The Federal Trade Commission had filed its first case against phone crammers who added bogus charges to users' mobile phone bills.
The complaint was filed against Wise Media, Brian M. Buckley, and Winston J. Deloney, who randomly signed users up for text-based "premium services" that included horoscopes, flirting, love tips and more for $9.99 per month.
Charges from Wise Media showed up on customers' bills in an abbreviated fashion, so people either didn't notice it or just paid up. Anyone who noticed at a later date found it difficult or impossible to obtain refunds, in part because contact information for Wise was not readily available.
The FTC's complaint asks the court to immediately freeze the defendants' assets and orders them to stop their deceptive and unfair practices. The agency also wants to use the millions earned from this scam to issue refunds.
In a statement, CTIA - the wireless industry trade group - commended the FTC action.
"The overwhelming majority of the premium subscription SMS campaigns, such as Major League Baseball's offerings or presidential campaign donations, comply with the Mobile Marketing Association's Code of Conduct," CTIA said. "These best practices require users to double opt-in to subscribe to premium SMS messages, and these codes are monitored at least once a month to ensure compliance with the MMA. To those companies that are not compliant, they must change their practices, or we will continue to aid the FTC to find and shut down any improper business."
Back in 2011, the Federal Communications Commission formally unveiled rules to combat phone cramming. The commission proposed rules that, among other things, would require landline phone companies to notify customers that they can block third-party charges and require providers to separately list any additional charges added to a bill.
The FTC will host a mobile cramming roundtable on May 8 in Washington, D.C.