Multi-state settlement with "Alyon Technologies" and "Telcollect, Inc." requires changes in practices, including making it more difficult for children to access adult web sites.
Iowa is among 23 states resolving consumer fraud allegations that two companies billed consumers $4.99 per minute for access to adult Web sites that some consumers say they did not access or agree to access. Consumers will be eligible for various refunds and credits. [Click here for a copy of Iowa's lawsuit, and Iowa's Consent Decree. (53 pages)]
Attorney General Tom Miller said his office received 78 complaints about the practices of Alyon Technologies, Inc., with headquarters in Secaucus, NJ, and Telcollect, Inc., with headquarters in Norcross, GA. The Consumer Protection Division of Miller's office said consumers complained about being billed by the companies for accessing adult-content Web sites, even though some did not own a computer, some were not home or were not using their computers when the supposed access occurred, and some had minor children who accessed the adult Web content.
"Iowans complained about collection notices and bills ranging from about $15 to over $800," Miller said. "Many deny accessing the adult Web content or agreeing to purchase it."
Many consumers who complained will receive automatic refunds or credits. For more information, consumers may call 515-281-5926 or 888-777-4590 (toll-free), or write to the Attorney General's Consumer Protection Division, Hoover Building, Des Moines, Iowa 50319. The e-mail address is email@example.com, and the web site is www.IowaAttorneyGeneral.org.
Background and details:
The States alleged the defendants would start billing consumers after unsuspecting adults or minors without permission opened pop-up windows or spam that automatically downloaded modem dialer software onto their computers. That software could then be used to dial up the Alyon billing gateway to access adult material. The states alleged Alyon captured the phone number, matched it with a name and address and then billed the consumers $4.99 per minute, allegedly without the consumers' knowledge or consent. Alyon allegedly told consumers they owed the charges even when consumers denied having accessed or agreed to purchase the adult materials.
The service also allegedly was set up to allow children to easily access the adult sites. No credit card number was required, and 900-number blocks were ineffective because people were unknowingly connected to a number with a New Jersey area code.
In most circumstances, contracts with minors are not enforceable. States alleged the defendants had no basis to demand parents pay charges when parents did not agree beforehand to pay them. This case underscores the need for adult supervision when kids are on computers.
Iowa filed both a lawsuit and a consent judgment yesterday. Iowa's suit was filed in Polk County District Court, and District Court Judge Richard G. Blane II entered the "Final Agreed Judgment and Consent Decree." The defendants denied all allegations of wrongdoing.
Provisions of the multi-state settlement include:
- Alyon has improved its process for ensuring that adults authorized to incur charges are "on the other end" of the modem before connecting them to the adult material or starting per-minute charges.
- Alyon will provide consumers with a free utility program they can download to remove all modem dialer software deposited by their clients, the adult Web site operators.
- Alyon will require the adult Web site operators to refrain from using potentially deceptive methods to download modem dialer software onto consumers' computers. Prohibited methods include impairing a computer user's ability to read the terms and conditions of the software download; disabling a computer user's ability to close out a pop-up box; depositing spyware on consumers' computers; and impairing the add/remove controls within computers' operating systems, which would make it difficult for consumers to detect and remove the modem dialer software.
- The defendants automatically will credit certain eligible consumers' bills and provide cash refunds available to a group of eligible consumers who previously had paid disputed charges.
- Consumers billed for charges allegedly incurred before June 15, 2003, but who do not qualify for an automatic bill credit or cash refund will have an opportunity to request a credit of disputed charges. However, they must follow a procedure for making such a request, which includes completing and returning an affidavit to the defendants within 45 days of the defendants' collection attempt. Click her for the dispute resolution process and affidavits.
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