Defendants Collected Millions For Collect Calls That Were Not Made
At the request of the Federal Trade Commission, a federal judge has halted a massive fraudulent billing scheme that has collected more than $25 million in bogus collect call charges from hundreds of thousands of consumers. The FTC charged three companies and their principals with deceptive and unfair billing practices for "cramming"
- the unauthorized billing of charges on phone bills - since at least January 2004.
"Charging consumers for bogus collect calls is stealing," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection." The Federal Trade Commission will not tolerate crooks who cram unauthorized charges onto phone bills."
The FTC's complaint alleges that, in many instances, the defendants initiated phony collect call charges, such as calls to telephone lines that were dedicated to computers and fax machines, and to phones where no one was present. In addition, some consumers' caller ID logs had no record of collect calls for which they were billed.
The FTC charged the defendants with violating Section 5 of the FTC Act by representing that consumers owed money they did not owe, and by causing consumers to be billed for collect phone calls they neither received nor authorized. According to the FTC's complaint, the defendants claimed that they submitted charges for billing on consumers' bills on behalf of long distance service providers, although the defen- dants have few, if any, long distance carriers as clients. The defendants' charges typically were buried on the last page of consumers' phone bills, with each charge typically in the range of $5 to $8.
On February 27, Senior Judge Kenneth Ryskamp ordered an ex parte tempo- rary restraining order freezing the assets of Nationwide Communications Inc., Access One Communications Inc., Network One Services Inc., and their principals, Willoughby Farr, Mary Lou Farr, Yaret Garcia, Erika Riaboukha, and Qaadir Kaid. The order appointed a temporary receiver over them and banned them from engaging in unauthorized billing.
On March 8, the court found that the defendants engaged in the widespread unauthorized billing of collect calls in violation of Section 5 of the FTC Act and entered a preliminary injunction order prohibiting them from billing or submitting any charge for billing on a consumer's telephone bill. The order continued the asset freeze over them and appointed a permanent receiver over Nationwide Communications, Access One Communications, Network One Services, and certain affiliated entities. The FTC ultimately seeks to permanently bar the defendants from further violations, make them forfeit their ill-gotten gains, and make them pay restitution to consumers. The Commission approved the filing of the complaint in U.S. District Court for the Southern District of Florida by a 5-0 vote.
NOTE: The Commission authorizes the filing of a complaint when it has 'reason to believe' that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaint are available from the FTC's Web site at
The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
MEDIA CONTACTS:
Mitch Katz, Office of Public Affairs Federal Trade Commission 202-326-2161
Frank Dorman, Office of Public Affairs 202-326-2674
STAFF CONTACT:
Laura M. Kim, Attorney Division of Marketing Practices 202-326-3734
Federal Trade Commission, Plaintiff, vs. Nationwide Connections, Inc., Access One Communications, Inc., Network One Services, Inc. Willoughby Farr, Mary Lou Farr, Yaret Garcia, Erika Riaboukha, Qaadir Kaid, Defendants; United States District Court Southern District of Florida. Civil Action No.: 06-80180; FTC File No.: 052 3141
[TELECOM Digest Editor's Note: While this report _is_ quite good news, one pre-emptive strike everyone can take to assure this problem is at a minimum is to ask your local telco (typically, they are the billing agents for all telcos) to put a 'third party/collect block' on your lines. All the legitimate telcos at least, such as Verizon, SBC, Bell South, etc. share a common database of subscribers who do not want _any_ 'third party billings/collect calls' on their line for any reason at any time. When a caller does '00+' for example, and requests permission to bill a call to your line, or if you are willing to accept a 'collect call', this database is 'dipped' and the answer given is 'no way, Jose' or words to that effect. The calling party is then asked to provide an alternative way to bill for the call they wish to make. Of course, you also want to tell your telco to put a 900/976 block on your line as well. Given that collect calls are _so_ expensive these days, and toll-free 800 calls are so cheap, I do not know why anyone -- if they have some reason to accept calls that they have to pay for -- would not go with an 800 number instead of collect.Telco does not absolutely guarentee that a 'collect call/third party block' will work mainly since not all telcos -- at leest the sleazy ones, subscribe to the database dip. But, if a call gets billed to your number after you have instructed telco against same, they will remove it. I've had that on my lines for years with success, and although some telcos make a one time charge for being listed in the negative database, they are _not permitted_ to charge if you want to be listed in the 900/976 portion of the database. Bear in mind however this can pose problems if you need to accept collect calls from a correctional center. PAT]