Phone bill crammer agrees to $10 million penalty

Photo© ekostsov -

(Truman Lewis @ ConsumerAffairs) A massive mobile cramming scheme that cost consumers millions of dollars is also going to cost its founders and operators millions of dollars in cash, cars, houses, jewelry and other assets.

The Federal Trade Commission alleged that Lin Miao a number of accomplices pitched text message services offering “love tips,” “fun facts,” and celebrity gossip alerts, but placed charges for these services – typically $9.99 a month – on consumers’ bills without their permission -- a practice known as mobile cramming.

They also allegedly used deceptive websites designed to collect consumers’ mobile phone numbers that would then be billed for the services.

The charges appeared on consumers’ phone bills under confusing names such as “77050IQ12CALL8663611606” and “25184USBFIQMIG” and in many instances, consumers did not notice the variations in the amount of their bills from month to month. When consumers did notice the charges and attempted to seek refunds, the process was often highly cumbersome, with some promised refunds from the defendants never arriving, or consumers receiving only partial refunds from their phone company.

Assets forfeited 

To settle the charges, Miao and associates have agreed to surrender more than $10 million in assets, including the contents of numerous bank accounts; real estate in Los Angeles, Beverly Hills and Chicago; and a number of cars and pieces of jewelry.

“Cramming unauthorized charges on consumers’ phone bills is unlawful, and this settlement shows the FTC is committed to making sure that anyone who does it won’t be able to keep their ill-gotten gains,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers have the right to know what they are being charged.”

Under the terms of the settlement, Lin Miao and the corporate defendants will be permanently banned from placing any charges on consumers’ phone bills, making any misrepresentations to consumers about a product or service or a consumers’ obligation to pay, and will also be prohibited from charging consumers for a product or service without their express consent.

The settlement includes a monetary judgment of more than $150 million, which is partially suspended based on Miao’s inability to pay the full amount after he turns over nearly all of his and the companies’ assets.