A small group of Website services vendors has agreed to pay $1.2 million in damages after it was discovered sneaking unauthorized charges on their bills, the Federal Trade Commission said last week.
According to an FTC report, the service providers gave a "15-day free trial" of Website design services to hundreds of thousands of small businesses and nonprofits. After the free trial was finished, the service providers added a fee for the services to the customer's phone bill, often without authorization.
The FTC estimates that the service providers -- including Websource Media, Bizsite Pro, and Telsource Solutions -- extracted some $24.7 million in unauthorized charges from customers. The defendants filed financial statements to prove they could not afford to pay restitution, resulting in the $1.2 million settlement.
The case proves how easy it is for a business to be sucked into a telemarketing scam. The service providers offered a "free" service and then told customers the service would be canceled automatically if they chose not to renew it. However, the service fee was added to the customers' phone bill, and it was a small enough charge that many customers never noticed they were paying it.
At the request of the FTC, a U.S. District Court judge in Houston, Texas, ordered a halt to the unlawful operations, appointed a receiver to oversee the business operations, and froze the defendants assets, pending trial.
Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message.