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From Antitrust Law Daily, April 17, 2013

FTC Files First Case Against Mobile Phone "Cramming"

By Jody Coultas, J.D.

In its first action targeting mobile phone "cramming," the Federal Trade Commission charged Wise Media, LLC with allegedly placing unauthorized charges on consumers' mobile phone bills in violation of the FTC Act (Federal Trade Commission v. Wise Media, LLC, filed April 16, 2013).

Wise Media allegedly sent text messages with horoscopes, flirting, love tips, and other information. The messages suggested that the recipient was subscribed to these "premium services," which many consumers dismissed as spam and ignored. Even if consumers responded via text indicating that they did not want the services, they were charged on their mobile phone bills on an ongoing basis, the agency charged. Consumers were signed up for these services at random without their knowledge or permission.

The FTC alleged that (1) Wise Media hid its contact information from consumers, (2) the company's call center employees frequently promised refunds that were never provided, and (3) mobile phone charges were abbreviated and did not always clearly designate the company as the source of the charge. Many consumers did not notice or understand the charges and paid the bills, not realizing some charges came from third parties, according to the agency. To the extent that consumers did notice the charges, the process of obtaining refunds was difficult and often unsuccessful, the complaint noted.

The FTC sought to immediately freeze the defendants' assets and stop their deceptive and unfair practices. The requested permanent injunction would force the defendants to return the money stemming from the cramming to be used to provide refunds to victims of the scam.

On May 8, the FTC will host a roundtable discussion on mobile cramming with consumer advocates, industry leaders, and government regulators in order to discuss ways to protect consumers from this growing problem.

The case is No. 1:13-CV-1234.

Attorneys: David C. Shonka, Acting General Counsel, for the Federal Trade Commission.

Companies: Wise Media, LLC

MainStory: TopStory ConsumerProtection FederalTradeCommissionNews

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