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Alyon Technologies Settles FTC Charges

December 6, 2004
Alyon Technologies, Inc. will drop its claim to approximately $17 million in consumer bills to settle Federal Trade Commission charges that it engaged in unauthorized billing and collection for adult videotext services supposedly accessed on the Internet by hundreds of thousands of consumers. Another $22 million in bills may be forgiven if consumers challenge their charges.

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

The settlement provides that consumers who were billed for adult services used on or before June 15, 2003, and who disputed the charges to the defendants on or before January 15, 2004, will be credited.

Consumers who were billed for services used on or before June 15, 2003, but who did not pay or dispute the charges, will have the opportunity to dispute the charges in writing and qualify to have the debt forgiven. The defendants may continue to bill those consumers.

On the first bill sent to these consumers in the future, however, the defendants must disclose the rights consumers have to dispute these bills. Those rights are set out in http://www.ftc.gov/os/2004/12/alyonexhf.pdf.

Consumers who believe these bills were not authorized must complete the appropriate affidavit, sworn to under penalty of perjury, and return it to the defendants within 45 days after they receive the bill. The settlement also bars Alyon from billing consumers without first giving them notice of all material terms and conditions of the offer and getting their express, verifiable authorization to receive and be billed for the videotext services.

It requires that Alyon monitor the practices of its videotext service providers to assure they comply with those conditions and disclosures.

In May 2003, the FTC charged Alyon and its principal, Stephane Touboul, with illegally billing and collecting for videotext services purportedly accessed on the Internet. Over time, 16 state attorneys general filed similar charges against Alyon in state courts.

According to the FTC, the defendants downloaded a modem-dialing program onto consumers’ computers, allegedly after consumers clicked on a button to agree to the terms and conditions for such a download. The dialing program then disconnected consumers from their own Internet service providers and reconnected them to the defendants’ network.

The defendants captured the telephone number used by the modem and matched it against databases of line subscriber information. The line subscribers identified as responsible for the captured telephone numbers later received bills charging them $4.99 a minute for each minute the defendants claimed videotext services were purchased, regardless of whether the telephone line subscribers authorized the purchase.

The FTC alleged that many consumers never visited the defendants’ sites at all, and were charged due to billing service errors of which the defendants were aware. Other line subscribers were billed because a minor child or someone else in their household accessed the services without the line subscriber’s authorization.

The FTC also alleged the defendants’ dialing program at times downloaded onto consumers’ computers without their authorization. It also alleged that the defendants failed to follow provisions of the Pay-Per-Call Rule that provide a mechanism for consumers to dispute charges for “telephone-billed purchases.”

The settlement announced today ends the litigation against defendants Alyon and Touboul.

The settlement bars Alyon from representing that a consumer who is being billed owes money:

• unless the consumer is an adult;
• the consumer received clear and conspicuous notice of all material terms and conditions of the offer to access videotext services; and
• the consumer provided express, verifiable authorization to receive and be billed for the videotext services.

It requires Alyon to monitor the practices of its videotext service providers to assure that they comply with those conditions and disclosures. The settlement bars Alyon, and any videotext service providers with which it does business, from blocking consumers’ ability to read the terms and conditions of service; plant spyware, viruses, or other unnecessary software on consumers’ computers; block consumers’ ability to remove a dialer program or disconnect from the videotext service; fail to disclose how billing charges are calculated; or download modem-dialer software without consumers’ authorization. The settlement also bars the defendants from violating the Pay-Per-Call Rule.

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