Web Site Scams Target Small Businesses

Con artists are using the telephone billing and collection system to scam consumers by billing for services they never authorized. One such scam offers a “free web site.” How to protect your business.

Have you looked closely at your business telephone bill lately? If not, you should! You may be spending money every month for a web site or other services that you never authorized or agreed to buy.

According to the FTC,  scam artists have discovered that one of the easiest ways to milk their victims is by cramming charges for services onto their phone bills. And one of the hottest scams in recent months has been to charge small businesses for web sites they never approved.

What typically happens is that a small business will get a call offering them a “free” web site for a thirty-day trial period. Businesses are told that billing will automatically start at the end of the free trial if they don’t cancel the service, or that they won’t be billed unless they authorize the site at the end of the free trial. But businesses have complained that they were billed at the end of the trial period regardless of whether they cancelled (or never agreed to sign on) for the service. Furthermore, in some cases they were charged a “set-up fee” for creating their “free” web site.

In a recent crackdown to put an end to such practices, the FTC filed charges against several companies allegedly using these tactics. The companies were Wazzu Corporation, Jayme Amirie, Kenneth Gharib and Kirk Waldfogel of Fountain Valley, CA; Shared Network Services, LLC and Peter Westbrook, d/b/a 1st Page in Lodi, CA; and WebViper, LLC, Tigerhawk, LLC, Thomas J. Counts, Patrick C. Taylor, and Richard M. Bogdanas, individually and d/b/a Yellow Web Services. All Web Viper corporate and individual defendants are based in Montgomery, AL, except Richard M. Bogdanas who resides in Chalk Lake, TX

The FTC has received more than 10,000 complaints about cramming since October 1997. In fact, cramming charges onto phone bills has become such a widespread problem that it has become the fifth biggest source of complaints the FTC receives. In it’s third annual fraud report to Congress, the FTC says, “Con artists have found the telephone billing and collection system to be a fertile area to defraud consumers. Taking advantage of changes in the telecommunications industry that began 15 years ago with the break up of AT&T, these stealth ‘operators’ are arranging to put charges on consumers’ phone bills for services that were never ordered, authorized, received or used.”

How to protect your business
Cramming is only one of the ways small businesses who aren’t web-savvy are getting scammed. In addition to cramming, small businesses who aren’t web-savvy are often getting ripped off by vendors who do shoddy work, overcharge, don’t register domain names, register them in their own name, or never put up the web site at all. Here are some steps you can take to avoid these ripoffs.

  1. Carefully check all telephone and charge card bills for unauthorized charges each month.
  2. Call the phone company or charge card company immediately if you see charges for services you didn’t authorize.
  3. Do not pay for any service you have not authorized. Under the law, you are under not obligated to pay for unordered merchandise or services. They may be treated as a gift.
  4. Limit the number of people in your company who are authorized to make purchase on your behalf.
  5. Deal with web hosts and web site designers you know. If you don’t know anyone personally, get recommendations from other business owners who have been satisfied with the work done on their behalf. Be highly skeptical of high pressure telemarketing calls.
  6. Ask for references and check them! Look at the web sites that have been set up and then call the owners to ask for comments.
  7. Get a written contract describing what the web site designer will do and what services are included in the price.
  8. Ask for the URL and check it out before you make final payment to your web site developer. If the site isn’t up, or if there are misspellings or other problems insist they be corrected before paying
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