by Wayne M. Krakau - Chicago Computer Guide, December, 2002
Internet Slamming is my term for a scam in which people or businesses are charged a fraudulent fee on their phone bill for some combination dial-up Internet access, e-mail, Web site hosing, and online phonebook-style listings on a vendor's Web site.

This new scam is closely related to the better-known fraud of Slamming, the switching of long distance services either completely without permission or through the use of some type of trickery or deceit. It is one member of a group of scams the telephone industry calls Cramming that involves sneaking charges into the miscellaneous section of a phone bill.

I was recently Internet Scammed. The first sign was an unusually high total on my business phone bill. It included a charge of $33.10 from ILD Teleservices, Inc. that I traced it back to the miscellaneous section of the bill where I found a $29.95 charge from National Online Services plus various taxes.

SBC reps told me that they are not allowed to question this type of bill (not true). They also stated that any action they could take on a customer's behalf would be considered anti-competitive behavior by legislators and regulators (also not true). All of this was in spite of the fact that they accepted my assertion that the charge was fraudulent. They referred me to ILD.

ILD claimed that they are only an intermediate billing company and have no real association with National Online Services. They represented themselves an innocent third party and referred me to National.

I got enough information from National to figure out how they got my name. A couple of months earlier, I received a call offering a company listing on their Web site (which I am purposely NOT going to mention - let them get their own publicity) bundled with Web site hosting and dial-up Internet access. I explained to the salesman that my company actually sold telecommunications and Web hosting services so that the listing was the only thing that applied to me. He offered me a free 30-day trial for only the listing. I talked to three different representatives of National and they all assured me that the offer was self-expiring and that I would only have to take action if I wanted to keep - and pay for - the listing. Since already I have a listing at a (legitimate) competitor's site, I didn't suspect anything. When I later inspected National's site and found it to be technically deficient and that my company listing was inaccurate, I declined to sign up for their services.

After a lot of arguing, I managed to get National to cancel my contract, but they wouldn't do it retroactively, so I as warned by both ILD and SBC that I would be out another two months of bogus charges.

I started searching the Web for info on this scam and was absolutely overwhelmed by the number of complaints against ILD. I tracked down a law firm, Horwitz & Associates (coincidentally in Chicago) that was gathering information on ILD for a potential class action suit and got additional clues as to the nature of this scam.

A company sets itself up as a billing agent for many small service companies. It then accepts all bills without question. The lawyers try to prove that, despite protestations to the contrary, the billing company is actually in collusion with if not the outright owner of the service companies. If they can prove it (which is no easy task), then they can file a civil RICO (Racketeer-Influenced and Corrupt Organization) suit. Since the law has fallen so far behind the technology, the lawyers are having difficulty finding consumer law violations, especially in third party relationships (involving customer, billing company, and service company).

As further evidence of intent, many of the people who are being hit with Internet access fees don't even have computers, including some who are told they signed up via the Web! A good number of victims are elderly or disabled. There are many cases of people who can't even contact the vendors or the billing companies to try to cancel. Their bills just keep coming, month after month.

Amazingly, my next SBC bill not only lacked additional bogus charges, it listed a credit for the previous false charge! I found out that, because phone companies give a bit more flexibility and autonomy to their business line (as opposed to home line) representatives, a few business owners who complained enough (like me) received credits. However, as in the case of having a credit card company assist you in protesting a bill, the underlying vendor can protest right back and reinstate the dropped charge. This means that I still could get stung additional charges (something like the nearly unkillable murderer in slasher films).

What can you do to avoid Internet Slamming? Just as in protecting yourself from viruses, many of the suggestions are somewhat obvious, but only if you are warned of your vulnerability. Here are my suggestions:

  • Consider blocking the miscellaneous section of your phone bill. It is similar to blocking the long distance section. Your bill can't be changed except by a call from you on your phone. There are some small disadvantages to this technique, so check with your phone company first.
  • Read your phone bill carefully every month and immediately report anything suspicious.
  • Do not engage telemarketers in any conversation. If they have a recording of you saying "Yes," or a synonym thereof, they can splice in a question in front asking if you want to accept their services, and then use this as "evidence" to trick your phone company into believing in the validity of their charges. Typically they ask you to confirm some innocuous information, such as your address, to get your response, without necessarily warning you that you are being recorded. Unless you are willing to hire attorneys and forensic audio experts, you won't be able to counter their manufactured evidence. Warn anyone with access to your phones, including employees and family members, about this.
  • Don't enter any contests unless you are willing to hunt down and read all of the fine print. Contests are often fronts to gather information for Internet Slamming and other scams. This includes contests via e-mail, faxes, Web pages (especially pop-up ads), and even at shopping malls.
  • If someone contacts about winning a contest, assume they are lying scum (see above) and cautiously move forward from there (assuming, of course, you don't see your own front door on TV). If it is a legitimate contest, they won't mind restricting all further contact to your attorney.
  • If you become a victim, use the Internet to gather information to use in fighting back. Whois is a particularly useful tool. (Search for "whois" using your favorite search engine.) When a company refuses to give out their info (as National Online Services did with me), whois will find the Web site owning company and its main contact, phone number and street address. You will need this if you want to try sending a registered letter of cancellation or even a subpoena. General searches for a company might also yield additional consumer or legal information.

The irony in this is that ILD is a founding member of CERB, the Coalition to Ensure Responsible Billing! This association of third-party billing companies has a list of rules designed to avoid fraudulent charges, which, based on my Web searches, are all violated by ILD. The real nature of CERB is revealed when you read its filings with various government bodies politicking for less "restricting" rules for its own industry.

In the end, the best advice I can give is "Let the non-buyer beware."

©2002, Wayne M. Krakau