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Porn Billers Settle Lawsuit, Agree to Reforms

January 17, 2005
Consumers who've been billed for looking at adult Web sites they didn't visit may benefit from a multi-state settlement involving two of the companies that provide billing and collection services for Porn sites. The agreement also requires the adult sites to make it more difficult for children to access their content.

Alyon • Connecticut Settles With Alyon • Alyon Settles State Lawsuits • Alyon Settles; Some Consumers Eligible for Credits • FTC Admits Altering Affidavit in Alyon Case • Judge Bars Alyon From Collecting For Videotext Services • Web Redial Scam Busted

Consumers complained they were billed $4.99 per minute for access to adult Web sites they say they did not visit. In some cases, consumers said their children were exposed to the adult sites without their parents’ permission although the parents were later billed.

Under most circumstances, contracts with minors are not enforceable. The states' case alleged the defendants had no basis to demand parents pay charges when parents did not agree beforehand to pay them.

“This case demonstrates how easily the Internet can lead consumers down a costly path where companies start running their money meters without a consumers’ knowledge or consent,” Illinois Attorney General Lisa Madigan said.

“Consumers have reported that by clicking on an innocent looking pop-up or spam, they triggered the download of modem dialer software, were cut off from their own service provider and connected to a phone line in New Jersey. This case also underscores the need for adult supervision when kids are on the computer,” Madigan said.

Madigan’s original May 2003 complaint alleged the defendants would start billing consumers after unsuspecting adults or minors without permission opened pop-up windows or spam that automatically downloaded modem dialer software onto their computers. That software could then be used to dial up the Alyon billing gateway to access adult material. Alyon captured the phone number, matched it with a name and address and then billed the consumers $4.99 per minute, allegedly without the consumers’ knowledge or consent.

Alyon allegedly told consumers they owed the charges even when consumers denied having accessed or agreed to purchase the adult materials.

The service also allegedly was set up to allow children to easily access the adult sites: no credit card number is required and 900 number blocks are ineffective because people are unknowingly connected to a number with a New Jersey area code. The defendants billed consumers in amounts ranging from less than $100 to more than $700.

A consent order filed in Sangamon (Illinois) County Circuit Court requires Alyon Technologies, Inc., of Secaucus, New Jersey, Telcollect, Inc. of Norcross, Georgia, and Alyon CEO Stephane Touboul to make significant changes to their practices and to pay Illinois and 22 other states $285,000 to settle Madigan’s May 2003 lawsuit.

That complaint charged the three defendants with violating the Illinois Consumer Fraud and Deceptive Business Practices Act. The defendants deny all allegations of wrongdoing.

The provisions contained in today’s settlement include:

• Alyon has improved its process for ensuring that adults authorized to incur charges are on the other end of the modem before connecting them to the adult material or starting the clock on per minute charges.

• Alyon will provide consumers with a free utility program they can download to remove all modem dialer software deposited by their clients, the adult Web site operators.

• Alyon will require the adult Web site operators to refrain from using potentially deceptive methods to download modem dialer software onto consumers’ computers. Such prohibited methods include impairing a computer user’s ability to read the terms and conditions of the software download; disabling a computer user’s ability to close out a pop-up box; depositing spyware on consumers’ computers; and impairing the add/remove controls within computers’ operating systems, which would make it difficult for consumers to detect and remove the modem dialer software.

• The defendants automatically will credit certain eligible consumers’ bills and provide cash refunds available to a small group of eligible consumers who previously had paid disputed Alyon charges.

• Consumers billed for charges allegedly incurred before June 15, 2003, but who do not qualify for an automatic bill credit or cash refund will have an opportunity to request a credit of disputed charges. However, they must follow a procedure for making such a request, which includes completing and returning an affidavit to the defendants within 45 days of the defendants’ collection attempt. The affidavits are available on Alyon’s Web site under the "Customer Support" tab.

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