Millions in Unwanted Charges on Consumers’ Mobile Phone Bills
The operator of a massive mobile cramming scheme has agreed to surrender more than $1.2 million in assets to settle Federal Trade Commission charges, including the contents of numerous bank accounts, two luxury cars, shares in a number of startup companies and multiple luxury watches.
“Ensuring that consumers are protected in the growing mobile environment is a top priority at the FTC,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “This settlement shows that we are committed to making sure that bad actors do not profit from taking advantage of consumers’ confusion about their mobile phone bills.”
Under the terms of the settlement, Andrew Bachman will be permanently banned from placing any charges on consumers’ phone bills, making any misrepresentations to consumers about a product or service or a consumers’ obligation to pay, and will also be prohibited from charging consumers for a product or service without their express consent.
The settlement also includes a monetary judgment of more than $97 million. The judgment is partially suspended based on Bachman’s inability to pay the full amount, after he turns over nearly all of his assets.
Among the assets Bachman will be required to surrender under the terms of the settlement are:
• the contents of four bank accounts, less $4,500;
• two vehicles: a 2012 Ferrari 458 Italia and a 2012 Mercedes G550 SUV;
• shares in a number of startup companies; and
• jewelry items, including three Audemars watches, one Patek Phillippe watch, and four Rolex watches.
The FTC filed its complaint against Bachman in December 2013, alleging that he and a number of other defendants pitched text message services offering “love tips,” “fun facts,” and celebrity gossip alerts, but placed charges for these services – typically $9.99 a month – on consumers’ bills without their permission — a practice known as mobile cramming. They also allegedly used deceptive websites designed to collect consumers’ mobile phone numbers that would then be billed for the services.
The charges appeared on consumers’ phone bills under confusing names such as “77050IQ12CALL8663611606” and “25184USBFIQMIG” and in many instances, consumers did not notice the variations in the amount of their bills from month to month. When consumers did notice the charges and attempted to seek refunds, the process was often highly cumbersome, with some promised refunds from the defendants never arriving, or consumers receiving only partial refunds from their phone company.
A settlement with a number of the other defendants in the case was announced in June, while the case against corporate defendant Bullroarer, Inc. is still in litigation.
The FTC has brought a number of law enforcement actions in addition to policy and education activities designed to combat mobile cramming in recent months that are part of the Commission’s overall work to protect consumers in the mobile environment.
The Commission vote approving the proposed stipulated order was 5-0.