logoKaren of Okemos, Mich., was puzzled a few weeks ago to find two charges on her telephone bill that made no sense to her. The charges were identified only as “Totaltel Media Monthly Service Fee” and were placed there by something called ILD Teleservices.

“ILD said they would issue me a check, but I had to pay my phone bill. There is also taxes charged, but I don't know how that will be reimbursed. I'd like to know how in the world did this happen?” she asked in a complaint to ConsumerAffairs.com.

The short answer is that what happened to Karen happens millions of times a year, usually to consumers who, just like Karen, are baffled by what the charges may be, if they notice them at all.

The problem is not a new one. Back in 2006, ConsumerAffairs.com published a lengthy report titled “Congress, Feds Sleep While Cramming Charges Afflict Thousands: Congress Created the Problem, Won't Life a Finger to Solve It.”

Not much has changed since then, although a federal class action filed yesrterday claims ILD Teleservices "and hundreds of third-party service providers" conspired to bill nearly one million Indiana telephone customers falsely, using "intentionally false affidavits and other documents." 

The suit was filed in U.S. District Court in Indianapolis on behalf of all Indiana residents who have been wrongfully billed by ILD.

It relies on an Indiana law which requires that ILD have five pieces of information about a customer before submitting a payment request to the local telephone companies which then include the charge on the customer's monthly bill.

The law requires that ILD possess the following information for every charge it submits to local telephone companies:

  • The name of the customer requesting the service;

  • A description of the service rendered;

  • The date on which the customer requested the service;

  • The means by which the customer requested the service;

  • The name, address and telephone number of all sales agents involved in the transaction.

The suit claims that ILD submitted fraudulent affidavits to the local telephone companies claiming that it had the required information for each transaction, and charges that the actions violated the Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO.

ILD, based in Ponte Vedra Beach, Fla., is what is known as a “billing aggregator.” Third-party vendors contract with ILD to handle the billing for their services and ILD, in turn, submits the billing information and supporting affidavits to local telephone companies.

Billing aggregators were created as part of the Telecommunications Act of 1980, which broke up AT&T and established local exchange carriers (“LECs”).

The theory was that hundreds of innovative service providers would compete to offer low-cost services to consumers, who would be billed by the LECs. No one quite knew what those innovative services might be but assumed they would be long-distance plans, voice-mail and message-forwarding services and other communications-related products.

Instead, the Indiana class action alleges, the charges that appear on consumers' bills often have little or nothing to do with legitimate telephone services. And it charges that ILD “never” has the information required by Indiana law, because it allows the third-party providers to retain the information.

The suit states that the only information ILD receives from the service providers is a data string that contains the consumer's telephone number, the amount to be billed and a brief description of the service provided.

ILD billed Indiana consumers more than $50 million between 2003 and 2009, the suit states.

The named plaintiff in the case is the Gold Seal Termite and Pest Control Company. In February, March, May and June of 2009, Gold Seal's monthly AT&T bills included a charge of $49.97 described as an Online Yellow Pages charge. Gold Seal, like many other customers, paid the charges even though, the suit alleges, neither ILD nor AT&T had any of the required five pieces of information to confirm that the charges were valid.

The suit accuses ILD of operating a “common and uniform scheme to defraud” and asks the court to award customers their actual damages, legal expenses and punitive damages.

The suit was filed on behalf on Indiana consumers by Cohen & Malad, LLP, an Indianapolis law firm.