"Rebate" Checks Sent To Consumers Were Really Contracts

Crammers Settle FTC Charges

June 22, 2001

Simple.Net • Simple.Net Sued for Use of Activation Checks • Crammers Settle FTC Charges --- • More Scam Alerts ...

Operators who used bogus "rebate" checks to deceive consumers into signing up for Internet yellow pages directory and Internet service have agreed to settle Federal Trade Commission charges that their operations were deceptive and violated federal law.

In June 2000, the FTC filed suit in U.S. District Court for the District of Arizona against Mesa-based YP.Net; Telco Billing, Inc.; Publication Management Inc.; and several individuals.

The FTC alleged that the defendants sent checks for $3.50 marked "REBATE ACCOUNT" to consumers all over the country. Nothing on the front of the check alerted consumers that, by cashing the check, they were agreeing to purchase the Internet yellow page listing at the rate of $19.95 per month for a year, or that the charge would automatically be placed on their telephone bill. Only a notice printed on the inside of the envelope spelled out the terms and conditions of the agreement.

The settlements will bar the deceptive practices in the future; require clear and conspicuous disclosure that by depositing a check a consumer is agreeing to sign up for the service; and provide consumer refunds.

In the course of preparing for trial, the FTC identified a related company, Simple.Net, engaged in a similar marketing scheme. The company marketed Internet access services using "rebate" checks. A stipulated final judgment and order for permanent injunction filed with the court would bar their misrepresentations of rebates and require them to send customers who signed up for their service confirmation notices giving the consumers the opportunity to cancel and receive a refund. The companies covered by the order with Simple.Net include Simple Access, Inc., Dial Up Services, Inc., and ISP Marketing, Inc.

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