Federal Trade Commission
May 18, 1999
FTC Attacks E-Mail Scam
E-Mail Duped Consumers
into Making Costly International Calls
The Federal Trade Commission has obtained a
federal district court order freezing the assets of a scam that dupes consumers into
making costly international telephone calls in an attempt to ward off bills for
merchandise they never ordered. The FTC alleges that the scammers make their money from
the revenues from the costly audiotext telephone calls and has asked the court to block
the revenue stream from American telephone carriers, return the money to the unwitting
consumers and bar the alleged deceptive practices.
According to the FTC complaint, the scam works
like this: Consumers receive an e-mail informing them that their order has been received
and processed and their credit card will be billed for charges ranging from $250 to $899.
In fact, the consumers hadn't ordered anything. The e-mail advises consumers that if they
have questions about their "order" or want to speak to a
"representative" they should call a telephone number in area code 767. Most
consumers don't know the area code is in a foreign country, Dominica, West Indies, because
no country code is required to make the calls. Consumers who call expecting to speak to a
"representative" about the erroneous "order" are connected to an adult
entertainment audiotext service with sexual content. Later, consumers receive telephone
charges for the international, long-distance call to Roseau, Dominica.
"This scam used low-down tactics and
high-tech tools to rob consumers in their own homes," said Jodie Bernstein, Director
of the FTC's Bureau of Consumer Protection. "We used our high-tech tools and our
rapid response team to stop this scam three weeks after identifying complaints in our
database. We want to be sure that these lawbreakers don't profit from their con and that
consumers get their money back."
The FTC alleged that the defendants contacted the
consumers using bulk e-mail -- commonly known as spam -- with a variety of forged
addresses which prevented consumers from refuting the orders by e-mail. This is the first
FTC case filed against unnamed defendants. Upon identifying the defendants, the FTC will
move to add them to the court complaint.
According to the FTC, under international
agreements, U.S. telephone carriers would ordinarily bill consumers for their pay-per-call
charges and forward the funds to the Dominica telephone company which in turn distributes
portions of the revenue to the providers of the audiotext service. Due to time lags
between billing, collection and remission payments, it would typically take about 60 days
for the funds to reach the audiotext business. The FTC has asked the court to prevent the
telephone carriers from remitting the funds now in the revenue stream and preserve the
money for consumer redress. The FTC has also asked the court to bar the defendants from
violating the FTC Act.
The Commission vote to file the complaint was 4-0.
The case was filed in the U.S. District Court for the Western District of North Carolina,
in Charlotte, on May 11, 1999.
NOTE: The Commission files a
complaint when it has "reason to believe" that the law has been or is being
violated, and it appears to the Commission that a proceeding is in the public interest.
The complaint is not a finding or ruling that the defendant has actually violated
the law. The case will be decided by the court.
Copies of the complaint are
available from the FTC's web site at www.ftc.gov
and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired
202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone
recording at 202-326-2710.
- MEDIA CONTACT:
- Claudia Bourne Farrell
- Office of Public Affairs
- STAFF CONTACT:
- Eileen Harrington or Richard Quaresima
- Bureau of Consumer Protection
- 202-326-3127 or 202-326-3130
(FTC File No. 992-3190)