[telecom] feds indict six in "text msg scam"

[DOJ press release]

Six Defendants Charged In Manhattan Federal Court In Multimillion-Dollar Text Messaging Consumer Fraud Scheme

Defendants Fraudulently Charged Hundreds of Thousands of Mobile Phone Customers More Than $50 Million for Text Messaging Services Without Their Knowledge or Consent

... with participating in a scheme to charge mobile phone customers tens of millions of dollars in monthly fees for unsolicited, recurring text messages about topics such as horoscopes, celebrity gossip, and trivia facts, without the customers' knowledge or consent - a practice the defendants referred to as "auto-subscribing."

... engaged in a multimillion-dollar scheme to defraud consumers by placing unauthorized charges for premium text messaging services on consumers' cellular phone bills

... The consumers who received the unsolicited text messages typically ignored or deleted the messages, often believing them to be spam. Regardless, the consumers were billed for the receipt of the messages, at a rate of $9.99 per month, through charges that typically appeared on the consumers' cellular telephone bills in an abbreviated and confusing form

... Even then, consumers' attempts to dispute the charges and obtain refunds from the Texting Company or from the Texting Company's Affiliates were often unsuccessful

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- curiously (or not) nothing in the press release about the billing practices of the cellular companies themselves or whether they helped, or hindered...

_____________________________________________________ Knowledge may be power, but communications is the key snipped-for-privacy@panix.com [to foil spammers, my address has been double rot-13 encoded]

Reply to
danny burstein
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I believe that the regulation of premium SMS is up to the FCC, and is not at this point a criminal issue.

Personally, I think you'd have to be criminally stupid to design a system that included the equivalent of collect 900 number calls, but what do I know?

R's, John

Reply to
John Levine

I believe that if anyone bills someone for without their knowledge or consent, and there's a huge pattern indicating that it is NOT a simple mistake, and especially if they denied that it was a mistake, then they are guilty of fraud, regardless of who regulates whatever that is. It doesn't matter whether the messages are delivered by postal mail (the US Postal Service regulates that), by burning dog poop left at a front door (I guess that's regulated by the Department of Agriculture and/or the local fire department) by smoke signals (I guess the EPA would regulate that), text messaging (the FCC would regulate that) or mental telepathy (I don't think anyone regulates that. Yet, anyway.) That still doesn't allow someone to surprise-bill me for premium messages sent by telepathy.

Just because something uses new-fangled technology doesn't mean that technology-independent laws don't apply. For example, the FCC need not get involved if someone goes around murdering people by cramming phone bills down their throat until they choke on them, beating them over the head with a pay phone, or strangling them with a phone cord.

You'd need to make an exception for billing for legally mandated taxes by those mandated to bill for them. Those doing the billing here are not the phone companies, and what's billed isn't a mandated tax.

It would be hard to nail the phone companies for being complicit in this type of fraud. If the law mandates that phone companies act as billing agents for the fraudsters, then those who passed that law belong in jail.

I think you'd have to be criminally stupid to design a payment system that involves broadcasting information needed to conduct a financial transaction against someone else's account over radio waves in range of other customers and whatever bad guys are standing around. Even if it is encrypted, the encrypted data seems to be enough to conduct a transaction, even if it's conducted with the WRONG card with a RFID chip.

(Yes, I've seen that happen with Mobil Speedpass. Two people paid the other's bill. It involved some unwise handing of a fob over one cashier conducting another transaction to another cashier. It was only when one of them checked his receipt that it was noticed he was billed for way more gasoline than his car could hold, but that 18-wheeler could.)

I'm afraid that screwups like this might be even easier with some of the newer systems like ApplePay, especially given that it's so easy to crash phones with a text message. Can text messages that send back a payment be far behind? I shouldn't single out ApplePay; other systems are vulnerable also.

***** Moderator's Note *****

I've received word from my leader that I am now in charge of regulating communications via ESP. I've decided to tax it at the rate of one simolean per finished thought. Send the money to me the old-fashioned way.

Bill Horne Moderator

Reply to
Gordon Burditt

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