FTC Admits Altering Affidavit in Alyon Case

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

April 28, 2004
The Federal Trade Commission (FTC) has admitted it altered an affidavir presented to the court hearing its case against Alyon Technologies, Inc. In a news release, the FTC corrected its earlier statement that consumers did not have to pay bills sent them by Alyon.

"Some consumers may have misunderstood the press release as permitting them to delay paying bills received from Alyon until the Commission's case is resolved," the FTC said in its correction.

On April 22, Alyon filed a motion with the U.S. District Court for the Northern District of Georgia following the FTC's admission that it had "altered" affidavits in connection with its case against Alyon. The altered affidavits suggested to consumers that the Court had prohibited Alyon from billing, collecting, or attempting to collect payments on their accounts, when in fact Judge R.W. Story of the U.S. District Court clearly stated in a July 10, 2003 order that Alyon had every right to collect its bills.

According to an April 19, 2004 FTC filing: "An FTC employee, while handling consumer complaints about Alyon's billing practices, altered one of the affidavit forms prescribed by the Court... and distributed such altered affidavits to a number of consumers." The affidavit included paraphrased explanations of the Judge's ruling

"The FTC misrepresented to consumers the terms of Judge Story's Order. In fact, the FTC's statements were directly contrary to Judge Story's Order which preserved our right to bill and collect from consumers," said Stephane Touboul, chief executive officer of Alyon. "Once we were made aware of the FTC's actions, it was clear to us that we needed to bring this matter to the immediate attention of the Commission to put a stop to the dissemination of these misleading affidavits."

In May 2003, the FTC and 13 state attorneys general charged that Alyon was illegally billing and collecting for videotext services purportedly accessed on the Internet. According to the FTC's complaint, the defendants used a modem dialing program that disconnected consumers from their own Internet service providers and reconnected them to the Internet sites Alyon billed for without the consumers' authorization or approval.

Using the dialing program, the defendants allegedly captured the telephone number used by the modem and matched it against several databases of subscriber information, databases which, the FTC said, frequently contain errors.

According to the FTC's complaint, the subscribers identified as responsible for the captured telephone number later received bills charging them $4.99 a minute for each minute the defendants claim videotext services were purchased, regardless of whether the line subscribers authorized the purchase.

"While we are gratified that the FTC has issued a "clarification" of its prior press releases and has admitted to altering affidavits, Alyon is cautiously optimistic that the FTC will now cease its non-judicial activities designed to undermine Alyon's ability to remain in business and vindicate its legal rights," said Touboul.

"Alyon remains hopeful that now that these issues have been brought to light, the parties will be able to move forward and potentially enter into a fruitful dialogue to end this case without further litigation. However, if a satisfactory agreement cannot be reached, Alyon will proceed to vigorously defend itself in court and will pursue its legal rights to seek compensations from the FTC for its admitted wrongful conduct," Touboul said in a statement.

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