FTC Puts $1.9M Kink in Phone Bill Crammer's Wallet

coondoggie writes to mention that the three largest companies in the billing aggregation market have been hit with a $1.9 million fine in response to the more than $30 million in bogus charges added to consumer's bills. The ringleader of the scam however, Willoughby Farr of Nationwide Connections, has been hit with $35 million and a lifetime ban. "Today's settlement would prohibit the companies from misrepresenting that consumers are obligated to pay for telecommunications charges that have not been expressly authorized. It also would be barred from billing or submitting any telecommunications charges for billing on a consumer's telephone bill unless such charge has been expressly authorized. [...] The FTC still has a case pending against other principals in this case: Yaret Garcia, Erika Riaboukha, and Qaadir Kaid. One other defendant Mary Lou Farr, has already settled with the FTC."

Comments

My Bill is always wrong

[FredFredrickson]

Here's how it works, They overcharge you an extra $1.

Some percentage of their cusomters will notice the $1, while most may not notice at all.

Out of the customers that notice, X amount will take action and call the company

The company Rep will respond that instead of receiving and immediate refund, they will put the "refund" into the system and it may take a while to process.

1 Month goes by and out of the small percentage that took action a month ago, a smaller percentage will realize that the refund never went through and call again.

The Rep will apologize and either deny the refund's existance, claim to "not have access to the records," or some other BS excuse. They will promptly "issue" a refund for you.

You may at this point recieve a $1 credit to next month's bill. Never a refund.

So by the end, 3-5% of the mis-billed customers may actually get their refund/credit. During the one and a half months it took to "process" the refund/credit, company that handles billing made X% interest on the overbilled cash. They made out like bandits on the refund thanks to the fact that it's done in such mass quantities. It benefits the company largely to have billing errors.

The other 95% of customer who never noticed lose $1 each. Cumulatively, the company with a 30 Million subscriber base makes $28 Million off a single billing error.

Of course, to make it look like a mistake, there won't be a 100% customer base billing error, but you get the idea.

The only way to rectify the issue is demand not only a refund but also interest on the money they stole, as well as credit towards the administrative overhead it took for you to navigate their phone menus for hours on end.

Re:My Bill is always wrong

[xstonedogx]

Comcast is doing exactly this with me now, only the problem is $17.99.

I picked up a new box at the store (to get HD content). They didn't activate the box properly at the store. (I don't believe it was an accident, because the same exact thing happened to my dad not a month before it happened to me - and we are in different areas.) I contacted tech support and they couldn't activate it from there either. I don't think they even tried because the box literally did nothing when they said they tried. They told me they would have to send out a tech, but did not mention anything about having to pay. The tech was here for about two minutes, did exactly what I did over the phone with tech support they were miraculously able to activate the box.

I contacted them and told them to pound sand. They said they would refund the money. They didn't refund me the next month. My next bill should appear any day now. Since I received the same exact canned response, I don't expect to see a refund this month either. Won't they be surprised when I issue a charge back with my credit card company, complain to the FTC and others, and become a former subscriber.

The part that really pisses me off is that I was already paying them more than most customers probably pay (I'm a stay-at-home dad until Fall, so I can justify it pretty easily), and by adding this box I was actually increasing my bill.

Re:My Bill is always wrong

[jwiegley]

My damn union just started doing this sort of deceitful, unethical crap. I'm a teacher. Teachers like myself in California are represented by the California Faculty Association (CFA). You do not have to be a member of the union, you can choose not to be. However if you choose not to be then the union still legally charges you 75% of the dues a normal member pays. Their argument is that the union negotiates and defends to the benefit of all employees and thus all employees should pay their fair share, known as an agency fee. Because California is not a right to work state you cannot refuse to pay. If you do then the union can mandate that you be fired.

I would argue that the union doesn't represent me. Every action they take punishes people in my position and is aimed at rewarding the less competent, less educated or lower paid instructors. So what does this all have to with the article?

Starting last month the union started deducting 100% of dues from non-members. These people are not given the same rights and privileges as members. Oh, buried on the second to last page of a yearly CFA report is the information that you can object to the additional 25% if you send a written letter with personal information to the CFA. It's just like the damn phone company. I know they did it just hoping that some percentage wouldn't notice, or wouldn't bother, to send such a letter in.

The thing that really bugs me is how is this even legal??? If they can just arbitrarily take an extra $10.00 from my paycheck why not, $50, $500?? How is it legal to reach into another man's salary and take something that is not legally owed to them?

Ayn Rand had it right.

Disproportion.....

[IHC Navistar]

How can the phone companies, or any company, be fined so little when the actual theft was far more? I mean, a $1.9 million dollar fine for $30 million worth of fraudulent charges?

1: Charge $30 million in fraudulent charges.
2: Generate gross fraud revenue of $30 million.
3: Customers report you.
4: FTC fines you $1.9 million.
5: KEEP PROFIT of $28.1 million.
6: Lather, rinse, repeat.

(Now that I think about it, this could be a buisiness model/method. I CALL PATENT!)

If a company makes more from fraud than it has to pay in fines, where is the deterrent? 28.1 million in retained fraudulent revenue won't discourage anything.

A better way:

1: Fine the company 50% of fraud revenue.
2: Force restitution of 100% of fraud revenue

If the combined amounts of the fine and fraud revenue exceed the total profits and cash reserves of the company, then allow the company to pay in installments that will allow the company to continue operating so that both the fine and restitution can be paid back, with restitution to defrauded customers taking priority over the fine. If the company keeps up fraudulent activity to the point where payments continually compound onto one another and the company cannot make all its payments because the amount exceeds it's profits and cash reserves, then the company, assets and all, is sold off to competitors or creditors, and the assets of responsible executives are used to reimburse shareholders, consumers, and creditors.

Fines need to be a *DETERRENT*, not an inconvenience.

Re:What about Telcos?

[the_rev_matt]

I just called to get one of these scam voicemail services removed from my account (interesting: if you called the number the voicemail was supposedly active for, it would ring 15 times then go to fax tone). The rep from the VM company indicated that pretty much anyone can sign up pretty much anyone else for this voicemail service on some web page somewhere and the company doesn't care because they can bill it.

The rep from ATT was pretty bothered by my explanation of what happened and opined that there was no way it should be legal and that it was bad business for ATT to even bill for this crap. Then he spent 20 minutes going over every service we have on our account and giving me the lowest price available for the ones we wanted to keep and eliminating the rest. Cut my bill by about 30%.

RTFA

[bkaul01]

The $1.9 million restitution agreement is in addition to the almost $35 million the FTC is collecting from the person the FTC considers the ringleader of this scam, Willoughby Farr of Nationwide Connections. They're confiscating the full amount, plus fining them an additional $1.9M. So, the guilty parties will have lost at least $2M on the deal once legal costs, etc. are accounted for. How is that not a deterrent?

Re:RTFA

[OnlineAlias]

Fraud is fraud. It is illegal. Put the executives in jail and shut the company down. Have we as a society gotten so accepting of the corporate culture of greed and scams that outright fraud should be punishable by simply not making as much profit?

Re:What about Telcos?

[tompaulco]

The telcos willingly pass through the charges to you because they receive about 1/3 of the revenue. The telcos need to be punished as well. They basically want to act like a credit card which always gives the benefit of the doubt to the company that put the charge on the bill. I say, if they want to be like a credit card, then they need to abide by the regulations of the credit industry. In the credit industry, if you question a charge, they immediately place it into a suspect status, and you don't have to pay it until it is resolved. With the telcos, if you call and question it, they give you the runaround, and even if they do agree to investigate, you still have to pay the charge until they make their decision on the charge, and if you don't then they will cancel your phone service and report you to the credit bureaus and collection agencies.

My Own Experience

[CyberGarp]

So one day I discover that Sprint is my long distance carrier at $5/minute. I protest the "slam" to the FCC. The FCC rules that its a valid transfer, since it came from a website and they don't regulate those transfers.

I tell BellSouth and Sprint that I will only pay the fee my original carrier I had negociated (40c/minute to east europe), otherwise I will see them in court. I document every correspondence, record every phone call. Each time I send them another letter saying I'm not paying for a service I didn't ask for, I include a xerox of all previous letters and transcripts. The packets grow thicker and thicker.

My stance was simple, You can't make me pay for something for which I didn't agree too without a contract. The FCC was off base ruling that this was legit. Please produce a signed or verbal proof of a contract with Sprint. BellSouth kept trying to collect for sprint and this went on and on.

So I sent a letter that if something didn't happen I would file in court and we could resolve the situation there.

Then the call came, "Ahhh, Mr. Garbett, we've been reviewing your file. You are talking about challenging our arrangement with other service providers under contract law is this correct?"

"Yes"

"Well, you have to understand that's a delicate matter. No one has done that before. We make a lot of money off this arrangement. How does a year of free service sound?"

"Okay"

"So you agree to drop the matter, and we will credit you for a years service based on your history and drop the charge-- Do you agree to these terms."

"Yes"

And there it was, a year of free service. I've been waiting for several years since then for a large enough abuse of this system that a class action forms. I find it all mildly amusing.