver over them and banned them from engaging in unauthorized billing.
On March 8, the court found that the defendants engaged in the widespread unauthorized billing of collect calls in violation of Section 5 of the FTC Act and entered a preliminary injunction order prohibiting them from billing or submitting any charge for billing on a consumer’s telephone bill. The order continued the asset freeze over them and appointed a permanent receiver over Nationwide Communications, Access One Communications, Network One Services, and certain affiliated entities. The FTC ultimately seeks to permanently bar the defendants from further violations, make them forfeit their ill-gotten gains, and make them pay restitution to consumers. The Commission approved the filing of the complaint in U.S. District Court for the Southern District of Florida by a 5-0 vote.
NOTE: The Commission authorizes the filing of a complaint when it has 'reason to believe' that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information on 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Office of Public Affairs
Federal Trade Commission
Office of Public Affairs
Laura M. Kim, Attorney
Division of Marketing Practices