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A company that sent bills to consumers for services consumers did not order has agreed to settle FTC charges that the billing scheme violated federal law. The company is barred from billing consumers without their express consent and is required to monitor the vendors with which it does business and take action, including ending its relationship with a vendor, if the vendor engages in illegal billing practices.

In May 2003, the FTC charged TelCollect, Inc., working on behalf of Alyon Technologies, Inc., and its principal, Stephane Touboul, with illegally billing consumers for adult videotext services purportedly accessed on the Internet. According to the FTC, Alyon downloaded a dialing program onto consumers’ computers, allegedly after consumers clicked on a button to agree to the terms and conditions for such a download. The dialing program then disconnected consumers’ Internet connections and reconnected them to the defendants’ network, then billed consumers $4.99 for each minute they had supposedly purchased the services, regardless of whether the line subscribers had authorized the purchase. The FTC’s complaint stated that TelCollect was responsible for collecting on past-due payments, allegedly sending bills to consumers on company letterhead that said the “delinquent account formerly owed to Alyon Technologies Inc has been placed with TelCollect for recovery...This communication is from a debt collector.” TelCollect also was responsible for answering the toll-free “customer service” hotline listed on some of the allegedly delinquent bills.

In December 2004, Alyon and Stephane Touboul settled FTC charges and dropped their claim to more than $17 million in consumer bills. They are barred from billing a consumer or claiming a consumer owes money for any videotext service without the consumer’s express, verifiable authorization. They are further barred from planting software on consumers’ computers without their consent.

In the settlement announced today, TelCollect is permanently barred from billing a consumer for any videotext services unless it has verification that the consumer is an adult who has expressly agreed to purchase the services and has received clear and conspicuous notice of all the terms and conditions associated with the purchase. The defendant also is required to obtain written agreement from each vendor it works with that the vendor will comply with the terms of the stipulated order. The order requires that TelCollect monitor each vendor, including conducting investigations of consumer complaints of unauthorized billing, and take appropriate action – which may include terminating its business relationship – against any vendor who fails to comply. The order contains standard recordkeeping and reporting provisions to assist the FTC in determining the defendant’s compliance.

The Commission vote authorizing staff to file the stipulated final order was 5-0. The complaint was entered in the U.S. District Court for the Northern District of Georgia, Atlanta Division, on June 13, 2005.

Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the stipulated final order are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X030053)
(Civ. No. 1:03-CV-1297-RWS)