Feeds

FTC: Web scam artists pilfered $24.7m from American businesses

'But we'll settle things up for $1.2m'

Website security in corporate America

After allegedly pilfering more than $24.7m from small businesses and non-profits across the country, a gaggle of web scam artists - sorry, alleged web scam artists - will fork over a measly $1.2m to settle a court case brought by the federal government.

For several months starting in 2002, according to a suit from the Federal Trade Commission (FTC), the case's 11 defendants forced unauthorized web charges onto hundreds of thousands of American companies, nabbing nearly $25m. Five years on, the FTC has announced that 10 of the 11 have agreed to settle, each promising not to pull the same trick again. The lone hold-out, Steven L. Kennedy, looks set for a December trial.

Filed in June of 2006, the FTC suit claims that the 11 made countless cold calls to small businesses and non-profits, offering a free 15-day trial of a web site design service. But it looks like the free trial was less than free. Though operators insisted that the service would automatically cancel after 15-days if it wasn't approved by the customer, the FTC says, the defendants pushed charges onto customer phone bills whether they had approval or not.

Then, when customers called to complain, operators insisted they had "verification recordings" authorizing the charges. At least, that's the word from the FTC. We have to be careful about these things. In settling, the defendants haven't admitted they're guilty.

But they have agreed to pay over $1.2m in settlement costs. The court would ask for the full $24.7m, but the defendants have official papers proving they can't afford that much.

Speaking with The Reg, James Elliott, the FTC lawyer overseeing the case, said that the money will go into a temporary FTC fund that should eventually be distributed among the victims of the alleged scam. "Hopefully, there will be a redress procedure," he said, "and somewhere down the line, consumers will be able to assert a claim against the redress fund." Some business have already received refunds from the defendants and various phone carriers.

The hold-out, Stephen Kennedy, may yet get off, but if the U.S. District Court in Houston, Texas orders him to pay damages, those will go into the same FTC fund.

If you're interested, the other defendants include WebSource Media, BizSitePro, Eversites, Telsource Solutions, Telsource International, Marc R. Smith, Kathleen A. Smalley, Keith Hendrick, John O. Ring, and James E. McCubbin, Jr. ®

Internet Security Threat Report 2014

More from The Register

next story
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
OECD lashes out at tax avoiding globocorps' location-flipping antics
You hear that, Amazon, Google, Microsoft et al?
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.