FTC Seeks Contempt Order Against Web Site Billing Service

Thursday Aug 14th 2003 by Roy Mark
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Federal agency claims Mercury Marketing continuing to bill for Internet-related services without consumers' authorization; many of which are small businesses caught by the telemarketer's lure of inexpensive Web hosting and site design services.

The Federal Trade Commission (FTC) has filed a suit charging Mercury Marketing of Delaware and its principal owner, Neal D. Saferstein, with contempt of court for continuing to bill consumers for Internet-related services without consumers' authorization. The FTC has asked the court for a hearing and for a temporary order to halt the illegal billing practices.

In addition, FTC lawyers want a U.S. District Court to freeze the corporation's assets to preserve them for consumer redress, pending a ruling on the contempt charges.

On June 28, 2000, the FTC filed its complaint in U.S. District Court for the Eastern District of Pennsylvania alleging that Mercury and Saferstein misrepresented that consumers were legally obligated to pay for the defendants' Internet-related services. The complaint claims that Mercury's telemarketers cold-called small businesses nationwide offering to create a Web page, or advertisement on the Internet, for consumers and then billed them without their authorization.

"In numerous instances, consumers who are billed for the defendants' Internet-related services do not remember receiving the defendants' telephone calls," the complaint states.

In other instances, the defendants allegedly billed consumers who said they declined to buy the services or agreed only to receive additional free information. According to the FTC, the defendants never asked consumers for credit card or other payment information, but later charged consumers on their telephone bills.

The defendants and the FTC agreed to a consent order on March 1, 2001. The settlement prohibits Mercury and Saferstein from misleading consumers and requires the defendants to reveal all material terms of the sales transaction prior to charging consumers. It also requires the defendants to obtain express, verifiable agreement to the terms of any sale they make and requires that the terms of any recorded portion of the sales call to be consistent with the terms of any non-recorded portion.

The consent order also requires defendants to notify consumers they are billing that they can cancel and requires the defendants to provide refunds to those who did not authorize Mercury to bill them.

In legal papers filed in U.S. District Court on July 30, the FTC alleges that the defendants "have engaged in precisely the same deceptive and misleading practices that led to the FTC's original action — billing consumers for their Web services without the consumer's authorization."

The FTC said that as the result of increasing consumer complaints, the FTC reviewed Mercury's business records, subpoenaed third parties, interviewed consumers, and surveyed Mercury's customers to monitor compliance with its order. Despite the 2001 Order barring the illegal activities, the "conduct has not only continued, it has worsened," the FTC told the court.

"Simply put, defendants violate the existing order by billing consumers who they have misled," the complaint states.

According to the FTC, recent complaints and company billing records show defendants even bill consumers who have asked to be placed on the national "Do Not Call" list. The FTC said the record demonstrates that "the defendants are engaged in a systematic and widespread effort to defraud consumers."

Mercury also operates and bills consumers under the names Mercury Internet Services, Mercury Communications, Mercury, MIS, Mercury Internet Services Wireless, Venus Voice Mail, and/or Mercury Technologies. Using the name Venus Voice Mail, the defendants allegedly target residential telephone line subscribers.

If the court finds the defendants in contempt, the FTC will ask the court to order consumer redress and to permanently bar the illegal activities.

Adapted from internetnews.com.

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