Mobile cramming scheme halted by FTC

The Federal Trade Commission has obtained orders with the four remaining individual defendants and their affiliated companies in a mobile cramming scheme that the agency says bilked consumers out of more than $100 million through bogus charges added to their mobile phone bills.

The proposed settlements with Darcy Michael Wedd and Phwoar, LLC.; Fraser Robert Thompson and Ocean Tactics, LLC; Erdolo Levy Eromo and Erdi Development LLC; and Michael Pajaczkowski, Concise Consulting, Inc., and MMJX Consulting, Inc., resolve the FTC’s charges related to the MDK Media mobile cramming scheme. The FTC in 2015 reached settlements with six other individual defendants and affiliated companies. The FTC’s case against the remaining defendants was then put on hold pending the outcome of related criminal charges brought by the U.S. Attorney’s Office for the Southern District of New York. These actions resulted in criminal sentences against Wedd, Thompson, Eromo, and Pajaczkowski, with the last case resolved in July 2023.

FTC obtains orders halting mobile cramming scheme

“Putting a stop to unauthorized charges has been a longtime priority of the FTC. This case showcases the financial harm these practices cause, and the need to ensure that developing technologies do not become a haven for fraudulent schemes,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

In the complaint first announced in 2014, the FTC charged that the defendants used deceptive practices, including fake websites with bogus offers of “freebies” or gift cards, to trick consumers into providing their mobile phone numbers. The defendants then placed monthly subscription fees for a variety of “services” on consumers’ mobile phone bills without their authorization – a practice known as mobile cramming.

The “services” described in the complaint consisted of subscriptions for text messages sent to consumers’ mobile phones that contained short celebrity gossip alerts, “fun facts,” horoscopes, and other items. The subscriptions typically cost consumers $9.99 or $14.99 per month, which is renewed automatically each month. The defendants made it difficult for consumers to dispute charges. Some consumers were crammed for multiple months and, even after significant effort, were unable to obtain a full refund.

Under the proposed settlements, Wedd, Thompson, Eromo, and Pajaczkowski, as well as their related companies are prohibited from placing any charges on any telephone bills, from making any misrepresentations about any product or service, and from engaging in any unfair billing practices. In addition, they are prohibited from using or benefitting in any way from the customer data they collected through this scheme and are required to destroy any remaining customer data.

Many consumers who were impacted by the defendants’ practices received refunds through settlements the FTC and the Consumer Financial Protection Bureau reached with the four major mobile carriers, AT&T, T-Mobile, Sprint, and Verizon, related to mobile cramming charges that were placed on customers’ bills without their authorization. The mobile carriers discontinued such third-party billing practices following the actions of the FTC and other state and federal agencies to crack down on cramming.

The Commission vote approving the stipulated final orders with Wedd, Thompson, Eromo, and Pajaczkowski, as well as their affiliated companies, was 3-0. The FTC filed the proposed orders in the U.S. District Court for the Central District of California.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

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