BUSINESS
Irish firm accused of Web porn fraud
06-10-2000
by Paul Drury
An American court has been told that an Irish-registered company allegedly overcharged on-line pornography customers in a multi-million USD global Internet fraud.
The company, Verity International Ltd., which is registered in Dublin, has denied wrongdoing in a statement issued by its lawyer.
The company previously hit the headlines in Britain in 1997 for allegedly running a phone-sex operation that billed users for calls to Sierra Leone. In that case, British Telecommunications PLC broke its contract with Verity (the firm is not associated with Verity Inc. of Sunnyvale, California).
Court proceedings documented in Friday's Wall Street Journal state that thousands of consumers in the US were allegedly billed an average of nearly USD250 apiece last month for "videotext" services that they did not know had been accessed through their telephone lines, the US Federal Trade Commission (FTC) said in court.
In a single week in September, about 67,000 US households received bills from Verity, according to the FTC. The average overcharge was USD222, with some overcharges topping USD4,000, the agency said.
The Journal reports that the FTC filed a complaint in a New York City federal court on Thursday against Verity, claiming that it was improperly charging thousands of US Internet users for long-distance phone calls.
Verity used porn sites to distribute software that allowed Internet users to avoid paying for "adult entertainment" with their credit cards by placing charges on a telephone bill, said the FTC. The software appealed to privacy-seekers and youths without credit cards.
The porn viewers were told they were being charged to view sex videos over a phone line to Madagascar at a rate of USD3.99 a minute, the complaint says. But the FTC concluded that the phone calls actually terminated in the UK and should have cost only eight cents a minute.
Verity, the FTC alleged, intended to pocket the difference.
The scam was discovered when FTC investigators used a common programme called NeoTrace (downloadable over the Internet for USD29.95) to locate the alleged perpetrators in the UK, the court heard.
Verity, in addition to its Dublin registration, uses an address on the Channel Island of Sark, said the FTC. The porn site itself was in New York. The only connection to Madagascar was the phone number.
"The telecommunications services offered by Verity International Ltd. comply fully with all FTC and FCC guidelines," said Verity's lawyer, Joel Richter of New York, in a statement.
"All charges, including the exact price per minute of the international call, are fully and clearly disclosed to the consumer before the software can be used. The consumer must acknowledge and accept these charges several times by clicking on the screen."
The FTC also charged California billing firm Integretel Inc. and its subsidiary Ebillit, with making improper charges. Richard Gordin, lawyer for Integretel, said the companies have no connection to Verity and merely forwarded its bills.
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