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TMCNet: Cafe Owner's Mystery Phone Charge Part Of National Problem

[March 03, 2010]

Cafe Owner's Mystery Phone Charge Part Of National Problem

Mar 03, 2010 (The Hartford Courant - McClatchy-Tribune Information Services via COMTEX) -- The phone rang as Lance Plourde was finishing the breakfast orders.

The caller promised to be quick: All he wanted was to "confirm my business information for the new phone books that were coming out," said Plourde, 37, co-owner of the Hop River Cafe in Andover.

In the background, Plourde heard a recording of a woman talking in a low voice, but the caller "talked over it," Plourde said.

A few months later, Plourde's wife, Heather, 36, spotted a $39.95 web-hosting charge on their monthly phone bill. "She wanted to know why I had agreed to have our online traffic monitored. I had no idea what she was talking about," Plourde said.

The Plourdes say they were targets of a scam known as "cramming," in which a company adds charges to the phone bill for a service not authorized or ordered.

The Federal Trade Commission is cracking down on one of the scam's alleged perpetrators, announcing this week that it is suing Inc21.com Corp., an Internet services company that allegedly attached a total of $19 million worth of unauthorized charges to the phone bills of thousands of small businesses and consumers nationwide over the past five years.

The agency is charging Inc21, a San Francisco company, with unfair and deceptive acts in a lawsuit filed in U.S. District Court in California.

Inc21 could not be reached by phone or e-mail for comment.

The FTC charged that Inc21 sold Internet directory listings, website design, hosting services other services for $12.95 to $39.95 a month. The company, which hired third-party telemarketers, offered consumers free trials without explaining the steps they had to take to avoid charges, the lawsuit alleges.

In some cases, telemarketers claimed they were calling to verify business contact information, the FTC said. To prove that the charges were authorized, the company taped the conversations it had with consumers, then doctored them to misrepresent consumers' responses, the lawsuit alleges.

Plourde said he was the victim of a similar scheme in which his responses were taped and altered. When he called the telemarketing company to question the $39.95 charge, he was told he had authorized the service. As proof, the company played a recording of the phone call, Plourde said, "but the voice of the man who called me was nowhere to be heard. It was set up just right with the background recording so it sounded like I set the whole thing up myself and agreed to all the terms." According to court documents, the case "highlights the vulnerable underbelly of a widespread and under-regulated practice called Local Exchange Carrier billing [which] arose out of the court-ordered breakup of AT&T in the 1980s. ... Today, the types of charges that can appear on local telephone bills through LEC billing encompass far more than long-distance services and can have almost nothing to do with phone services. Since its institution, LEC billing has attracted fraudsters." "I think the LEC billing system can work if there's consent," said Kerry O'Brien, a San Francisco attorney representing the FTC. "In this situation, consumers weren't consenting." Most of the victims were businesses, and therefore weren't always protected by the Telemarketing Act, which primarily protects individual consumers, O'Brien added.

At trial, the FTC will ask that Inc21be forced to relinquish its "ill-gotten gains." Plourde said the charges on the cafe's phone bill eventually were removed, but the experience has made him wary of talking to solicitors and vigilant about checking his business' monthly phone bills.

"You've got to go over them line by line," he said.

To see more of The Hartford Courant, or to subscribe to the newspaper, go to http://www.courant.com/. Copyright (c) 2010, The Hartford Courant, Conn.

Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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