Trying to address a growing consumer problem, the Federal Trade Commission has filed suit against an Atlanta-based company, saying it improperly charged millions of mobile phone users for text-message services that they did not ask for.
The lawsuit against Wise Media is the first federal lawsuit filed against a company for a practice known as “cramming,” but more are likely to follow as consumers use more smartphones as their primary way to communicate.
Unauthorized charges often were buried in wireless phone bills under “premium services” or “monthly subscriptions,” the lawsuit said.
“This is a problem that is on the rise,” said Malini Mithal, the assistant director of the FTC’s financial practices division.
Mithal could not reveal how long the FTC has been investigating Wise Media. The Atlanta office of the Better Business Bureau has received 26 complaints about the company, mostly in 2012. Wise Media did not answer nine of the complaints, leading to an “F” rating with the BBB, according to Fred Elsberry, president and chief executive officer of the area office.
Consumers complained that they were billed without their consent, Elsberry said.
Wise Media, of Grayson and Atlanta, and Concrete Marketing Research, of Lilburn, a second company named in the lawsuit, have been registered with the Georgia Secretary of State’s office since 2010. Attempts to reach the company’s owners as well as an attorney listed as a registered agency of Concrete Marketing Research were unsuccessful.
The FTC alleges that Wise Media sent text messages offering subscription services for “HoroscopeGenie” or “Long Life Love Tips” for $9.99 a month. But consumers were finding the monthly charges on their mobile phone bills regardless of whether they signed up for the service, the government contends. Many consumers said they ignored the text messages but were charged anyway, the lawsuit said.
“We have consumers who say they have never heard of Wise Media. They have never signed up for services, and that’s what’s going on here,” Mithal said.
More than 1,000 “cramming” complaints have been filed related to mobile phone bills.
Wise Media was accused of “cramming” in a class-action lawsuit filed in U.S. District Court in Northern California district last year. A judge dismissed the case months later.
“When we notice a pattern of problems from any particular content company, we work to rectify the issue — fast,” said Kate Jay, a spokeswoman with Verizon Wireless. Consumers should review their mobile phone bills monthly and contact the company for any charges they do not understand.
Atlanta-based AT&T Mobility referred the issue to the industry trade group, CTIA - The Wireless Association.
“To those companies that are not compliant, they must change their practices, or we will continue to aid the FTC to find and shut down any improper business,” said Michael Altschul, CTIA’s senior vice president and general counsel.
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