Tuesday, April 07, 2009

AT&T is a partner to phone scams that target the vulnerable elderly

Just because we’re sorting through the wreckage of cosmic financial frauds doesn’t mean the everyday kind has taken a vacation.

Eleven years ago “Webtel” and “Netfill” were two billing entities used in one of the first worldwide large scale small transaction credit card scams. It’s worth noting that the secret of that con was the crooks created a legitimate bank, and used banking authority to pilfer credit card numbers.

The old scam has a companion set of scams that run against phone customers. Once phone companies moved into the financial transaction business, they’re also got in bed with the lice that prey on the elderly (probably using the dial-a-victim services sold by Wachovia Bank and Info-USA). Like MasterCard and Visa, AT&T, of course, makes its dime whether the transaction is legit or criminal.

These phone service scams are known as “cramming”, and the FCC has a resource on how to respond.

In this case two of my elderly relatives are victims of a company that calls itself “OAN Services”. They're not the only victims …
My vigilant aunt noticed a $14.95/month “OAN Services” charge appearing on her AT&T residential phone bill. She was told it was requested by “John Beale on the internet” (unknown to my relatives).

At the same time she found a charge for “Enhanced Services Billing Inc”, also for $14.95. That was supposedly requested by my non-computer-using uncle via email.

Enhanced Services Billing has its share of victims:
AT&T was no help. They claim they're not responsible for these charges, and my aunt should deal with them herself. It’s the same response they give every victim of these scams.

The 2005 ESBI report has the most details on one front of this operation. From that we learn ..
… Enhanced Services Billing, Inc. (“ESBI” or “Company”), a Delaware corporation, whose principal address and telephone number are 7411 John Smith Drive, Suite 200, San Antonio, Texas 78229-4898, (210) 949-7000…

… Enhanced Services Billing, Inc., 10500 Heritage Blvd Ste 200, San Antonio, TX 78216-3631, (210) 949-7000

this site [jf: FCC cramming page] about cramming to be helpful. It even led me to this pdf file here. While I was there, I could read all about Enhanced Services Billing Inc, and the settlement agreement they signed. More specifically, I might note that it was a "Stipulated Final Judgment and Order For Permanent Injunction and Other Equitable Relief." This enjoins the defendants (including Enhanced Services Billing Inc.) from "violating Section 5 of the FTC Act, 15 U.S.C. … 45(a)." Where all the relevant parties have signed, I can see that a man named Joseph W. Webb, at the "John Smith" address above, is the president of the company. The agreement was likely signed by him either May 9th or May 10th of 2001, a date which also seems to fit with the "John Smith" address. You'll see his signature on Page 34 of the pdf. So thanks, FTC, I feel my tax dollars were put to good use.

The FTC comes through again with this article, also from 2001, about how the scam works. Turns out Enhanced Services Billing Inc is a billing aggregator. I'll let the FTC tell you what that is:
ESBI and BCI each served as "billing aggregators." Billing aggregators open the gate to the telephone billing and collection system for vendors, and act as intermediaries between the vendors and the local phone companies, contracting with the local phone companies to have charges on behalf of their client vendors placed on consumers' telephone bills and to have the local telephone companies collect those charges from consumers. Once the charges are collected by the phone companies, the billing aggregators, after taking their fee, pass the revenues back to their client vendors.
Referencing the pdf noted above, to which Enhanced Services Billing Inc stipulated, the FTC asserts the following:
-that ESBI falsely represented that consumers were legally obligated to pay charges on their telephone bills for web sites and other items they had not ordered or authorized others to order for them;

-that ESBI unfairly attempted to collect - or arranged for local phone companies to collect - payment of charges from consumers for web sites and other items they had not ordered and that consumers were unable to prevent ESBI from causing such unauthorized charges to appear on their phone bills;
… Just ask Dr. Leonard Saltzman, whose eight year odyssey against Enhanced Services Billing Inc ended with an October 2005 settlement agreement from the company. To summarize, the fraudulent billings began in 1997. Enhanced Services Billing Inc got a claim for restitution dropped in August 2000. In October 2001, summary judgment was granted in favor of the company, because "knowingly receiving benefits from someone else's fraud was not covered under section 2 of the Consumer Fraud Act." Dr Saltzman appealed, leading to a reversal in June 2004. A fairness hearing for the proposed settlement was held on October 21, 2005.
So this company has been running these scams for 12 years.
12 years.

If you Google on the number “210-949-7000” you find it was also used by “Billing Concepts, Inc” located at “John Smith drive” (recall that the summary judgment above was signed by “John Smith”, a search on “ABRY Partners” and “fraud” is illuminating. I also suggest a search on “Parris Holmes” and “Fraud” which reveals a 1996 SEC civil action against him.
7411 John Smith Drive, Suite 200
San Antonio, Texas 78229-4898
Telephone: (210) 949-7000
Fax: (210) 696-0270

Wholly Owned Subsidiary of ABRY Partners LLC
Incorporated: 1985 as U.S. Long Distance Corporation
Employees: 115
Sales: $10 million (2004 est.)
… Utilizing state-of-the-art systems technology, Billing Concepts built a platform enabling the future of billing, clearing and settlement services including authentication and authorization, mediation, invoicing, collection and settlements. Billing Concepts, Inc. (BCI) offers outsourced billing solutions through a wide range of proprietary LEC processing products and wireless Internet clearing and settlement services.
Key Dates:
1985: U.S. Long Distance Corporation founded; Billing Concepts is a subsidiary.
1988: Billing Concepts Corporation is launched as separate company.
1998: Company acquires CommSoft.
1999: Company spins off three divisions as Aptis.
2000: Company acquired by Platinum Equity Holdings; becomes Billing Concepts, Inc.
2003: ABRY Partners acquires company.
2004: Company is merged with ACI Billing Services, Inc., under the ABRY umbrella.
… Billing Concepts, Inc. (BCI) bills itself as the "authentic, proven, trusted" billing clearinghouse for the telecommunications industry. Together with ACI Billing Services Inc., Billing Concepts forms the Billing Services Group of parent ABRY Partners LLC, providing a comprehensive billing system that collects long distance charges from telephone users on behalf of more than 1,300 local telephone companies.
The company also provides these services to wireless carriers and Internet Service Providers (ISPs). One of the fastest growing and most profitable companies of its kind in the late 1990s, Billing Concepts was streamlined and restructured in the early 2000s when its software businesses were divested and the billing operations and company moniker were acquired by the investment firm of ABRY Partners.
While the telecommunications industry was taking shape, in 1985 Parris H. Holmes, Jr., invested $50,000 to start a small pay-phone business in his Houston garage…
… From 1993 to 1995 the company offered enhanced clearinghouse billing and information management services to other businesses, including providers of telecommunications equipment and information, as well as other providers of nonregulated communication services and products (for example, 900 access pay-per-call transactions, cellular long distance services, paging services, voicemail services, and equipment for Caller ID and other telecommunications applications). The billing of nonregulated telecommunication products and services became a significant factor in the successful evolution of USLD's business. Revenues grew steadily reaching $33.16 million in 1992, $46.46 million in 1993, $57.75 million in 1994, and $80.85 million in 1995.
… Holmes remained Chairman/CEO of USLD until June 1997. "I felt like the separation process had been completed," said Holmes in a December 1997 interview with Diane Mayoros in the Wall Street Corporate Reporter. "It was a natural progression to move on to focus my time and energy" as chairman and CEO of Billing Concepts Corporation…
.. On January 30, 1998, BCC distributed a one-for-one stock dividend to its shareholders of record. During the third quarter, actions by the FCC and the Regional Bell Operating Companies on "slamming and cramming" issues led to a temporary interruption in the revenue growth of BCC's business…
… BCI remained the leading force in LEC billing. In August 2004, BCI integrated traffic from its sister company, ACI Billing Services, to a common platform. The result meant that the two companies were capturing about 85 percent of the LEC billing market…
Of course AT&T gets revenue from these companies. They’re not incented to shut them down, and they don’t have the corporate spine to resist. AT&T doesn’t have to actually break the law, they can just sit back and let small fry do their dirty work.

Between SMS spam marketing and rebate scams and this foul business AT&T is very much in the spirit of our age.

Which brings us back to the Depression of 2009, and my 128 posts on fraud.

We have far too much fraud in our world. Big fraud, small fraud and every size between. We know we can’t eliminate fraud – it’s as old as biology! We can’t eliminate it, but somehow, some way, we have to beat it back.

It’s out of control.

Update: Based on what my aunt told me and this article I think one scam may work like this ...
  • Crooks set up a web site that offers "free" shopping coupons in return for signing up with the service by providing a phone number
  • Other crooks (accomplices and freelancers) sign up for the (worthless) coupons and provide a legitimate phone number (in this case, my relatives) and information including fraudulent email addresses, etc.
  • The charges appear on phone bills.
  • If the fraud is not detected, ESBI and other accomplices pocket the money.
It also appears from comments on the 2007 post that you can request a "password" on your AT&T account that will prevent anonymous cramming.

Update 4/10/09: Dustbury.com reveals an important detail; when calling the semi-legit crooks processing the transactions created by other crooks/accomplices and demanding a refund for fraudulent purchases, you request a confirmation number that you then provide to AT&T. AT&T will then recommend filing a police report of identity theft.

Again, AT&T is the corporation we should be going after. They have the power to change this scam.

Update 5/30/09: My aunt has sent on some f/u notes, which I've attached as comments to this post under my name. AT&T continues to point their finger at the FCC.

I'm guessing that's a convenient out for them. I'd be much more impressed if they'd actually lobbied one of their pet Senators to change the law. If they haven't done that they're complicit.

AT&T simply discards any complaint letters they received, so I recommend letters to your state District Attorney and to your state Senator and/or Representative. I also recommend switching away from AT&T if you can. Maybe if Verizon gets the iPhone...

AT&T also tells my aunt that the third party blocks have no effect and they don't are about confirmation numbers provided by the crammers.

Meanwhile the 2007 My Little Corner post continues to receive comments.

What we really need is for a US Senator to start getting cramming charges through AT&T. That tends to get some action...


John Gordon said...

Comments from my Aunt, who's been pursuing her cramming attack via AT&T ...

"Today I called AT&T again. "Dan" said he didn't know anything about a number (which I tried to give him) which would claim our credit for the one remaining charge not yet credited back.

I asked for the misc. third party block. He gave us that but I asked how it would help. And who are the parties? He said ATT is the 1st, we are the 2nd, so another party can't get in to our phone stuff.

I don't really see how it will help because those fraud companies didn't go to them or us. I reiterated that it is AT&T that is to blame.

He said they are required by the FCC to put those billings on our phone bill! So 3 strikes. Then I asked for the zip code of his CEO. Said he didn't have it."

John Gordon said...

Another f/u from my most patient Aunt, who is still in talks with AT&T ...

"Today we had a call from AT&T. It was not the CEO to whom I wrote but a reasonably intelligent woman in San Diego. She said the my next bill shows another credit so maybe that will be removal of the final charge. I'll believe it when I see it.

She explained that AT&T is forced to allow these types of charges on the bills by the Telecommunications Act of 1996, forced by the FCC.

We have now been told this enough times by enough people that I'm beginning to think it must be true. She said complaints should be directed to the Bureau of Consumer Affairs and the BBB and the government.

She said people complain to the wrong place (ATT) and if the letter is addressed to ATT it will just circle back to them and they can't do anything...

... I asked her how people glom onto their victims. She said any time you fill out any kind of form (e.g. for your insurance co., for a magazine subscription or whatever) they can unleash this on you.

I told her that we are most cautious and every time asked by our bank or insurance co. or credit co. if we want to "opt out" we always say yes and send it back. I told her that one of the companies said they require mother's maiden name and asked if they gave that or even had it. They don't--nor SS# nor driver's license #."

Walt in California said...

I too fell victim to the phony ESBI/MYIPRODUCTS charges of $14.95/month. Interestingly, when I called MYIPRODUCTS to dispute the charges, the operator claimed that my wife had ordered the service and that a confirmation email had been sent to me at my business email address. I am the sole signatory to our home telephone service contract with AT&T and my wife has never been connected with the account in any way. It was sheer negligence on AT&T's part to accept a third-party charge when the name on the alleged "order" did not match the name on my AT&T account. Oh, and of course no email confirmation was ever sent to me. MYIPRODUCTS surmised that it must have been intercepted by a spam filter. I have my own personal server that I use for email and there are no spam filters. Nice try, MYIPRODUCTS...

In my case, I am pretty sure that MYIPRODUCTS grabbed my wife's information from some employment offers she had posted on craigslist. The charges first appeared the month after she posted on craigslist and I know that her posts included her name, our home telephone number and my email address. Since she stopped posting on craigslist, the fraudulent charges have stopped.

I complained to the Minnesota attorney general (where MYIPRODUCTS is based), the California attorney general, the FCC, the FTC and the California PUC. I wrote a stern letter to MYIPRODUCTS on my business letterhead (I happen to be an attorney) threatening legal action if the charges were not removed within 30 days.

The Minnesota AG sent me a very nice (but noncomittal) packet of information about cramming with copies of Minnesota statutes regarding cramming. I received noncommital form letters from the California AG and the FCC.

What got AT&T's attention, however, is when the California PUC opened a complaint on my behalf. I suddenly received EIGHT separate telephone calls from AT&T customer relations within two days from three different AT&T employees. By this time MYIPRODUCTS had already refunded me in full (and they did so within 3 weeks, despite their initial insistence that it would take 2-3 billing cycles to process). The AT&T reps advised me of this credit and even advised me of a new and separate charge of $7.14 (from some outfit called ILD Teleservices Inc.) that I had overlooked. I was given an immediate credit for this $7.14 by AT&T, which of course is contrary to their standard claim that one must first deal with the third-party billers before AT&T can get involved. The AT&T rep didn't even ask me if the $7.14 was legitimate before giving me my credit. He assumed it was fraudulent, which speaks volumes.

Finally, I came across a class action lawsuit filed in February 2009 against MYIPRODUCTS and ESBI that alleges the exact same scheme as is being discussed here. The case is entitled ELIZABETH TALAMANTES v. MYIPRODUCTS et al. and the Case Number is BC407826 (Superior Court, Los Angeles County). The lead attorney is Alan Himmelfarb (Telephone: 323-585-8696). The case was briefly remanded to Federal Court (slime-ball defense tactics) but is back in Los Angeles Superior Court at the present time. Case records are available online but I believe there is a charge for access by the court.

CarpeDiem-Cali-to-Ca said...

Great information. I can't Thank You enough
for taking the time, and effort to put this
information out there. I have just dealt w/
this issue myself w/ AT&T & ESBI....what a
load of BS, and whimps. After 4 phone calls
back & forth w/ AT&T, ESBI, I hope this is
resolved. Due to your in depth info, I was
able to be quite forceful. When I was told
by ESBI credit would 'take 1-2 billing cycles',
I promptly stated I'd contact the California PUC,
and het a case opened up about this rip-off.
Interestingly, the story changed immediately to
'credit will be processed in 1-7 business days'.

Keep up the fight. Honesty, and anti-fraud (no
Matter how small) is the best way.