The Federal Trade Commission (FTC (News - Alert)) has accused the nation's largest third-party billing company of scamming more than $70 million from consumers by adding unauthorized charges to phone bills through a practice known as "cramming."
Regulators claim Texas-based Billing Services Group (BSG) added unauthorized charges to approximately 1.2 million telephone lines for nine "enhanced services" like voicemail, streaming video and theft protection services. The complaint alleges that BSG placed the charges on behalf of a "serial phone crammer," and failed to investigate the "highly deceptive" marketing of the services or if they were ever ordered and used by consumers.
The allegation represents the fourth such action by the FTC to address extensive cramming by BSG entities. The commission claims that BSG violated a 1999 settlement that prohibits billing for vendors that who "fail to clearly disclose the terms of their services." In addition, BSG is alleged to have continued to charge for fraudulent services despite "voluminous complaints" from consumers and telephone companies.
Verizon (News - Alert) even terminated BSG's ability to charge for a certain voicemail service due to perceived cramming violations, yet the company continued the practice through other local telephone providers, according to the complaint.
The FTC has asked a federal court to force BSG to pay $52.6 million, the amount the company billed for but never fully repaid to consumers.
"BSG made it possible for con artists to steal people's hard-earned money by placing charges on phone bills for services they never ordered or used," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "Under previous federal court orders, BSG cannot profit from the fraud of others and then deny responsibility for the harm they made possible."
In a statement, BSG called the motion "incomplete and inaccurate," noting that the investigation centered on Alternate Billing Corp, a former BSG client that is not an entity of BSG.
"Apparently, the FTC's view is that, because BSG settled litigation 13 years ago, BSG is liable for contempt whenever a service provider is able to evade the compliance measures implemented by BSG, regardless of BSG's diligence and good faith," the statement read. "The bottom line is that the FTC is trying to blame BSG for the acts of another party."