The Federal Trade Commission filed its first case challenging mobile “cramming” on April 16 against Wise Media, LLC, Brian M. Buckley and Winston J. Deloney. Mobile cramming is a practice where unauthorized charges are added to a person’s cell phone bill.
The complaint was filed in the U.S. District Court for the Northern District of Georgia.
FTC alleges that Georgia-based Wise Media took in millions of dollars by charging consumers’ cell phone bills, many of them unauthorized charges. The company allegedly sent periodic “premium” texts with horoscope alerts, flirting tips and other material. Wise Media allegedly arranged to place $9.99 per month on consumers’ mobile phone bills.
The FTC complaint asks the court to freeze the defendants’ assets and order them to stop their deceptive and unfair practices. The agency also seeks a permanent injunction to force the defendants to surrender money it made from cramming to the victims of the scam.
The complaint alleges that in many instances, Wise Media sent texts suggesting that consumers were subscribed to the service, messages many consumers dismissed as spam and ignored. Even if consumers sent messages stating they did not want the service, they were billed on an ongoing basis.
The FTC alleges that Wise Media made its contact information difficult to find. When consumers found a phone number for Wise Media, they were reportedly promised refunds that were never produced.
In addition to Wise Media, Buckley and Deloney, the complaint names Concrete Marketing Research, LLC, alleging that it received funds from the operation.
Cramming scams involving unauthorized charges on phone bills have been around for a long time, but now that many people have dropped their land lines, the scam has moved to mobile phones.
How do unauthorized charges wind up on cell phone bills?
Consumers can use their mobile phones to order and pay for “premium SMS services” such as games. They can agree via text message to have a charge appear on their bill. The content provider uses a five- or six-digit number called a short code. Content providers generally use a “double opt-in verification” process requiring a consumer to take two steps to confirm they want to buy something. The content provider will then enter an agreement with another business, known as an aggregator, to place charges on specific carriers’ mobile bills.
According to the FTC, the defendants did not get get consumers’ knowing agreement to pay for the services through a “double opt-in” or any other process whereby a buyer gives express informed consent. Wise Media allegedly placed the charges onto consumers’ mobile bills without their consent and collected money when people paid their bills without noticing the unauthorized charges. Shorthand descriptions reportedly made it even harder for consumers to find out what was going on.
On May 8, Commission staff is hosting a roundtable discussion on mobile cramming with consumer advocates, industry leaders and government regulators to address how to protect consumers from this growing problem.