Federal Trade Commission v. Inc21.com Corp.

MEMORANDUM OPINION AND FINDINGS IN SUPPORT OF PRELIMINARY INJUNCTION

INTRODUCTION

In this enforcement action, the Federal Trade Commission moves for the entry of a preliminary injunction to stop defendants from collecting unauthorized charges on many thousands of telephone bills. For the reasons set forth below, a preliminary injunction is warranted and is now GRANTED.

STATEMENT

This action highlights the vulnerable underbelly of a widespread and under-regulated practice called LEC billing. LEC billing — or “Local Exchange Carrier” billing — arose out of the court-ordered breakup of AT & T in the 1980s. See United States v. American Tel. & Telegraph Co., 552 F.Supp. 131, 227 (D.D.C.1982). After AT & T agreed to divest its local phone operations into seven independent regional holding companies, the local phone companies continued to present customers with the convenience of a single telephone bill for both local and long-distance fees, despite the fact that the long-distance services were provided by separate business entities. LEC billing was born. Four years later, the FCC detariffed the billing and collection services provided by local telephone companies, opening the door…