|The Federal Trade Commission, the plaintiff in this case.|
Photo courtesy wikimedia.
Similar to the Verizon case, Inc21.com used "local exchange carrier" billing (LEC billing) where companies charged services to an individual's phone bill. According to court documents, Inc21 was in the business of reselling long distance phone service and tacking it on to customer's local phone bill. Eventually, it changed directions and made an online yellow pages for companies to improve their online profile. However, they continued to bill their customers using LEC billing for a series of internet products and services. Inc21 and similar companies employed a call center in the Philippines that called small businesses, read a message and then entered a charge for $29.95 on their phone bill for maintaining a website on the online yellow pages run by Inc21. Surveys of customers indicated that 95% of customers had no idea what the $29.95 charge was.
The FTC sued under Section Five of the FTC Act which penalizes individuals and companies from engaging in business activities which would deceive a normal consumer. Studies noted that over 90% of people surveyed stated that they had no idea what they were billed for and why. They also did not feel they received any benefit from the transaction. Judge William Alsup granted a permanent injunction preventing the defendants from engaging in telemarketing and LEC Billing and held them jointly and severally liable for $37,970,929.57.
The case is FTC v. Inc21.com Case No. 10-0022
FTC v. Inc21