A Boston Entrepreneur’s Lesson in Checking Your Phone Bill
A company founded at Babson College agreed to settle in a ‘phone cramming’ scam that charged users for unsolicited text messages.
The Federal Trade Commission announced that the operators of a text messaging scheme run by Babson College graduates agreed to surrender more than $10 million in assets. The details of their misdeeds offer us all a lesson in double-checking our monthly phone bills.
According to the original complaint from the FTC, companies run by defendants Lin Miao and Andrew Bachman ran “phone cramming” scams that sent spammy texts to people’s phones, then charged them a monthly subscription for the service. Though consumers never authorized the charges, the scheme operated on the assumption that people wouldn’t carefully check their phone bills.
Bachman, a Boston-based tech entrepreneur, was not named as an individual party to the settlement, but he served as an owner or officer for some of the corporate defendants. He and Miao cofounded the internet marketing company Tatto Media while students at Babson College. Since then, they’d enjoyed flattering press profiles. Bachman was even the subject of a front page Boston Globe trend piece this past November about physically fit tech workers. It included gems like this:
Stylish in casual clothes, Bachman has the sculpted torso of someone who has been lifting weights for years, and seems to be always working out, even squeezing in a set of pushups at his desk.
Though he isn’t individually named in the settlement, his press has been less glowing since the FTC’s original complaint came out in December. The FTC alleged that the company texted factoids, things like horoscopes or love advice, to phone customers, then charged them $9.99 per month under confusing names like “77050IQ12CALL8663611606.” According to the complaint, when customers noticed the charges on their bills and sought refunds, they often had trouble receiving full refunds. Also according to the FTC :
In one instance, a website told visitors they had won free Justin Bieber tickets, which they could claim by filling out an online quiz. Part of the process required consumers to enter their phone number, and while consumers didn’t receive the Justin Bieber tickets, their phone numbers were likely signed up for one of the defendants’ paid services.
Now, the FTC says the companies have agreed to stop any such behavior and pay a whole lot of money as part of the settlement. From their press release:
Under the terms of the settlement, Lin Miao and the corporate defendants will be permanently banned from placing any charges on consumers’ phone bills, making any misrepresentations to consumers about a product or service or a consumers’ obligation to pay, and will also be prohibited from charging consumers for a product or service without their express consent. The settlement includes a monetary judgment of more than $150 million, which is partially suspended based on Miao’s inability to pay the full amount after he turns over nearly all of his and the companies’ assets.
And with that we remind you to check your phone bill this month and most importantly, never take an online quiz to get free Justin Bieber tickets.