Advertising Law Blog

The State of Wisconsin announced that it was suing telephone-billing aggregator ILD Telecommunications, Inc. based on alleged cramming activities by its customer, ILD's customer Radical Persson, Inc., who marketed Internet services billed under the names Echurch Network and ILab Technologies. The state's lawsuit seeks refunds for all affected Wisconsin consumers, as well as penalties for the company's violations of Wisconsin law.

Radical Persson marketed its Internet services to small businesses, including Internet access, website hosting and Internet advertising. It then billed its services through consumer's phone bills using ILD as the aggregator, who through its contracts with local telephone companies, was authorized to include charges on telephone bills on behalf of companies like Radical Persson, Inc.

The lawsuit is interesting in several respects. First, Wisconsin initially sued only the marketing company, but has now amended to include its principal as well as its billing provider. Second, the case appears to be yet another instance of regulators seeking to hold service providers liable for the allegedly deceptive acts of their clients. According to the amended complaint, the government contends that ILD knew or should have known of the deceptive nature of its client's practices because based upon its own records over 30% of Wisconsin consumers charged for services provided by ILabs and over 40% of Wisconsin consumers charged for services provided by EChurch denied authorizing the services for which they were charged, or otherwise questioned their billings. As a result, the state alleges that ILD is liable for violations of Wisconsin telecommunications law by billing customers for services they did not order, and for billing for services after the customer had canceled.