Texas AG Sues Cell-Phone Crammers for Billing Millions to Consumers
Abbott charged 24 defendants, including Jason R. Hope, Wayne P. DeStefano, Ernest W. Souhrada, EyeLevel Holdings LLC, d/b/a JAWA and a number of other companies, with running the scheme. The defendants operated websites that tricked consumers into submitting their mobile phone numbers -- which were then billed for various monthly services, according to the lawsuit.This kind of fraud, known as "cramming," involves insertion of unauthorized, misleading or deceptive charges onto consumers' phone bills, and is also the subject of a Senate Commerce Committee investigation announced last December.
Texas investigators found that the defendants operate hundreds of websites advertising SMS text-messaging services on topics designed to lure unsuspecting victims, such as song lyrics, maps, recipes and video games, typically available online for free.
When victims searched for one of these popular topics, they unwittingly found themselves on one of the crammers' sites. According to the charges, all the defendants' sites feature large, eye-catching boxes inviting customers to enter their cell phone numbers for text messages containing song lyrics, gaming advice and such.
These websites, the complaint alleges, violated the law by failing to clearly and conspicuously disclose these subscription services carry a fee to be billed to the consumers' mobile phone. The price is only disclosed in a tiny, hard-to-read, single-line caption in a dark gray font on a black background, the complaint says.
The complaint also accuses the defendants of sending customers text messages containing a password to enter one of their websites. These text messages mention an associated cost at the end of the message below the screen, where customers are unlikely to see it. In some cases, the cost is only displayed in a second text message.
The defendants, the lawsuit says, perpetuated the scam by directing all emails from consumers complaining about the unauthorized charges to a similar "dummy" website. Unlike the original site, the phony site includes all the necessary disclosures about costs, requires acceptance of terms and conditions, and includes cancellation information.
The attorney general's office is seeking a court order to shut down the illegal cramming operation. The lawsuit also calls for penalties up to $20,000 per violation of the Texas Deceptive Trade Practices Act and refunds for victims.
Verizon Wireless, the mobile carrier whose customers were victims of the cramming ring, has cooperated with the attorney general's office and created a website, premiumsmsrefunds.com, where customers can seek reimbursement. Verizon filed a lawsuit of its own against Hope and the other defendants in a Phoenix federal district court.