The Federal Communications Commission (FCC) has fined two related companies, Calling 10 and Telseven, as well as the companies' owner, Patrick Hines, more than $3.4 million.
The FCC says that the companies deceived consumers who mistakenly called their toll-free numbers about their purported services and then subsequently billed those consumers for services that were neither provided nor requested, a practice known as "cramming."
The Commission also fined Telseven and Mr. Hines for non-payment of required fees.
According to the FCC, the companies acquired approximately one million toll-free numbers, some of which were similar to existing working numbers or formerly used by well-known entities such as Chase Bank and other financial institutions. These acquisitions served no apparent purpose other than to increase the likelihood that consumers would dial one of these numbers and reach Telseven or Calling 10 by mistake.
The Commission says that the companies failed to notify consumers that they tried to reach an inactive or incorrect number and falsely implied that their service was related to the party the caller tried to reach. In addition, the companies charged consumers approximately seven dollars for service that the consumers never authorized and the companies never provided.
While the companies did not deny the violations, the FCC says that Mr. Hines argued that he should not be held personally liable for his companies' wrongdoing. The Commission rejected Mr. Hines's arguments, finding that he personally participated in cramming and deceptive marketing activities while forming sham companies to facilitate the scheme.
The FCC action against the companies and Mr. Hines comes in the form of two separate fines. The Commission fined Telseven, Calling 10, and Mr. Hines $1.68 million for billing consumers for unauthorized charges and fees and for deceptive marketing. Separately, the agency also fined Telseven and Mr. Hines over $1.75 million for failing to pay regulatory fees, make required contributions to FCC programs, and provide good faith estimates of its projected revenues.
By law, companies like Telseven are required to pay regulatory fees, provide accurate revenue information to the FCC, and make required contributions to FCC programs, including payments for the Universal Service Fund, Local Number Portability, and North American Numbering Plan. Telseven and Mr. Hines are jointly and severally liable for both fines, totaling over $3.4 million.
The FCC says that it is committed to combating such cramming and deceptive marketing because these unjust and unreasonable practices result in consumers paying for services they never requested or received, forcing them to expend significant time and effort to request refunds and reverse unauthorized charges.
For more information about the FCC's rules protecting consumers from unauthorized charges on telephone bills, see the FCC consumer guides regarding cramming.
To file a complaint with the FCC, go to https://consumercomplaints.fcc.gov/hc/en-us or contact the FCC's Consumer Center by calling toll-free 1-888-CALL-FCC (1-888-225-5322).