FTC Settles Cramming Case Against Billing Services Group

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By Kyle Daly

May 4 — Billing Services Group agreed to pay $5.2 million to resolve Federal Trade Commission charges that it violated a 1999 court order against placing unauthorized charges on consumers' phone bills, the agency announced May 4.

A forerunner of the company, which handles billing for local exchange carriers including AT&T Inc., agreed in 1999 to stop adding unauthorized third-party charges to phone bills, a practice commonly known as “cramming,” lest it be subject to contempt charges and penalties. That agreement came as part of a $1.6 million settlement between the FTC and a company then known as Hold Billing Services Inc., which became a subsidiary of Billing Services Group (BSG) following a series of mergers and corporate restructurings.

In 2012, the FTC filed a motion requesting that BSG be held in contempt of the 1999 order, alleging that BSG violated it by permitting unauthorized billing. The FTC and BSG have now settled those claims under an agreement in which BSG acknowledged that it failed to vet third-party charges and didn't investigate consumer cramming complaints.

BSG will be required to pay the $5.2 million judgment across 10 payments every 90 days; should it fail to make a payment, the U.S. District Court for the Western District of Texas will impose a $17 million judgment under the FTC's proposed order.

The company also agreed to not add unauthorized charges on any type of bill and not to place any charges on phone bills for enhanced services such as e-mail or voice mail.

In a statement , BSG said it was “pleased to have reached resolution” on the matter.

The FTC vote approving the settlement was 3-0, though it needs court approval before becoming final.

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

Text of the proposed settlement agreement is at: http://src.bna.com/eHw