Judge orders Inc21.com to pay $38 million to consumers it defrauded

man glowering into telephoneA U.S. District Court judge has ordered a San Francisco telecommunications company to pay almost $38 million in restitution to consumers the company charged for services they didn't order.

Judge William Alsup barred Inc21.com Corp. and its sister businesses from telemarketing unless they first get approval from the court and the U.S. Federal Trade Commission. The order also blocks the companies from charging consumers' telephone bills, requires third-party companies through which the charges were placed to return money to consumers, and orders Inc21.com to pay restitution.

The FTC sued the company and its related businesses in January, alleging the firm hired telemarketers to sell its web-based services, then used local-exchange telephone companies to place unauthorized charges on consumer and business phone bills ranging from $12.95 to $39.95 a month.

The telemarketers allegedly told consumers and businesses either the call was to verify business information or that they would get a free trial offer. But they weren't told they would be charged if they failed to cancel the service after a trial period. In some cases, charges were also placed after consumers said they didn't want the company's services.

The practice, commonly called "cramming," involves placing unauthorized charges on someone's monthly phone bill -- usually small enough to be overlooked, especially if the total varies month to month.

"Indeed, over a five-year span from 2004 through 2009, defendants successfully extracted over $37 million in unauthorized payments from the telephone bills of unsuspecting businesses and consumers," the judge wrote in his order.

Named in the FTC case along with Inc21.com were sister companies JumPage Solutions Inc. and GST U.S.A. Inc.; company CEO Roy Yu Lin, his brother, John Yu Lin, and father, Sheng Lin. Inc21.com also did business as INC21, INC21.net, INC21 Communications, GlobalYP, NetOpus, MetroYP, JumPage Solutions, GoFaxer.com and FaxFaster.com.

A phone number for Inc21.com and several of its related business plays a recorded message that it is not a working number. Another number for the company's Chief Executive Officer Roy Yu Lin also didn't connect.

The FTC warns consumers to be wary of the following common ploys:
  • Enter to win. Before filling out a contest entry form, make sure to read the fine print. Some promoters use the forms as "permission" to enroll consumers in services.
  • Join the club. It may say it's free, but may lead to enrollment in a club with a monthly fee.
  • Free calls, especially to 900 numbers. Each 900 number that costs more than $2 has to carry a message about the service and the call's cost. Consumers have three seconds to hang up without getting charged.
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