Porn dialler case settled for $22m
Emily Fredrix in Washington
DECEMBER 07, 2004
AN internet company has agreed to forgive $US17 million ($22 million) in customer bills as part of an agreement with the government.
In exchange for the dropped bills, the US Federal Trade Commission (FTC) will stop its investigations of Alyon Technologies, which had been accused of illegally billing unknowing customers for a dial-up connection to pornographic web sites.
As part of the settlement, the New Jersey-based company will forgive $US22 million in bills incurred before June 15, 2003, for customers who dispute the claims. Customers with bills for the same time period who have disputed the claims will be credited.
The FTC estimates more than 200,000 customers will be affected.
Alyon Technologies may continue to bill customers, and it does not have to return money it has already collected, the FTC said.
The company also agreed to obtain verifiable consent from customers and to inform customers of their right to dispute charges in future bills. The company must also refrain from installing programs or spyware on customers' computers.
"The decision to provide these credits and institute these procedures made business sense and assisted us to bring this time-consuming and expensive litigation to a conclusion," Alyon President Stephane Touboul said in a statement.
The FTC had been investigating alleged violations of advertising and telecommunications laws by the company and Mr Touboul since May 2003. Similar charges were filed by attorneys general for 16 states, among them Wisconsin, California, Connecticut, Florida, Illinois, Missouri and Ohio.
The FTC said Alyon billed consumers $US4.99 a minute for dial-up internet connections to adult web sites. Customers would see a pop-up for the site, hit a button to agree to terms or close the window and Alyon would download a program onto the user's computer.
That program would then disconnect users from their own connection and dial a new provider, the FTC said. It said subscribers to the phone numbers would then receive bills, regardless of whether they had authorised the purchase or visited the site.
The Associated Press
This a a major loss for Alyon. Who now must contend with 12 lawsuits from State Attorney Generals and a RICO (Racketeering) suit filed in Florida.