The FTC and the New York Attorney General have taken court action in New York to halt the illegal billing practices and have asked the court to freeze the assets of the responsible companies pending trial, to provide for consumer redress.
New York City-based Crescent Publishing Group, its owner, Bruce Chew, and David Bernstein, are named in the federal court complaint detailing the charges, along with 64 affiliated corporations that operate the adult entertainment web sites.
According to the complaint, the "Free Tour Web Sites" generated income of $188 million between 1997 and October 1999 - $141 million of which was generated in the first 10 months of 1999 alone.
The web sites claim that consumers' credit card numbers are required solely to prove that the consumers are of legal age to view the adult material, and that the credit cards will not be billed. But thousands of consumers were charged recurring monthly membership fees ranging from $20 to $90, the complaint says.
The FTC said this week that: “Consumers who tried to dispute the charges were met with a variety of barriers designed by the defendants to thwart their efforts.” According to the complaint, the defendants use billing names different than the names of the Web sites, so consumers often had no idea who was billing them or why. Moreover, consumers often had difficulty the contacting anyone to get refunds from information provided to them on their billing statement.
The FTC and New York Attorney General According claim that the defendants routinely change corporate billing names and merchant banks in an attempt to avoid the fraud detection systems of credit card organisations such as Visa.