Under the settlement the company will drop its pending claims against consumers for disputed bills that total $17 million. Another $22 million in bills may be cancelled if these are challenged by consumers.
The FTC took action against Alyon and its owner, Stephane Touboul, in May 2003, alleging that they illegally billed and collected fees for videotext services – which it defines as "visual (and in some instances audio) information and entertainment services offered over the internet through individual web sites." Since then, 16 state attorneys general have filed similar charges against the company.
The FTC complaint accused Touboul and Alyon of downloading a modem-dialling program onto consumers' computers, allegedly after consumers clicked on a button to agree to the terms and conditions for such a download.
The dialling program then disconnected consumers from their own ISPs and reconnected them to the defendants' network. The defendants captured the telephone number used by the modem and matched it against databases of line subscriber information.
According to the FTC, the line subscribers identified as responsible for the captured telephone numbers later received bills charging them $4.99 a minute for each minute the defendants claimed videotext services were purchased, regardless of whether the line subscribers authorised the purchase.
The FTC said that many consumers never visited the defendants' sites at all, and were charged due to billing service errors of which the defendants were aware. Other line subscribers were billed because a child or someone else in their household accessed the services without the line subscriber's authorisation.
The FTC also alleged that the defendants' dialling program at times downloaded onto consumers' computers without their authorisation, and that the defendants failed to follow provisions of the Pay-Per-Call Rule that provide a mechanism for consumers to dispute charges for "telephone-billed purchases."
Monday's settlement also bars Alyon from billing consumers without first giving them notice of all material terms and conditions of the offer and getting their express, verifiable authorisation to receive and be billed for the videotext services. It requires that Alyon monitor the practices of its videotext service providers to assure they comply with those conditions and disclosures.
In addition, the settlement bars Alyon from representing that a consumer who is being billed owes money unless the consumer is an adult; the consumer received clear and conspicuous notice of all material terms and conditions of the offer to access videotext services; and the consumer provided express, verifiable authorisation to receive and be billed for the videotext services.
The settlement also bars Alyon, and any videotext service providers with which it does business, from blocking consumers' ability to read the terms and conditions of service; plant spyware, viruses, or other unnecessary software on consumers' computers; block consumers' ability to remove a dialler program or disconnect from the videotext service; fail to disclose how billing charges are calculated; or download modem-dialler software without consumers' authorisation.
Finally, the settlement also bars the defendants from violating the Pay-Per-Call Rule.
"The Order clearly confirms what we've been saying all along – that Alyon's practices were never determined by any court or the FTC to have been improper in any way," said Alyon's owner, Stephane Touboul. "In fact, the settlement contains language affirming that neither Alyon nor I admitted to any wrongdoing and that we specifically denied each and every claim and fact contained in the government's complaint."