February 19, 1997 6:15 PM ET
FTC shuts down Web billing scam
By _Maria Seminerio_
After receiving hundreds of complaints about an elaborate billing scam run by
adult Web sites -- including some from furious parents whose children racked
up thousands of dollars in phone bills downloading pornographic pictures on
the sly -- the Federal Trade Commission today ordered the sites shut down.
Users who had tried to access several "adult entertainment" sites run by two
New York companies were told to first download a viewer program known as
"david.exe." Unbeknownst to the users, the program disconnected them from
their local ISP (Internet service provider) and rerouted calls to an ISP in
the former Soviet republic of Moldova, said Jodie Bernstein, director of the
FTC Bureau of Consumer Protection, at a press conference today.
"This is essentially a stealth scam. Consumers are kept in the dark because
the software program also turns off their modem speakers so they cannot hear
either the disconnect or the dialing of the international number," said
Bernstein, who called it "one of the most insidious scams the FTC has ever
seen."
Even when users left the sites, the Moldovan calls continued as long as they
stayed online, to the tune of more than $2 per minute. The agency believes
that thousands of Web surfers lost hundreds of thousands of dollars in the
scam, although an exact number has not been determined, Bernstein said.
Sex sites www.sexygirls.com, www.1adult.com and www.beavisbutthead.com were
closed for business today as U.S. and Canadian authorities considered further
legal action against defendants Audiotex Connection Inc., of Rockville Center,
N.Y., and its president, Anna Grella; Promo Line Inc., of Dix Hills, N.Y.,
and its president, William Gannon; and an employee of the firms, David Zeng,
according to FTC officials.
Defendants' assets were frozen pending the outcome of a hearing on the case.
The FTC alleges that the defendants and the unnamed Moldovan ISP shared the
proceeds of the scam.
Ironically, some of the same technology that enabled the defendants to carry
out the scam helped the FTC to crack it, Bernstein said.
"Because of the Internet and the high-speed information and search services
it offers, we were able to track down and file charges against these
defendants very quickly [and freeze their assets]," she said.