Web scams hitting callers

Lawsuit: Plaintiffs say AT&T is passing on international charges for fraudulent calls through online flim-flams.

May 28, 2001|By Michael James | Michael James,SUN STAFF

When Kris Stoltenberg opened her AT&T phone bill on New Year's Day, she was shocked to find charges for seven calls totaling $272 from her home computer to the tiny South Pacific island of Vanuatu. All were to 1-900-numbers for pornography sites and psychic hot lines.

Stoltenberg, who lives in Grand Island, Neb., at first accused her husband. He in turn accused her. Soon, they began to suspect their children.

Then it occurred to the Stoltenbergs: Their computer wasn't in the house when the supposed calls were made. It was in the shop being repaired.

"I called AT&T and said, `Look - I didn't even have a computer when these calls were made, and I can prove it,' " Kris Stoltenberg said. "They finally took the charges off. But I'll tell you, it was a bad couple of days full of frustration and mental anguish."

Thousands of others around the country have fallen victim to similar digital con artists, and many of them have joined a lawsuit against AT&T, claiming the telecommunications giant is a willing participant in schemes that have brought it millions of dollars from redirected or phony calls.

AT&T denies wrongdoing, but the company is now removing the disputed charges from the bills of customers who are willing to complain long enough and loud enough.

The phony billing schemes are orchestrated from out-of-the-way island countries, including Vanuatu, Niue and Madagascar. Sometimes, an unwitting Internet user's computer modem is redirected to 900-numbers charging up to $7 a minute. In other cases, the victim is charged for a call that was never made.

The Federal Trade Commission, which has received hundreds of complaints about the schemes, terms the practice "modem hijacking."

"It's been a growing problem," says Lawrence M. Hodapp, an FTC attorney. "And it's an area that is going to continue to cause problems."

The chief weapons in fraud artists' arsenals are "dialer programs," often contained in small files users unknowingly download while visiting Web sites or reading their e-mail. More often than not, such programs are found on sex sites or Web pages offering free services - usually enticing the user with the words, "Just click to enter."

The program surreptitiously downloads, takes control of the victim's modem to break the Internet connection and silently re-connects to the Web through an international phone number. Computer users are usually unaware that calls were made until they receive whopping phone bills, listing the charges as coming from an obscure and faraway country. The telephone number listed for the billing party is usually phony or out of service.

"In some cases, I think people are just being charged after someone gets their phone number from a directory," says Fred Trapnell, president of AMT Telecom Group, a Michigan consulting firm spearheading a lawsuit filed against AT&T last month in U.S. District Court in New York.

"You can go to Best Buy and, for 19 bucks, buy a CD-Rom full of residential phone numbers. Someone is getting the numbers and writing a simple billing program."

But how much of the billing is fraudulent and how much is legitimate is a matter of considerable disagreement between consumers and AT&T. Three customers claim in legal documents that AT&T has "reaped more than $1 billion by collecting for pay-per-call services that were improperly classified."

"When these pay-per-call services are billed by AT&T ... the telephone subscribers are deceived into believing that they must pay the charges, and that they have no recourse," the lawsuit alleges. "AT&T fosters this deception by telling telephone subscribers that they must pay the bill or their telephone service will be cut off."

Officials at AT&T aren't giving credence to stories of rampant fraud by shadowy offshore con men and are standing by their billing practices. The company put an alert on its Web site over a year ago, warning consumers that visiting some adult entertainment Web sites may trigger international long-distance charges.

"Calls from consumers indicate that children are accessing these sites - because the sites don't require the use of a credit card," the alert noted.

Mark Siegel, an AT&T spokesman, said claims of billing fraud are investigated on a case-by-case basis. He said many of the problems occur because "people aren't reading the fine print" when they visit Web sites that offer lengthy disclaimers about charges for accessing its content.

"The lesson is you really have to be very careful about where you go on the Internet," Siegel said. "People are responsible for their telephone calls. ... They need to be very mindful when they are on the Net."

Among those who apparently weren't mindful are the Des Moines, Iowa, police, who received a sizeable phone bill linked to a Vanuatu porn site. Des Moines undercover investigators occasionally surf the Internet in an effort to crack down on pedophiles, and a detective clicked through one of the porn sites that charges exhorbitant fees, the Iowa attorney general's office said.

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