An Internet services company that crammed unauthorized charges onto the telephone bills of thousands of consumers and small businesses for services they never agreed to buy has been shut down.
According to the Federal Trade Commission (FTC), Inc21 and its affiliated companies sold Internet services, including Web site design services, Web site hosting, Internet directory listings, search-engine advertising and Internet-based faxing, for charges ranging from $12.95 to $39.95 a month.
The companies are accused of hiring offshore telemarketers to call prospective clients. Sometimes they offered a free trial, without explaining that consumers would have to take certain steps to avoid charges. In other cases the telemarketers said they simply were calling to verify their business contact information.
"I got my phone bill and ILD (ILD TeleServices) charged me $30.88 for some kind of Internet service that I never authorized," Christie, of Connel, WA, tells ConsumerAffairs.com. "When I called them, I was kept on hold for over 30 minutes and have not been able to dispute these charges."
"There was a 39.95 + tax charge on my local phone bill," says Amy of Byron, MN. "After calling my phone company & being referred to ILD I was told this was for Internet Yellow Pages through YP.com. ILD said they were just the billing company.
She says YP.com claimed her household had agreed to a trial offer that automatically upgraded to a billable service unless cancelled. "A recorded message prompted the recipient of their call to state their name, address, phone number, etc. & confirm that they were authorized to accept charges for our phone number," she tells ConsumerAffairs.com. That was preceeded by an agent that had promised that there was absolutely no charge for anything, at all. This is pretty deceptive to cover the call as having to do with phone service & then manipulate the call into a sales pitch w/o the recipient's knowledge."
The FTC also claims third-party billing aggregators were used to place charges on the phone bills of thousands of consumers and businesses that either:
• were never contacted at all;
• were told they were contacted only to verify business information;
• declined Inc21' s offer of Internet services; or
• were told they would receive a free trial offer, but not informed that they would be charged if they did not cancel.
In papers filed with the court, the FTC charged that Inc21 and its agents supposedly made tape recordings to demonstrate that its charges were authorized. But the agency contends that in many cases, the recordings were doctored to misrepresent the call and the consumers' responses. In other cases, the voices on the tapes are not those of the consumers who were supposedly on the calls.
The companies are charged with unfair and deceptive acts in violation of the FTC Act and the Telemarketing Sales Rule.
U.S. District Court Judge William Alsup has issued a Temporary Restraining Order and a Preliminary Injunction to halt the unlawful conduct, pending trial. In his order, Judge Alsup wrote, "It was Inc21 who orchestrated this overall scheme and set in motion an army of telemarketers who committed fraud. Even if Inc21 did not approve of the fraud (and it seems likely that it did approve), the fact remains that Inc21 is responsible for organizing this engine of fraud and reaping its profits. As such, Inc21 may certainly be held accountable and the engine of fraud may be shut down by court order."
Those named in the matter are Inc21.com Inc., doing business as Inc21, Inc21.net, Inc21 Communications, Global YP, NetOpus, Metro YP, JumPage Solutions, GoFaxer.com and Fax Faster.com, Jumpage Solutions, Inc., GST U.S.A., Inc., Roy Yu Lin and John Yu Lin officers and directors of Inc21.
The FTC complaint also names Sheng Lin, the father of Roy and John Lin, as a "relief defendant" because he allegedly received funds that can be traced to the deceptive and unfair practices, and has no legitimate claim to those funds.