The Federal Trade Commission (FTC) announced it recently reached settlement agreements with the last four defendants and their associated companies involved in a mobile cramming scheme. The FTC alleges that the scheme defrauded consumers out of more than $100 million via fraudulent charges added to their mobile phone bills.
The proposed settlements involve Darcy Michael Wedd and Phwoar, LLC; Fraser Robert Thompson and Ocean Tactics, LLC; Erdolo Levy Eromo and Erdi Development LLC; and Michael Pajaczkowski, Concise Consulting, Inc., and MMJX Consulting, Inc. The FTC had previously settled with six other individual defendants and their affiliated companies related to the MDK Media mobile cramming scheme in 2015.
Following the previous settlements, the FTC’s case against the remaining defendants was paused, pending the outcome of related criminal charges filed by the U.S. Attorney’s Office for the Southern District of New York. These actions led to criminal sentences against Wedd, Thompson, Eromo, and Pajaczkowski, with the final case resolved in July 2023.
“Putting a stop to unauthorized charges has been a longtime priority of the FTC,” stated Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This case showcases the financial harm these practices cause, and the need to ensure that developing technologies do not become a haven for fraudulent schemes.”
According to the FTC’s initial complaint, announced in 2014, the defendants used deceptive practices such as fake websites offering “freebies” or gift cards to trick consumers into providing their mobile phone numbers. The defendants then added monthly subscription fees for various “services” to consumers’ mobile phone bills without their authorization, a practice known as mobile cramming.
The “services” outlined in the complaint included subscriptions for text messages containing celebrity gossip alerts, “fun facts,” horoscopes, and other content. These subscriptions, costing consumers $9.99 or $14.99 per month, renewed automatically each month. The defendants made it challenging for consumers to dispute these charges, with some consumers crammed for multiple months and unable to obtain a full refund despite significant efforts.
Under the proposed settlements, Wedd, Thompson, Eromo, Pajaczkowski, and their related companies are banned from placing any charges on any telephone bills, making any misrepresentations about any product or service, and engaging in any unfair billing practices. They are also prohibited from using or benefiting from the customer data collected through this scheme and must destroy any remaining customer data.
Many consumers affected by the defendants’ practices received refunds through settlements the FTC and the Consumer Financial Protection Bureau reached with the four major mobile carriers, AT&T, T-Mobile, Sprint, and Verizon, related to unauthorized mobile cramming charges. The mobile carriers discontinued such third-party billing practices following actions by the FTC and other state and federal agencies to crack down on cramming.
The Commission vote approving the stipulated final orders with Wedd, Thompson, Eromo, and Pajaczkowski, and their affiliated companies, was 3-0. The FTC filed the proposed orders in the U.S. District Court for the Central District of California.
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