Mansions, Jewelry and Luxury Cars Surrendered to FTC in “Mobile Cramming” Settlement

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 23, 2014

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A pair of California “entrepreneurs” will be turning over the keys to their Bentley, mansions and over $10 million in cash as a result of a Federal Trade Commission lawsuit alleging a multi-million dollar mobile phone scam.

Mobile Phone Scammers Charge Customers Without Permission

CarThe FTC complaint, filed on December 5, 2013, alleges that Lin Miao and Andrew Bachman, under various corporate guises, took in over $100 million dollars scamming mobile phone users out of their hard-earned money by engaging in a practice referred to as “cramming.” Cramming involves billing customers on a monthly basis, without their permission, for text-message-based alerts for horoscopes, celebrity news or other information.

The suit is part of a concerted effort by the FTC’s Bureau of Consumer Protection to crack down on mobile phone scammers. At the time the case was filed, Bureau of Consumer Protection director Jessica Rich stated, “the FTC will continue working to protect consumers from unwanted third-party charges on their mobile phone bills.”

FTC Goes After Unlawful Practice of “Cramming”

Despite some token resistance from Miao and Bachman, the case settled quickly. A monetary judgment of $150 million dollars was entered, and then partially suspended after Miao agreed to turn over assets that include, in part, the contents of 14 bank accounts, property in Chicago, Los Angeles and Beverly Hills, four high-end cars and numerous high-value items of jewelry—including three Patek Phillippe watches.

“Cramming unauthorized charges on a consumers’ phone bills is unlawful, and this settlement shows the FTC is committed to making sure that anyone who does it won’t be able to keep their ill-gotten gains,” Rich said in a statement issued after the settlement was announced. “Consumers have the right to know what they are being charged.”

Tips to Avoid Being Scammed

The FTC has published a blog entitled “How To Beat A Mobile Cramming Scam” in an attempt to keep consumers informed of the potential pitfalls cramming can pose. The FTC explicitly references the case against Miao in the blog, pointing to a calculated decision to make a public example out of the duo even prior to entering into the settlement.

Many of the suggestions offered by the FTC seem, at first glance, to be common sense. But as cramming takes on new levels of sophistication and practices become even more deceptive, the reminder is welcome. Using caution when entering a cell number into a website, taking offers of “free prizes” with a grain of salt and knowing your carrier’s policy on fraudulent charges and refunds are among the tips the FTC offers. But perhaps most importantly, the FTC urges all consumers to check their phone bill each month.

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