Deceptive Billers Agree to Settle FTC Charges

January 31, 2002

Operators who allegedly sent bogus bills to consumers or charged their credit card accounts, claiming that the consumers owed money for audiotext or Internet services they did not order or authorize, have agreed to settle Federal Trade Commission charges that their practices violated federal law. The settlement bars the defendants from engaging in deceptive billing practices in the future, and requires them to provide e-mail confirmation of Internet Web site membership requests and prompt refunds of improperly billed charges. It also requires implementation of rigorous fraud detection and prevention mechanisms and requires that the defendants obtain a $100,000 bond before billing or collecting fees for audiotext or Internet services, which will be forfeited if they violate the terms of the settlement.

In October 2000, the FTC filed a complaint in U.S. District Court for the Southern District of Florida, alleging that Automated Transaction Corp. (ATC), World Telnet, Inc., WWW Provider Co., Edward Lipton, and Donald Tetro were illegally billing consumers for services they had not requested, authorized, or received. At the request of the FTC, the court issued a temporary restraining order to stop the illegal practices, froze the defendants' assets and appointed a receiver to oversee the businesses, pending trial. The stipulated final judgment and order announced today concludes the litigation.

The settlement bars the defendants from misrepresenting that consumers purchased or agreed to purchase goods or services or that consumers are obligated to pay for goods or services they did not order or authorize. It requires the defendants to obtain prior agreement from consumers before billing them. It also requires the defendants, within 48 hours of a purchase of credit card access to one of their Web sites, to send an e-mail to the purchaser describing their billing methods, price and cancellation policy, the name of the Web site the consumer will be charged for accessing, and the merchant name that will appear on the consumer's charge account.

It bars the defendants from misusing the services of third-party debt collection agencies and requires that they implement rigorous fraud detection and prevention measures. The settlement further requires the defendants to obtain a $100,000 performance bond before billing or collecting fees for audiotext or Internet services. The settlement bars disclosure of their customers' personal identifying information. Finally, the settlement contains record-keeping provisions to allow the agency to monitor compliance with the order.

ATC is a Delaware corporation, based in Weston, Florida. World Telnet, Inc. is also Weston-based. WWW Provider Co. is defunct.

The Commission vote to approve the settlement was 5-0. It was filed in the U.S. District Court for the Southern District of Florida and signed by the judge on January 24.

Deceptive Billers Agree to Settle FTC Charges

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