FTC Accuses Company Of Cramming Millions Of Dollars Of Bogus Charges On Wireless Bills

In the first case of its kind for the wireless industry, the Federal Trade Commission has accused a company and its owners of raking in millions of dollars by charging wireless customers for text services they never signed up for.

It’s a practice known as “bill cramming,” wherein third parties pile on charges for their services — sometimes without authorization and often without having provided clear pricing or terms to the user — on consumers’ phone bills. The FTC has already gone after companies accused of dumping bogus charges on landline bills, including last year’s complaint against the nation’s largest third-party billing company, but this is the first case its filed involving wireless cramming.

Per the complaint [PDF], filed yesterday in a U.S. District Court in Georgia, a company called Wise Media is accused of placing unauthorized $9.99/month charges on wireless bills for so-called “premium services” that sent text messages with horoscopes, flirting, love tips and other information.

The FTC claims that the company was signing up consumers at random and making these charges without any permission being given by the consumer. Instead, some consumers would randomly receive text messages from the company saying they were now subscribed to one of its services. Most recipients of these texts say they dismissed the message as spam. Others say that even when they replied to the text to unsubscribe, they were still later charged by Wise Media.

Additionally, the complaint alleges that Wise Media attempted to hide its charges on customers’ bills by using codes that made the cost appear to be something more legitimate than a horoscope or love-advice text service.

Given that wireless bills can now be well over $100, sometimes several hundred dollars for family plans, a number of affected consumers did not even notice the charges immediately and paid their bills in full.

Consumers that did try to contest the charges often found it difficult to find contact information for Wise Media. Those that were able to contact the company were then promised a refund, but did not always receive one, says the FTC.

The FTC alleges that the defendants’ practices were deceptive and unfair in violation of the FTC Act. It has asked the court to immediately freeze the defendants’ assets and order them to halt the questionable practices. Additionally, the FTC is seeking the return of the defendants’ ill-gotten gains so that it may provide refunds to affected consumers.

“The concept of ‘cramming’ charges on to phone bills is a not a new one,” said FTC Chairwoman Edith Ramirez. “As more and more consumers move to mobile phones, scammers have adapted to this new technology, and the Commission will continue its efforts to protect consumers from their unlawful practices.”