Verizon offers refunds for fraudulent SMS messages

The operator has also filed a lawsuit against a group of people it claims set up more than 100 fraudulent campaigns

By , IDG News Service |  Mobile & Wireless, SMS, Verizon

Verizon on Wednesday said that it filed a lawsuit this week against a group of people and related companies that it alleges duped people into signing up and getting charged for premium short message services.

Filed in the U.S. District Court for the District of Arizona, the suit names Jason Hope, Wayne DeStefano, three of their employees and their related companies, including Cylon LLC and Jawa. Verizon also said that the Texas attorney general filed a similar suit against the same defendants.

Because some of the short message programs the defendants set up complied with Verizon's rules, Verizon says it is unable to identify which customers didn't know about the charges for the services. As a result it has set up a Web page where customers can file a claim form and get reimbursed if they were wrongly charged for the services.

Verizon describes a plan enacted by the defendants over more than a year to evade detection by Verizon for text message campaigns that hid the cost of the services from consumers. The operator first approached Cylon in 2009 when it discovered that Cylon wasn't complying with Verizon's terms for offering premium text services. Verizon suspended Cylon as a result, but Hope and DeStefano came up with ways around the suspension, the operator says.

For instance, the defendants began setting up new companies each time they leased a short code and activated a campaign so that the operator didn't know the campaign was affiliated with Hope and DeStefano, Verizon alleges.

Short codes are short phone numbers the users can text in order to sign up for premium services. The CTIA mobile trade group administers short codes so that they'll work across operators. The campaigns promised to send text messages to subscribers regarding news, recipes and movie times, among other topics.

The defendants also instructed employees to lease short codes under their own names and used addresses at UPS stores in multiple states. "By using these multiple addresses, defendants made it more difficult to connect the [single-purpose-vehicle LLCs] and the short code campaigns to each other and to a single enterprise," Verizon claims in the suit.

The defendants then devised campaigns that complied with Verizon's rules and ran those campaigns as well as others that used the same short codes but didn't comply with Verizon's rules.

One example of an unauthorized campaign was an ad that appeared when users searched in Yahoo for "food network recipe." If Web users clicked on that advertisement, they were directed to what appears to be a cooking website. A pop-up ad on the site invites visitors to enter their mobile numbers in order to get the recipes.

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