Thursday, March 10, 2011
Texas Attorney General Seeks Halt to Fraudulent Text Messaging SchemeAUSTIN – Texas Attorney General Greg Abbott today charged 24 defendants – including Jason Hope, the chief executive officer of Arizona-based Eye Level Holdings – with perpetuating a text messaging scheme that led to millions of dollars in unauthorized mobile phone charges.
According to state investigators, the defendants used illicit websites to bait mobile phone customers into submitting their wireless numbers online. The defendants’ scheme relied upon the improperly obtained numbers to charge customers for monthly subscription services. This high-tech fraud is commonly called “cramming.”
Verizon Wireless, a carrier whose customers were defrauded by the defendants, has fully cooperated with state investigators and has established a website through which affected customers can seek reimbursement for improper charges.
State investigators found that the defendants operate hundreds of websites through which they advertise paid monthly subscription services and other items. An Internet search for one of the topics covering a wide variety of subjects such as song lyrics, maps, recipes and video games – subjects generally available free online. As a result, each time a customer conducted an Internet search for one of the topics, the customer was directed to one of the defendants’ websites.
According to the State’s legal enforcement action, the defendants’ websites feature a bold eye-catching text box directing customers to enter their cell phone numbers. The websites unlawfully failed to provide customers clear and conspicuous disclosures revealing that the defendants charged for the subscription service – and that charges would be billed to the customer’s mobile phone account. The defendants’ websites disclose a price only in very small, virtually unreadable one-line caption in a dark grey font on a black background.
Authorities also discovered that the defendants sent customers text messages containing a password to enter on the defendants’ website. The defendants reference a cost at the end of the message where customers are unlikely to see it. In some instances, the reference to cost is not even displayed in the first text message – only in a second text message.
The State’s enforcement action explained that the defendants further deceived customers by ensuring their inquiries about unwanted charges were directed to a “dummy” website. The fraudulent site appears similar to the original Web page – but it is materially different because it includes all the necessary disclosures about service costs, requires acceptance of terms and conditions, and includes cancellation information.
The Attorney General’s Office is seeking a court-ordered halt to the defendants’ deceptive practices. The State also seeks penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act and restitution to harmed customers.
Texans should review their wireless cell phone bills and if they find unauthorized charges or believe they have been deceived by similar deceptive business practices, they should file a complaint with the Attorney General’s Office at (800) 252-8011 or online at www.texasattorneygeneral.gov.