FTC Goes After Nation's Largest 3rd-Party Billing Company For Profiting Off Bill-Cramming

The federal crackdown on the practice of landline bill-cramming — the slathering on of charges for often unauthorized third-party services onto consumers’ phone bills — continues, with the Federal Trade Commission accusing the country’s largest third-party billing business of attempting to cram $70 million worth of bogus charges down consumers’ throats.

From 2006 through 2010, the FTC claims that Billing Services Group added charges to phone bills on behalf of what the agency describes as a “serial phone bill crammer,” for a range of services — voicemail, streaming video, theft protection, directory assistance, job skills training — that consumers “never authorized or even knew about.”

Furthermore, alleges the FTC, the billing company continued to do so even in the face of thousands of complaints, all “while utterly failing to investigate either the highly deceptive marketing for these services or whether consumers actually used them.”

While this was going on, Verizon and AT&T both ordered the practice to stop, but BSG allegedly continued putting the charges on customers’ phones through other landline providers.

“BSG did not turn off its lucrative illicit billing spigot until the FBI forced its hand by executing a search warrant at the crammer’s office,” writes the FTC.

Back in 1999, the company now known as BSG reached a settlement agreement with the FTC that barred the business from engaging in misleading billing practices and from and billing for vendors who fail to clearly disclose the terms of their services. Thus, the agency recently alleged in court that BSG is in violation of that permanent injunction.

The feds are now asking for BSG to pay back $52.6 million, the total amount that the company billed consumers and failed to refund.

“Cramming is a scam that hits as many as 20 million consumers a year,” says Parul P. Desai, policy counsel for Consumers Union. “The vast majority of us don’t catch these bogus charges on our bills, and there are con artists out there who take full advantage of it. These are serious allegations that the FTC has brought against one of the biggest billing companies in the country. This only goes to highlight the need to extend cramming protections beyond landlines to wireless and VoIP customers.”

When it first became public that the FTC was going to go after BSG, the company denied the allegations.

“We are extremely disappointed by the allegations made by the FTC,” said BSG’s CEO. “We have devoted substantial resources to quality control in billing operations to comply with both the spirit and the letter of the settlement with the FTC as well as the requirements of local phone companies. We believe that our operations fully comply with the terms of the settlement.”

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