May 7, 2013

FTC Sends Clear Message Re Mobile Phone Cramming

Consumer Advertising Law Blog

Late last month, the Federal Trade Commission (FTC) filed its first complaint in the area of mobile phone "cramming." The case, filed against Wise Media, LLC Brian M. Buckley, and Winston J. Deloney alleges that defendants made tons of money "cramming" unauthorized charges on consumers' cell phone bills. The complaint signals how strongly the FTC is focused on the technology arena and consumer protection issues arising out of this area. As technology improves, apparently so does the creativity of those allegedly scamming consumers.

Allegedly, crammers bill consumers for "premium services" like horoscopes, love tips, and other such information that consumers receive via text message a few times a week. The FTC claims the problem is that many consumers didn't actually opt in to receiving such texts, but were chosen at random, then billed monthly for the service. At times, the FTC alleges, defendants did send text messages suggesting that people were getting a new service, but most people deleted the texts as spam. In the rare instances that consumers texted back that they weren't interested, apparently those requests were ignored and consumers were charged anyway.

The subject of phone bill cramming is not new, but this is the FTC's first foray into the mobile area. To address some of these issues, The Commission is hosting a "Mobile CrammingRoundtable" on May 8. The discussion will be free and open to the public at the FTC's Conference Center in Washington. FTC Commissioner Maureen Ohlhausen is slated to provide opening remarks and various panelists will discuss the state of mobile cramming today, including strategies on how to prevent and respond to the practice. The agenda for the roundtable can be found here. We will of course keep our readers updated on any new developments in this area, but the message from the FTC is loud and clear. As technology gets more sophisticated, so do scammers, but the regulators are taking note and planning countermoves of their own. Stay tuned!

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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