California Man Hands Over Bentley and More to Settle Mobile Scam Lawsuit

Operators of a mobile-phone scam settle FTC charges for $10 million.

A photo taken on February 6, 2013 shows the Bentley logo on a car displayed at the Grand Palais in Paris on the eve of an auction of luxury vintage cars. 125 vintage motor cars, 100 collection motorbikes and a 1920's Gipsy Moth plane by De Havilland, will be auctionned at Bonhams on February 7. AFP
National Journal
Laura Ryan
Add to Briefcase
Laura Ryan
June 13, 2014, 10:28 a.m.

An en­tre­pren­eur makes mil­lions from un­sus­pect­ing vic­tims in a mo­bile-phone scam. He drives a Bent­ley, jet-sets between his mul­tiple homes, and col­lects jew­els. But he is found out, and justice is served.

This isn’t a movie plot. A Los Angeles-based en­tre­pren­eur will hand over more than $10 mil­lion in cash, real es­tate, and lux­ury cars to settle a law­suit with the Fed­er­al Trade Com­mis­sion for billing un­know­ing con­sumers mil­lions of dol­lars on their mo­bile-phone bills, the con­sumer pro­tec­tion agency an­nounced Fri­day.

Ac­cord­ing to an FTC state­ment, Lin Miao and a hand­ful of Los Angeles-based com­pan­ies made mil­lions by send­ing text mes­sages to con­sumers of­fer­ing “love tips,” “fun facts,” and celebrity gos­sip. Little did the con­sumers know, they were charged as much as $9.99 per month for these ser­vices — a prac­tice com­monly known as “mo­bile cram­ming.”

“Cram­ming un­au­thor­ized charges on con­sumers’ phone bills is un­law­ful, and this set­tle­ment shows the FTC is com­mit­ted to mak­ing sure that any­one who does it won’t be able to keep their ill-got­ten gains,” Jes­sica Rich, Dir­ect­or of the FTC’s Bur­eau of Con­sumer Pro­tec­tion, said in a state­ment. “Con­sumers have the right to know what they are be­ing charged.”

The charges were of­ten un­noticed be­cause they ap­peared on the bills in a vague or con­fus­ing form, ac­cord­ing to the FTC’s law­suit. Cus­tom­ers who no­ticed the charges and asked for re­funds nev­er got them, ac­cord­ing to the state­ment.

Miao and the oth­er de­fend­ants are sur­ren­der­ing all of their as­sets be­cause they can­not pay the full set­tle­ment price of more than $150 mil­lion.

The full list of as­sets in­clude the cash in 14 bank ac­counts, five lux­ury cars (in­clud­ing a Bent­ley and a Mer­cedes), five prop­er­ties in Chica­go and Los Angeles, and Tiffany jew­el­ery.

The FTC filed a com­plaint against Miao last year. The law­suit is part of the FTC’s crack­down on mo­bile cram­ming.

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