BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Monday, 5 November, 2001, 20:18 GMT
US internet sex scam settled
Crescent Publishing Group logo, BBC
No more hanky panky for Crescent Publishing
The operators of several adult-oriented websites in the US have agreed to pay $30m to settle charges that they illegally billed thousands of customers for online "tours" that were advertised as free.

"The 'Free Tour Websites' claimed that consumers' credit card numbers were required solely to prove that the consumers were of legal age to view the adult material, and that the credit cards would not be billed," the US Federal Trade Commission (FTC) said in a statement.

Thousands of visitors were then charged recurring monthly membership fees of between $20 and $90, the consumer protection agency said.

The $30m will be distributed to consumers who have been defrauded by Crescent Publishing, but if that proves impractical, it will be divided equally between the US Treasury and the State of New York, the FTC said.

Settlement terms

New York-based Crescent Publishing and 64 affiliated companies must also post a $2m bond, and owners Bruce Chew and David Bernstein agreed to put up $500,000 each before they continued to operate the websites, the FTC said.

The FTC and the Attorney General of New York State alleged in their complaint that visitors to, and dozens of other sites were billed using different names.

As a result, consumers often had no idea who was billing them or why, and they often had difficulty contacting the operators to get refunds, the complaint alleged.

When Visa learnt of the high number of complaints against Crescent Publishing, it cancelled the company's merchant account.

By 1999, Crescent Publishing and its affiliates were collecting more than $14m a month in illegal charges, adding up to a total of $118m over three years, according to the FTC.

The settlement also requires that in future the defendants must get express permission from consumers before billing them, and requires them to keep records to ensure compliance.

See also:

10 Aug 01 | Sci/Tech
Britons drawn to online porn
05 Jul 01 | Business
Cashing in on porn boom
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories