No one likes spending money on things they never agreed to pay for, or “agreed” through some type of trickery. One of the most frustrating scams out there right now is called “cramming,” where a telemarketer calls businesses and other consumers to “verify information,” takes whatever answer the person gives as a “yes” and adds a monthly charge to their phone bill.
A court recently shut down a massive cramming operation known as Inc21 at the request of the Federal Trade Commission (FTC) and ordered the participants to pay back $38 million to consumers they allegedly deceived.
Inc21 placed charges on the telephone bills of thousands of small businesses and consumers for Internet-related services they didn’t agree to buy. The defendants were barred from charging consumers’ telephone bills and from telemarketing without prior approval from the FTC and the court.
Third parties through which charges were placed, including local exchange telephone companies (LECs), were ordered to return money in escrow to consumers. The defendants were ordered to pay consumers nearly $38 million in restitution for consumers.
The FTC sued Inc21 in January 2010, charging it with hiring offshore telemarketers to sell its Web-based services. The defendants used LECs to place charges on consumers’ phone bills. The charges were usually between $12.95 and $39.95 per month.
Consumers were billed after being told by telemarketers the call was only to verify business information, if they declined Inc21’s offer of Internet services, or after they were told they would receive a free trial offer (but weren’t told they would be billed if they did not cancel).
The FTC charged that the defendants violated the FTC Act and the Telemarketing Sales Rule (TSR).
Defendants are Inc21.Com Corporation; Jumpage Solutions, Inc.; GST U.S.A., Inc.; Roy Yu Lin and John Yu Lin. Sheng Lin, who did not participate in the scheme, but who profited from it, is a relief defendant, ordered to give up $434,000 in financial benefits he got from the scheme.