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Web Hosting Service Billed Consumers Thousands in Bogus Bandwidth
Charges
A
United States District Court has halted the operation of a Web
site hosting service that advertised services for flat fees
ranging from $10 to $15 dollars but then crammed unauthorized
charges of up to $20,000 onto consumers' credit cards for
supposed "excess bandwidth" use. At the Federal Trade
Commission's request, the court has halted the illegal billing,
frozen the defendants assets and appointed a receiver to oversee
the business, pending trial.
The
FTC suit names Bryan Kruchten, doing business as Page Creators
and Trinity Host, L.L.C. The defendants are based in suburban
Minneapolis, Minnesota.
According
to the FTC, the defendants used the Internet to advertise
"discount" Web hosting services - such as domain name
registry, Web page design and technical support - for monthly
service fees of $10 to $15. Consumers provided credit card
numbers so that they could be billed. Without their knowledge or
approval, the defendants allegedly later charged many of their
customers huge additional fees, in amounts sometimes as large as
$20,000, for such things as "excess bandwidth" use.
The FTC alleged that the additional charges were fraudulent.
Computer server logs showed that the customers did not actually
use anywhere near the amount of bandwidth for which they were
billed. In fact, in some cases, the defendants billed individual
customers for allegedly using more bandwidth than all their
customers combined. In fact, the FTC told the court, the
defendants charged "excess bandwidth" fees to
consumers who had not yet constructed their Web sites, to
consumers who had already canceled their services and to
consumers who had signed up to receive "unlimited"
bandwidth.
When
consumers, financial institutions and even the Minnesota
Attorney General's office challenged the validity of the
charges, Kruchten produced reports generated by two types of
computer software to prove that the charges were legitimate. But
the people who wrote the sofware that supposedly produced the
reports state that the defendant doctored the reports and the
"proof" was phony, the FTC told the court.
The
agency alleges that Kruchten and his companies violated federal
law when they misrepresented that consumers owed money for
excess bandwidth and when they placed unauthorized charges on
consumers' credit cards.
The
agency will seek to permanently bar the illegal actions and has
asked the court to order redress for consumers who were
illegally charged.
The
Commission vote to file the complaint was 5-0.
The
complaint was filed with the invaluable assistance of the
Minnesota Attorney General's office and the Civil Division of
the U.S. Attorney's Office in the District of Minnesota. The
case was filed March 26, under seal. The seal was lifted March
30.
NOTE:
The
Commission authorizes the filing of a complaint when it has
"reason to believe" that the law has been or is being
violated, and it appears to the Commission that a proceeding is
in the public interest. The complaint is not a finding or
ruling that the defendant actually has violated the law. The
case will be decided by the court.
Copies
of the complaint are available from the FTC's web site at http://www.ftc.gov
and also from the FTC's Consumer Response Center, Room 130, 600
Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works
for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information
to help consumers spot, stop and avoid them. To
file a complaint, or to get free information on any of 150
consumer topics, call toll-free, 1-877-FTC-HELP
(1-877-382-4357). The FTC enters Internet, telemarketing and
other fraud-related complaints into Consumer Sentinel, a secure,
online database available to hundreds of civil and criminal law
enforcement agencies worldwide.
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