FTC Cramming Charges
As part of the increased regulatory focus on the mobile marketing space, the Federal Trade Commission (FTC) brought suit against Wise Media, LLC, Brian M. Buckley and William J. Deloney, alleging mobile telephone bill “cramming” in violation of the FTC Act and other applicable laws. “Cramming” is the act of placing unauthorized charges on a consumer’s telephone bill – in the present example, mobile telephone bills.
From the FTC website:
The defendants allegedly billed consumers for so-called “premium services” that sent text messages with horoscopes, flirting, love tips and other information. The Commission’s complaint alleges that consumers across the country were signed up for these services seemingly at random, and that the operation placed repeating charges of $9.99 per month on mobile phone bills, without consumer knowledge or permission. […]
Wise Media and its operators have taken advantage of the fact that consumers may not expect their mobile phone bills to contain charges from third parties and that Wise Media’s charges appear on bills in an abbreviated manner that does not always clearly designate the company as the source of the charge. As a result, many consumers didn’t notice or understand the charges and paid the bills. To the extent that consumers did notice the charges, the process of obtaining refunds was difficult and often unsuccessful according to the complaint.
The Commission alleges that Wise Media went to great lengths to hide its contact information from consumers. When consumers victimized by the scam were able to find a phone number for Wise Media, its call center employees frequently promised refunds that were never provided.
The complaint against Wise Media is part of a larger trend of regulatory action within the mobile space. In light of this action, and the general regulatory trend, mobile service providers that bill for services by and through consumers’ mobile telephone bills should immediately review their marketing practices (and those of its affiliates) and consumer disclosures in order to ensure compliance with the FTC’s guidance and to avoid allegations of cramming. Entities that fail to comply with applicable law in this vertical could find themselves facing regulatory action from the FTC, which could result in significant fines being levied.
If you are interested in learning more about this topic or need to review your mobile billing practices, affiliate marketing agreements and/or update your consumer disclosures based on this FTC action, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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