U.S. court halts alleged Web site billing scheme

A U.S. district court has ordered a halt to an operation that allegedly added unauthorized charges to the phone bills of small businesses and nonprofit groups for Web sites services that, in many cases, they didn't know they had and didn't request, the U.S. Federal Trade Commission (FTC) said.

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Judge Kenneth Hoyt of the U.S. District Court for the Southern District of Texas has approved a temporary restraining order halting the activity and freezing the assets of a group of businesses and individuals, the FTC announced Thursday.

The FTC's complaint named defendants WebSource Media, BizSitePro, Eversites, Telsource Solutions, Telsource International, Marc R. Smith, Kathleen A. Smalley, Keith Hendrick, Steven Kennedy, John O. Ring, and James E. McCubbin, Jr. The defendants illegally billed thousands of customers, according to the FTC.

The operation was a maze of interrelated companies directed by the people named as defendants, the FTC said. The operation used telemarketers to make cold calls to small businesses and nonprofits, and offered a “free” 15-day trial of a Web site design. The customers were told there was no charge or obligation and that the Web site would be cancelled automatically if it was not approved by them.

Whether the customers agreed or not to be billed after the trial, their phone bills were often charged. When consumers called to dispute the charges, the operators told them they had “verification recordings” of an employee authorizing the charges.

The FTC said the operation is typical of fraudulent Web cramming operations -- by using sales pitches to employees who frequently lack authority to make commitments for their employers and failing to effectively notify consumers that a Web site has been set up. The operators repeatedly changed the names of their companies to avoid detection by telephone companies they rely on to bill consumers and to evade scrutiny from law enforcers, the FTC said.