Alyon Technologies won a round in their on-going legal battles July 10. That's when a federal judge in Georgia rejected a Federal Trade Commission bid for a preliminary injunction against the New Jersey-based billing company, whom the FTC and several states had accused of trying to squeeze money from customers who said they never used Alyon's clients’ porn sites and services.
"All allegations against the company were found unsubstantiated, and Alyon has been fully exonerated," the company said in a July 14 announcement about the ruling from U.S. District Judge R.W. Story, calling the FTC action against them unwarranted.
It's not quite the end of Alyon's battle, however – they're settling case by case with several other states lodging complaints similar to that in the Georgia federal case, according to company spokesman Hugh Mansfield. He told AVNOnline.com they've settled with Pennsylvania, Rhode Island, and South Dakota as of July 14.
The FTC's Georgia complaint covered Alyon activities in northern Georgia since June 2002, including using TelConnect as its collection agency. The commission accused Alyon of mailing bills to telephone subscribers directly for adult site access they neither authorized nor knew they were getting, as well as re-routing their line connections from their own Internet service providers to an Alyon network connection, and not even bothering to verify whether the adult site access was authorized by the customer in question.
"In numerous instances, after receiving written notices of billing errors from consumers," the FTC had charged, "(Alyon does) not forgive charges, nor do they conduct a reasonable investigation into the validity of the charges and notify the customers of why they are sustaining the charges." What Alyon was doing, the FTC complaint said, was continuing the billing and collection bids, even threatening action through TelConnect including legal action and adverse credit reporting.
TelConnect began sending such notices to Alyon's unintended customers in September 2002, the FTC charged, with customers who got TelConnect notices being told by Alyon that their accounts were no longer in Alyon's hands.
"Many consumers who have received the defendants' bills do not know what they are being billed for," the complaint said. "In many instances, neither the consumer nor anyone in the consumer's household has ever accessed Alyon's vendors' videotext services on the Internet, used their computer modem to make such a call, or has ever authorized any person to do so." Sometimes, the complaint added, a telephone subscriber learned the hard way that a minor in his home, or someone else who didn't have authorization, was using access billed by Alyon.
Mansfield said most of what got Alyon under such court scrutiny was the kind of confusion and technical trouble a new billing technology wrings out in its first days of operation, but that the federal judge in Georgia reviewed everything and concluded Alyon was basically on the right track and had no criminal intent.
"There's always going to be some speed bumps coming out of the gate," Mansfield said. "So at the end of the day we've dealt with those in a very effective manner over the last two years. If you look at our billings in the last twelve months we processed over 300,000 bills, huge increase over the first year…(and) if you looked at our percentage of incorrect or inaccurate billings, it was 1 percent. Which is not too bad.
"I think it's completely a question of a new service not being fully understood," he continued. "Anytime there's anything in question that has any volume of inquiry to the FTC you're going to be answering a few questions."
“This is a huge victory for Alyon," said company president Stephane Touboul in a statement about the Georgia ruling. "The court’s decision completely exonerates Alyon from unfair allegations. Alyon has always been committed to delivering a safe and viable alternative to consumers for online billing services. As our business grows and evolves, we continue to be dedicated to providing the most accurate method of billing for our customers.”
Fourteen states had joined the FTC in challenging Alyon practices, with West Virginia suing individually as well in late May. Alyon said the company had not only alerted the FTC to the company procedures the states were concerned about but "voluntarily agreed to comply with all of the FTC requirements."
Alyon had also agreed to voluntary compliance with Pennsylvania, implementing "new and enhanced safeguards," after Pennsylvania Attorney General Mike Fisher had ordered the company to make $14,000 restitution to consumers in 28 Pennsylvania counties.
In mid-May, the FTC slapped Alyon with a federal court complain accusing them of erroneous billing, surreptitious Internet connection switching, and threatening collection action when the consumers demanded answers. Wisconsin led thirteen states suing Alyon there on similar grounds.
The FTC had also accused Touboul of masterminding and directing a scheme said to include deceptive representation, unfair unauthorized billing, unfair unauthorized dialer downloads, violating pay-per-call rules, and failing to comply with bill dispute resolution procedures the rule outlines.
The technique the states and the FTC found particularly galling, according to the original complaints, was switching a Web surfer's line connection from their Internet service provider to an Alyon network line, when the surfer tried closing popup ads pumping for Alyon-supported adult Websites.
Touboul issued a statement at the time of the FTC's original complaints saying the company was stunned by those complaints given "our willingness and effort to work to resolve the consumer issues."
Mansfield said Alyon had since done an overhaul of sorts on the company's programs to make sure "before you agree to sign on (with us) that people are very clear as to what they're doing," an overhaul that included more text in the advisory and policy statements and compelling direct user verification "allow(ing) us to verify 100 percent."
He also said there were no known direct complaints filed against TelConnect in the case as yet.
