Giant Copyright Troll, Malibu Media, Sued By Investors

from the sketchy-companies-gonna-sketch dept

We've written a bunch of stories about Malibu Media, a copyright trolling operation. The company's founders, Colette Pelissier and Brigham Feld, like to claim that they're purveyors of "classy" pornography under the X-Art brand, but their business seems almost entirely focused on trolling practices. And its embrace of copyright trolling has resulted in some significant problems for the company over the years, as judges have very much caught on to the company's long history of sketchy practices.

Apparently those sketchy practices may go beyond its copyright trolling, as two of Malibu Media's investors are now suing the company, claiming that they lent the company money when it was short on cash, in exchange for 50% of its "net recovery" from the trolling operations, and a "50% interest" in the copyright of the porn X-Art created. So, how'd that work out?

In 2018 alone, continues the complaint, Malibu Media's litigation stampede generated over $2.8 million.

But the plaintiffs say they haven't seen any of the money and can't get an accounting. They further allege, "On information and belief, Defendants are shuttling assets and interests out of Malibu Media and into more obscure entities, including the shell entity holding companies: Click Here, Colette Holdings, Colette Properties, Colette Production, Inc., Colette Productions LLC, and/or Zo Digital."

Ah, shell companies and moving cash around. It appears that Malibu Media took all the wrong lessons from Prenda Law. Perhaps they'll find themselves in the same place in the end.

Filed Under: copyright trolls, investment, scams
Companies: malibu media, x-art

Comcast Gets $9 Million Fine For Tricking Customers With 'Worthless' Protection Plans

from the relative-wrist-slap dept

In August of 2016, Washington State sued Comcast, claiming the cable giant had long been offering consumers a "service protection plan" that was barely worth the paper it was printed on. According to the Washington State AG, the plan promised consumers "comprehensive" protection for all repairs, service calls, maintenance of inside wiring and customer-owned equipment, and "on-site education about Comcast products" for $5 more per month.

But the AG investigation found Comcast repeatedly misled consumers about the scope of the plan, and routinely charging consumers for repairs and service that should have been included under the plan's umbrella. Comcast misled more than 500,000 Washington state consumers in this fashion, and the AG's original lawsuit (pdf) noted that Comcast had even created a clear "service code" for techs to use when they wanted to incur charges for service that should have been covered under the plan.

Fast forward to last week, when a ruling in King County, Washington court (pdf) found that Comcast also technically violated the law more than 445,000 times when it charged tens of thousands of Washingtonians for this worthless Service Protection Plan -- without first obtaining their consent. From the full AG announcement:

"The court found that Comcast added the SPP to the accounts of 30,946 Washingtonians without their knowledge, and did not tell an additional 18,660 Washingtonians the true cost of the plan. The court ordered Comcast to refund affected consumers, and pay 12 percent interest on the restitution. The amount of restitution is unknown at this time, but is expected to be significant. The court ordered Comcast to issue the refunds within 60 days and report to the state on the specific details and amounts."

Comcast's little gambit was certainly profitable: the court ruling declared that Comcast netted more than $73 million in errant fees over a five-year period by signing up customers for the worthless service plan they never asked for. Court recordings even documented how Comcast would sign up customers for the plan even when they clearly rejected Comcast representatives' pitches.

Comcast, whose historically terrible customer service is already the stuff of legend, will be required to refund nearly 50,000 customers and pay a $9.1 million fine to make up for years of misleading behavior. And while that sets a Washington State record, that still likely falls well short of the total net profit Comcast made from scamming Washington State consumers. And that's of course just Washington State; if Comcast was doing this in Washington, it was likely doing it in other states, yet no other states have pursued investigations into the behavior.

In the wake of the federal government abdicating most of its authority to protect consumers from giant telecom monopolies that face little organic competition, states have tried to step up their game when it comes to consumer protection. But it hasn't been easy; with the Ajit Pai FCC's help, the telecom lobby has tried its damnedest to ban states from being able to hold giant ISPs responsible. That gambit hasn't been working out all that well -- at least in states that can be bothered to actually still care about consumer protection.

Filed Under: fcc, scams, service protection plan, washington, wireless protection plan
Companies: comcast

Hollywood Accounting Rears Its Ugly Head Again: Fox's 'False Testimony' And 'Aversion For The Truth' Leads To $179M Fine

from the this-is-endemic dept

For years, we've talked about bullshit Hollywood Accounting, in which the big studios make boatloads of money on films and TV shows while declaring publicly that those works never made a dime in profit. As we've discussed, in its simplest terms, the studios set up a separate "corporation" for the film or TV project, which then it charges massive fees -- and the sole purpose of those fees seem to be to send all the money to the studio, while claiming that the film or TV project is "losing money" and thus they don't have to pay out any profits to the actual creative people.

Remember this the next time the MPAA goes around talking about how its mission is to "protect creators."

Over at the Hollywood Reporter, Eriq Gardner has the latest bombshell example of Hollywood Accounting, which has resulted in Fox being told by an arbitrator to pay $179 million for repeated and obviously intentional dishonesty in reporting on the profits of the TV show Bones:

In coming to a decision, Lichtman describes how some of Fox’s top executives, including 21st Century Fox president Peter Rice and Fox TV CEO Dana Walden (soon to be top executives at Disney) plus Fox TV chairman Gary Newman (leaving Fox) “appear to have given false testimony in an attempt to conceal their wrongful acts.” According to the ruling, Fox has taken a “cavalier attitude toward its wrongdoing" and exhibits a "company-wide culture and an accepted climate that enveloped an aversion for the truth."

What is clear in reading through the details is that this scam works because everyone at the studio is on it. This is not some scam that came out of nowhere. This is the standard operating procedure used by the big Hollywood studios to screw over the people who were actually behind the creative aspects of the show, who were promised a cut of the profits that never arrive.

In this version of the scam, Fox also roped in Hulu, the online streaming platform it owns 30% of. In this case, it used Hulu to suppress the money coming in for the show, so it could show lower income for the sake of hiding profits.

In arbitration, Fox attempted to justify the low license fees that Fox Broadcasting, Hulu and Fox’s foreign affiliates were paying its studio division for rights to air the series.

“Bones was a middling show with middling ratings,” wrote Fox’s lawyers in an opening brief, adding that a higher fee from the $2 million per episode paid would have led to the show’s cancellation.

As Lichtman discovered in the course of the arbitration, though, Fox’s studio executives were never really interested in finding out the series’ fair market value.

“We were not allowed to get that information from the network,” testified Walden, who at the time ran the Fox studio but not Fox Broadcasting, when asked about the possibility of finding out what the network paid for similar shows in their middle seasons.

Given that the profit participants had self-dealing protection in their contracts that “deals must be as good as marketplace deals,” the arbitrator found Walden's lack of knowledge to be “either shocking if true, or disingenuous if false,” adding, “Interestingly, both Ms. Walden and Mr. Newman testified that they engaged in tough negotiations and fought for the [Profit] Participants. However, the evidence belies these assertions. How could they fight if they were not properly armed with the requisite information? What negotiations were there if the information mandated by the contract was not examined, called for or even investigated?”

It also comes out that Fox threatened to cancel the show unless those who contractually were supposed to get a cut of the profits signed a special agreement promising not to challenge the self-dealing licensing fees that Fox negotiated. As the story notes, other Fox actions at the time -- including signing on the showrunner of Bones at an expensive new contract to continue the show -- made it clear that this was a total bluff by Fox just to get the profit participants forced into a position where they couldn't challenge the sham licensing deals. The arbitrator calls this out directly:

The answer is self-evident: The show was not going to be canceled and there never was an intent to do so. The intent was to continue with the show and at the same time bar any chance for a lawsuit to be brought.

Also, there appears to be significant evidence to suggest that Fox tried to buy off a former executive who had organized a plan to avoid paying out profit sharing, by offering him insanely lucrative "deal" right before he was set to testify about the Bones situation:

And all of this activity was coming as Fox Entertainment’s then-chairman Peter Liguori sent a memo in 2009 to Fox Broadcasting’s then-chairman Peter Chernin outlining a “legal action plan” to avoid paying license fees covering the full cost of show production.

Shortly after sending this plan, Liguori would leave Fox and would later become CEO of Tribune Media, stepping down in 2017. The ruling reveals something new and startling: After his stint at Tribune and in the heat of this arbitration, Liguori signed a "First Look Agreement" with FX, which provided him contingent compensation far exceeding that of top executive producers in Hollywood. According to IMDb, Liguori's sole credit is a 1996 film, Big Night. Nevertheless, and with absolutely no public fanfare whatsoever that he now has a deal with FX, he is apparently getting profit points surpassing the industry's top showrunners.

"Why and how did this come about?" asks the arbitrator. "FX apparently issued no press release reporting its deal with Liguori. When viewed in light of these circumstances, the Liguori 'legal action plan' is far from innocuous. If one juxtaposes the First Look Agreement with Mr. Liguori's testimony at the hearing (where he downplays the significance of the plan itself), it seems coincidental that Mr. Liguori disappears for nine years (from Fox's radar) and then magically reappears with a First Look Agreement seven months before he is to testify in these proceedings with a deal in hand that most producers in Hollywood have strived to have their entire entertainment career."

There is a lot more in Gardner's article, which makes it incredibly clear that this was all standard operating procedure at Fox. Basically, the company appears to do anything possible to avoid an official "profit" on its works, to avoid paying out to the creatives involved in the show who signed on to participate in any profit. From this story alone, the company clearly had a detailed plan to avoid such payouts, and then bolstered it with sham deals, bogus threats, forced contracts, multiple levels of lying, and even potentially buying off a key witness.

Yeah, and Hollywood wants to paint the internet companies as bad?

Perhaps it shouldn't be shocking that the very same people who rush to the press and politicians to whine about some kids getting a free copy of their tv show or movie online would be in the midst of a massive multi-million dollar scam to defraud actual creators -- but it does seem like maybe (just maybe) we shouldn't be so quick to take those folks at their word when they complain about the internet and "piracy."

Filed Under: bones, fees, hollywood, hollywood accounting, lies, profits, scams, self-dealing
Companies: disney, fox, hulu

The Latest In Trademark Abuse Is Registering Marks To Obtain Ownership Of Instagram Accounts

from the fake-it-until-you-make-it dept

When one thinks about an Instagram account being taken over by a malicious actor, one usually imagines some kind of hack or social engineering resulting in the theft of an account password. The refrain "It wasn't me, I was hacked!" that you hear from some whose social media profiles are the subject of social scrutiny relies on this impression.

But there are many different ways to hack a cat. The latest in Instagram account takeovers appears to be done through the avenue of trademark law, interestingly enough. Motherboard has a fascinating write-up detailing an entire ecosystem of malicious actors who are abusing trademarks to convince Instagram to hand over access to accounts.

Scammers do this by creating fake companies and trademarks to convince Instagram they should be the legitimate owner of a username in question, with fraudsters using “trademarking,” as the technique is known, to get ahold of sought-after, valuable handles, according to posts and evidence of the process in action obtained by Motherboard. The scammers can then keep these handles as digital mementos, brag about their acquisition, or resell them at a profit in a thriving underground community.

Instagram allows users to report handles that a person or company believes infringes on their trademark. For example (this is a hypothetical), if the creator of the @disney handle on Instagram was not actually associated with Disney, the company may want to appeal to obtain ownership of the username. If Instagram agrees, it may then hand over control of the account to the original trademark holder. Instagram told Motherboard it has a team that works on trademark and intellectual property issues, and as part of that process, the team reviews whether a complaint may be fraudulent.

Judging by the sheer volume of bad actors that are "trademarking" in order to fool Instagram, it seems the company's team is at best not fully up to the task of weeding out the fraudsters. And, to be clear, this isn't so much a problem with trademark law as it is a problem with Instagram putting so much weight on supposed trademark ownership that it acts as the linchpin for account takeovers. That said, while time consuming, the ease with which bad actors can spin up trademarks makes this problem more wide-spread.

Several users on the underground forum OGUsers, which focuses on the theft and sale of high value Instagram accounts, appear to engage in the practice.

“I’m looking to get a trademark or fake trademark that will make it look like I own a word so I can get an insta username,” one user posted on the forum last year.

“Need someone from the uk to file a trademark from me,” another OGUsers member wrote last year. “Willing to pay fees + 20% in bitcoin.”

A previous Motherboard investigation found members of OGUsers often sell handles for thousands or sometimes tens of thousands of dollars worth of cryptocurrency, although most of those account hijackings likely rely on SIM-jacking, where a hacker takes control of a victim’s phone number.

Again, the ultimate culprit here is Instagram using a trademark, or supposed trademark, as the chief justification for handing over an Instagram account. There obviously needs to be more of a check in place to ensure that this exact tactic is not allowed to be abused. It's also something of a symptom of ownership culture that an individual is allowed to point to a trademark, then to an Instagram account, and claim ownership.

It seems the only barrier to abusing trademark law for malicious actions is one of creativity.

Filed Under: influencers, scams, takeovers, trademark
Companies: instagram

34 State AGs Demand The FCC Do More To End Annoying Robocalls

from the sorry-I-was-eating-dinner dept

Despite endless government initiatives and countless promises from the telecom sector, our national robocall hell continues. Robocalls from telemarketers continue to be the subject the FCC receives the most complaints about, and recent data from the Robocall Index indicates that the problem is only getting worse. Consumers continue to be hammered by mortgage interest rate scams, credit card scams, student loan scams, business loan scams, and IRS scams. In September, the group found that 4.4 billion robocalls were placed to consumers at a rate of 147 million per day. The trend is not particularly subtle:

The trend continues skyward despite the fact that the FCC passed new rules in 2015 expanding the ability of telecommunication companies to block robocalls and spam messages at the request of customers. And in 2016, the agency created a "robocalling strike force" tasked with crafting solutions for the problem. Additional rules dropped in 2017 taking aim at robocall spoofing.

So why is this still a problem? For one thing, cheap, internet-routed calling and spoofing options have outpaced both legal and technical solutions, leaving regulators and lawmakers in a perpetual race to catch up from behind. Flimsy security standards embedded in most caller ID systems also make spoofing phone numbers relatively trivial. Enforcement is also inconsistent (in part because smaller robocallers are often much easier to defeat in court than major companies), and years of apathy, blame shifting, and tap dancing by major carriers like AT&T certainly didn't help.

To that end, 34 State attorneys general signed a formal request this week urging the FCC to do more to thwart the problem. Comments made to the FCC make it clear that the FCC's 2017 spoofing rules didn't go far enough, so the AGs are requesting that the FCC create additional, more tailored rules to tackle things like "neighbor spoofing":

"One specific method which has evolved recently is a form of illegal spoofing called ‘neighbor spoofing.’ A neighbor-spoofed call will commonly appear on a consumer’s caller ID with the same area code and local exchange as the consumer to increase the likelihood he/she will answer the call. In addition, consumers have recently reported receiving calls where their own phone numbers appeared on their caller ID. A consumer who answered one such call reported the caller attempted to trick her by saying he was with the phone company and required personal information to verify the account, claiming it had been hacked. Scams like this cannot be tolerated."

The AGs also encouraged the FCC to bring some additional pressure on carriers to speed up the deployment of STIR (Secure Telephone Identity Revisited) and SHAKEN (Secure Handling of Asserted information using toKENs), protocol frameworks that should make it notably easier to authenticate legitimate calls and identify illegally spoofed calls. Hopefully the FCC can take a brief break from ignoring the public and kissing up to widely despised telecom monopolies to consider the request.

Filed Under: fcc, robocalls, scams, state attorneys general

Cops Slowly Wise Up To The SIM Hijacking Trend Carriers Don't Want To Seriously Address

from the you've-got-a-bit-of-a-problem-here dept

It only took a few years, but law enforcement finally appears to be getting wise to the phenomenon of SIM hijacking, which lets a hacker hijack your phone number, then take control of your personal accounts. As we've been noting, the practice has heated up over the last few years, with countless wireless customers saying their entire identities were stolen after thieves ported their phone number to another carrier, then took over their private data. Sometimes this involves selling valuable Instagram account names for bitcoin; other times it involves clearing out the target's banking or cryptocurrency accounts.

This week, news reports indicated that California authorities finally brought the hammer down on one 20-year-old hacker, who had covertly ported more than 40 wireless user accounts, in the process stealing nearly $5 million in bitcoin:

"Investigators accuse Ortiz of being a prolific SIM hijacker who mainly targeted victims to steal their cryptocurrency but also to take over their social media accounts with the goal of selling them for Bitcoin. According to the investigators, as well as people in the SIM swapping community, Ortiz was a member of OGUSERS, a website where members trade valuable Instagram or Twitter accounts."

In one of at least three attacks that happened during Consensus, Ortiz allegedly stole more than $1.5 million from a cryptocurrency entrepreneur, including nearly $1 million that he had crowdfunded in an ICO."

SIM hijacking has been making headlines for the better part of the last year, so it's nice to see law enforcement finally paying attention. What still isn't getting enough attention is the fact that these hackers are increasingly getting help from employees inside of major wireless carriers like T-Mobile. As security researcher Brian Krebs has been noting, wireless carrier employees can often be duped into conducting a SIM swap, allowing the hackers to steal another users' identity. Often hackers will go store to store until they've found an employee that's gullible enough or open to financial compensation to do it:

"A SIM swap is a legitimate process by which a customer can request that a new SIM card (the tiny, removable chip in a mobile device that allows it to connect to the provider’s network) be added to the account. Customers can request a SIM swap when their existing SIM card has been damaged, or when they are switching to a different phone that requires a SIM card of another size.

However, thieves and other ne’er-do-wells can abuse this process by posing as a targeted mobile customer or technician and tricking employees at the mobile provider into swapping in a new SIM card for that customer on a device that they control. If successful, the SIM swap accomplishes more or less the same result as a number port out (at least in the short term) — effectively giving the attackers access to any text messages or phone calls that are sent to the target’s mobile account."

And while some store employees have been duped, others are cooperating willingly with the hackers.

Reports over at Motherboard have highlighted how some employees are taking cash payments in exchange for private consumer data routinely only made available to carrier insiders. And despite this getting ample press (over the last month or two specifically), journalist Lorenzo Franceschi-Bicchierai has been pointing out that T-Mobile doesn't appear to want to much talk about it. For context, this is a screenshot taken of T-Mobile's internal systems, either by an employee being paid to participate in the SIM hijacking, or by a hacker that still has access to T-Mobile's private internal systems:

There are systems in place that are supposed to prevent you from having your number ported out without your permission. For example, T-Mobile users can call 611 from their cellphone (or 1-800-937-8997) and tell a support staffer that they want to create a “port validation” passcode to prevent unauthorized number ports. But despite some ongoing lawsuits over this internal security and privacy problem at T-Mobile, it's still pretty clear the company isn't doing enough to protect its customers, in stark contrast to the ultra-consumer-friendly branding schtick the "uncarrier" has been cashing in on for years.

Filed Under: arrest, scams, sim hijacking
Companies: t-mobile

Wireless Carriers Have A SIM Hijacking Problem They Don't Want To Talk About

from the nothing-to-see-here dept

Wireless carriers are coming under increasing fire for failing to protect their users from the practice of SIM hijacking. The practice involves posing as a wireless customer, then fooling a wireless carrier to port the victim's cell phone number right out from underneath them, letting the attacker then pose as the customer to potentially devastating effect. Back in February, a man sued T-Mobile for failing to protect his account after a hacker pretending to be him, ported out his phone number, then managed to use his identity to steal thousands of dollars worth of cryptocoins.

It didn't take long for numerous customers to complain they were the victim of the same scam, and for T-Mobile to send out a warning to users encouring them to add a few layers of additional security to their account.

But the problem appears to be even worse than originally believed. A new report takes a closer look at the problem, exploring how identity thieves use SIM hijacking to do everything from cleaning out bank accounts, to stealing valuable Instagram usernames and selling them for Bitcoin. The process isn't particularly complicated, and more often than not involves the social engineering of a cellular carrier's support employees. The entire process tap dances around protections like two-factor authentication, and highlights the peril of relying too heavily on a single cell phone number for identity verification in apps and other services.

Carriers, for their part, don't much like to publicly talk about the problem. In part because it's occasionally their employees that are helping to facilitate the scams for a little extra cash:

"Thug and Ace explained that many hackers now recruit customer support or store employees who work at T-Mobile and other carriers and bribe them $80 or $100 to perform a SIM swap on their target. Thug claimed they got access to the T-Mobile tool by bribing an insider, but Motherboard could not verify this claim. T-Mobile declined to answer questions on whether the company had any evidence of insiders being involved in SIM swap scams."

Quite often, those cellular carrier employees are more than happy to provide hackers with direct access to cellular carrier support systems:

"(One hacker) said they do SIM swaps by using an internal T-Mobile tool to look up subscribers’ data. During our chat, the hacker showed me a screenshot of them browsing the tool. I gave (the hacker) my phone number as a test, and the hacker sent back a screenshot that contained my home address, IMSI number (a standardized unique number that identifies subscribers), and other theoretically secret account information. Thug even saw the special instructions that I gave T-Mobile to protect my account.

As is their usual MO, wireless carriers don't much want to have a serious conversation about the problem, and often insist that it's only impacting a few, rare accounts (in stark contrast to the laundry list of increasing complaints seen over the last few years):

"Motherboard reached out to AT&T, Verizon, Sprint, and T-Mobile—the big four US cell phone providers—requesting data on the prevalence of SIM swapping. None of them agreed to provide such information. An AT&T spokesperson said this kind of fraud “affects a small number of our customers and this is rare for us,” but did not respond when asked to clarify what “small number” means.

There's some steps users can take, including changing passwords frequently. T-Mobile users can also, for example, call 611 from your cellphone (or 1-800-937-8997), then tell a support staffer that you want to create a “port validation” passcode. Still, like the SS7 exploit that has been in the wild for years, it's pretty clear that wireless carriers might want to spend a little less time on mindless mergers and consolidation, killing net neutrality, and jacking up prices, and a little more time protecting their customers from security threats.

Filed Under: fcc, hackers, scams, sim hijacking
Companies: at&t, sprint, t-mobile, verizon

Former FCC Broadband Advisory Panel Chair Arrested For Fraud

from the this-seems-to-be-going-well dept

For a few months now we've been noting how a "broadband deployment advisory panel" (BDAC) the FCC created to "solve the digital divide" has been plagued by scandal, resignation, and accusations of corruption. The panel was created last year to purportedly advise the Trump FCC on the best approach(es) to improving broadband cost and availability. But it didn't take long for reports to emerge that the panel was little more than a who's who of entrenched telecom industry interests, and since its creation its been plagued by a steady stream of disgruntled departures.

This week, Pai's panel made headlines again after reports emerged indicating that the woman Pai picked to chair the panel has been arrested for defrauding investors as part of a fiber network deployment con:

"Elizabeth Ann Pierce, who served as CEO of Quintillion Networks LLC , allegedly convinced two investment companies that the firm had secured contracts for a high-speed fiber-optic system that would generate hundreds of millions of dollars in future revenue, the Manhattan U.S. attorney’s office and FBI said Thursday. The system was pitched as one that would provide service in Alaska and connect it to the lower 48 states, authorities said.

“As it turned out, those sales agreements were worthless because the customers had not signed them,” U.S. Attorney Geoffrey Berman said in prepared remarks. “Instead, as alleged, Pierce had forged counterparty signatures on contract after contract. As a result of Pierce’s deception, the investment companies were left with a system that is worth far less than Pierce had led them to believe."

Ajit Pai had proclaimed that he had an "excellent and deep pool of applicants to serve on the BDAC," when he announced (pdf) Pierce's appointment last year. Apparently that well wasn't quite deep enough. The disgraced executive was appointed by Pai in April, resigned her Quintillion CEO spot in August, and had resigned from the BDAC by September.

But Pierce's arrest is only the latest chapter on the problems with Pai's advisory council. Earlier this year, San Jose Mayor Sam Liccardo penned a letter saying he'd be resigning from the panel, claiming in his resignation letter (pdf) that not only does the panel exist almost exclusively to help prop up the interests of incumbent ISPs, but it hadn't actually accomplished a single item of note in terms of helping improve broadband competition or availability:

"It has become abundantly clear that despite the good intentions of several participants, the industry-heavy makeup of BDAC will simply relegate the body to being a vehicle for advancing the interests of the telecommunications industry over those of the public...after nine months of deliberation, negotiation, and discussion, we’ve made no progress toward a single proposal that will actually further the goal of equitable broadband deployment."

Liccardo's complaints were mirrored by a similar, late March resignation letter by New York City CTO Miguel Gamiño Jr. And they were also mirrored by complaints from community broadband groups like the Coalition for Local Internet Choice (CLIC), who say the panel is actively undermining community-driven attempts to improve the nation's broadband connectivity:

"The audacity and impropriety of the process is clear from the fact that this entity, comprised primarily of corporate and carrier interests, is empowered by the Commission to develop model codes that could potentially impact every locality and state in the United States without any serious input from the communities it will most affect."

In more rural areas with a tepid ROI community broadband and public/private partnerships are often the best creative solutions to the broadband monopoly logjam. But because giant ISPs fear competition and folks like Ajit Pai are blindly, ideologically opposed to even working closely with local governments, the FCC is now actively undermining such efforts. Pai has routinely supported ISP-crafted protectionist state laws in 21 states that hamstring communities looking to build their own networks, even in areas ISPs refuse to.

In other words, much like his boss, Ajit Pai says one thing then immediately does another; he breathlessly professes to be "fixing" problems he's actually making worse, and is leaving a trail of dysfunction and grumbling in his wake.

Filed Under: ajit pai, broadband development advisory panel, corruption, elizabeth ann pierce, fcc, scams
Companies: quintillion networks

Comcast Busted For Signing People Up For Services They Didn't Want, Never Asked For

from the pay-more-for-nothing dept

Earlier this year Washington State sued Comcast for routinely ripping off its customers. The original complaint (pdf) argued that Comcast violated Washington state’s Consumer Protection Act (CPA) by misrepresenting its "Service Protection Plan," which lets users pay a $5 per month additional fee to cover "all" service calls. But the investigation found that Comcast not only over-stated what the plan covered, but routinely signed customers up for the plan who never asked for it, resulting in an additional $73 million in subscription fees over the last five years for what the State AG called a "near-worthless" plan.

The original complaint found that Comcast reps repeatedly sold the plan as being "comprehensive," covering all service calls, including those related to inside wiring, customer-owned equipment connected to Comcast services and "on-site education about products." But when customers subscribed to the plan called up thinking they'd then get a break from Comcast on service charges, the company would routinely bill customers anyway for all manner of services and repairs that should have been covered under the plan.

Amusingly, last week while Comcast was busy celebrating the vote to kill net neutrality, Washington Attorney General Bob Ferguson announced that his office would be amending and expanding its original complaint. According to investigators, the width and breadth of Comcast's protection plan scam went far deeper than investigators originally realized. After reviewing company interactions with subscribers, the AG found that "Comcast may have signed up more than half of all SPP subscribers without their consent," and in numerous instances charged customers for the SPP plan after telling them it was "free."

Ferguson's office claims they were "shocked" by the level of deception that occurred at Comcast:

"This new evidence makes clear that Comcast’s conduct is even more egregious than we first realized,” Ferguson said. “The extent of their deception is shocking, and I will hold them accountable for their treatment of Washington consumers."

If you've watched as Comcast gleans millions of dollars from unnecessary usage caps, extremely misleading fees (which it's also being sued over), or surcharges thanks to its monopoly over cable boxes, none of this should be remotely shocking. Being misleading is a rite of passage in the broadband sector, where captive customers, a lack of competition and blindly loyal state and federal regulators and lawmakers means accountability of any sort is frequently in short supply (though this is precisely the sort of stuff many falsely believe "the market" will magically take care of on its own accord).

And it's all about to get much worse. As we've well established, the Trump administration is gutting most meaningful FTC and FCC oversight of uncompetitive duopolies companies like Comcast. Worse, Comcast and Verizon have successfully lobbied the FCC to block any states that try to hold these ISPs accountable on the net neutrality, privacy, or errant billing fronts. All while the already flimsy competition Comcast faces in many of its markets weakens further thanks to telcos being unwilling to upgrade their networks. In other words, if you thought Comcast's behavior was bad in the past, you likely haven't seen anything yet.

Filed Under: scams, service protection plan, washington
Companies: comcast

After Investigating Itself, CenturyLink Proclaims There's Just No Way It Committed Billing Fraud

from the trust-and-don't-verify dept

Lawsuits have begun to pile up for broadband provider CenturyLink, after a whistleblower revealed earlier this year that the ISP had been routinely over-billing its broadband customers for years. The whistleblower, who claims she was fired after bringing the problem to company management, said the company had a multi-year habit of consistently signing customers up for services they never ordered and didn't want. Of course that's on top of the routinely-misleading billing practices we see at most giant broadband providers, most notably the habit of making up completely bogus fees to jack up the advertised price post sale.

The whistleblower account was followed up by lawsuits from several state attorneys general, who say they discovered ample evidence that misleading pricing and overbilling was a consistent occurrance. An investigation by Minnesota AG Lori Swanson, for example, found numerous examples where customers were overbilled -- yet CenturyLink refused to fix the problem -- even when customers had the ISP's original promises in writing.

But worry not! CenturyLink last week issued a press release stating it had investigated itself, and found that company executives were completely and utterly innocent of any wrong doing. According to CenturyLink, the company constructed a "special committee" filled with CenturyLink board members, who collectively dug through 9.7 million documents, 4.3 terabytes of billing data consisting of over 32 billion billing records -- and interviewed 200 current and former Company employees. They found, impressively, precisely what CenturyLink CEO Glen Post hoped they would:

"The Company accepts the Special Committee's findings and conclusions. The investigation confirmed my long-held belief that there was no fraud or wrongdoing at the Company and that cramming was neither widespread nor condoned. However, we know there have been times when we haven't provided our customers the experience they deserve. We have identified a number of areas where we can improve the customer experience and have already made significant progress in addressing those areas."

That's in stark contrast to what whistleblowers and numerous state investigations have so far discovered. So letting actual, independent third-party investigations determine guilt or innocence seems kind of important. What did the investigation find? It found that if there was a problem, it was due to the fact that CenturyLink's billing and pricing was somehow confusing customers:

"Some of the Company's products, pricing and promotions were complex and caused confusion, and the resulting bills sometimes failed to meet customer expectations. Additionally, limitations in the Company's ordering and billing software made it difficult to provide customers with estimates of their bills and confirmation of service letters that reflected all discounts, prorated charges, taxes and fees."

Of course CenturyLink would have you believe that this confusing pricing just magically materialized by itself accidentally. In reality, large ISPs consistently employ confusing pricing in order to make direct price comparisons between ISP bundles all but impossible. It's standard practice. Centurylink also has a nasty habit of (apparently accidentally) imposing completely misleading fees to jack up the advertised price of service. Take CenturyLink's $4 per month "Internet Cost Recovery Fee," for example, which CenturyLink explains as such on its website:

"This fee helps defray costs associated with building and maintaining CenturyLink's High-Speed Internet broadband network, as well as the costs of expanding network capacity to support the continued increase in customers' average broadband consumption."

Of course that's bullshit, and tackling the "costs of expanding network capacity" is what your regular bill is for. What the fee does accomplish is it lets CenturyLink advertise one price, then charge something else entirely. It's something broadband providers learned from the airline, banking, and other industries, and with limited competition, the "free market" mysteriously never auto-corrects the problem. And neither the FCC nor FTC have ever deemed this fairly blatant false advertising via bogus fees (which take many forms) worthy of serious inquiry.

And that's with the FCC's net neutrality rules in place, which at least required that ISPs clearly document all of this hidden nonsense to consumers at the point of sale. With those requirements about to die, and both federal and state oversight of ISPs about to be obliterated, you can expect an already-bad problem to only get worse. It's another example of how the death of net neutrality is going to have wide-reaching negative effects that go well beyond our traditional understanding of net neutrality violations. Of course if you like being nickel and dimed by your broadband ISP, the future's looking bright for you indeed.

Filed Under: billing fraud, fraud, overbilling, scams, self-investigation
Companies: centurylink