Prague, 6 November 1997 (RFE/RL) -- The U.S. Federal Trade Commission (FTC) announced Tuesday that thousands of people who ran up expensive phone bills to Moldova while believing they were viewing free adult pictures on the Internet will receive $2.7 billion in refunds.
The refunds are part of a settlement the FTC has reached with several firms and individuals charged in the phone scam which worked by inviting Internet browsers to three different sites to download "free" software that would permit them to view a variety of pornographic photographs.
But what the software really did was disconnect the browser's phone link to the original Internet provider, mute the speaker on the dialing device so the user would not know the connection had been broken, and then re-dial a new number carrying the country code of Moldova -- all while providing the adult pictures to distract the users.
Once the users were connected to the Moldovan number, the charges began incurring without the user's knowledge. Even worse, users remained connected to the Moldovan number after they left the web site to surf another location, closed down their browser, or used a different application on their computer. In order to break the connection, the computer had to be physically shut off.
The phone scam first came to light last December when the American telephone company, AT&T, alerted federal authorities to the unusual spike in the amount of calls to Moldova, all to the same number.
The FTC said complaints came in soon afterwards from customers whose telephone bills were running as high as $3,000.
By February, U.S. federal investigators had enough evidence to shut down the three Internet sites and charge the owners and proprietors of the web sites with unfair and deceptive trade practices.
Tuesday, the FTC announced two settlements had been reached.
The first settlement involves Audiotex Connection, Inc., Promo Line, Inc., and Internet Girls, Inc. -- all of New York -- and two individuals associated with the firms.
The second settlement involves Beylen Telecom Ltd. of the Cayman Islands, NiteLite Media, Inc. of New York and one NiteLite Media employee.
Paul Luehr, Chairman of the FTC's Internet Coordinating Committee, told RFE/RL that the settlements require the defendants to redress consumer victims by paying funds to AT&T and MCI phone companies who in turn will issue credits to their customers.
The defendants are also required to pay the FTC an undisclosed amount of money. The FTC will then refund customers of other smaller long-distance carriers who were billed as part of the scam.
Luehr says that the Moldovan phone company was very cooperative during the investigation and agreed to waive any claims on money due to them as a result of the fraudulent activity.