Consumers who have received random text messages on topics such as horoscopes, celebrity gossips, and general trivia may have fallen victim to a multi-million text messaging service scam that ran from 2011-2013. Those consumers victimized by the scheme were billed regardless if they delete the unsolicited text messages. Cellphone users were charged at an average rate of $99.99 per month for the mere fact that they received these random messages.
These charges usually appear on the consumer’s cellular telephone bills in vague and confusing abbreviated descriptions like “96633IQ16CALL8668611606” and “25184USBFIQMIG.” The charges recurred each month and no amount of unsubscribing and dispute with service providers was able to stop the messages from coming into their mobile phones.
$50 million worth of text messaging services
On May 28, the United States Attorney for the Southern District of New York charged six men for fraudulently charging hundreds of thousands of mobile phone consumers for unsolicited text messaging services known as “auto-billing.” Lin Miao, Yong Jason Lee, Michael Pearse, Yongchao Liu, Michael Pajaczkowski and Christopher Goff were able to earn more than $50 million from their elaborate scam. The men used their earning to fund a lavish lifestyle, attending expensive parties, traveling and gambling.
The grand plot behind the text messaging scam
Miao and Lee were working for a company that offers premium text messaging services. Pearse and Liu on the other hand were working in an affiliated company. Pajaczkowski and Goff were working for a mobile aggregator company that is responsible for billing costumers for premium text messaging services.
Miao and Lee bought large volumes of mobile phone numbers from Pajaczkowski and Goff who had access to costumers’ data by virtue of their employment at the mobile aggregator company. Miao then worked with Lee, Pearse and Liu to have random text messages sent to consumers and to have these consumers enrolled in premium text messaging services without their knowledge. The men also device a scheme to make it appear as if the consumers have actually subscribed to the text messaging services.
Six men charged in multi-million dollar text scam
The six men were charged with conspiracy to commit wire fraud and mail fraud which carries a maximum term of 20 years in prison. Miao was already arrested at Los Angeles International Airport while Lee, Pajaczkowski and Goff were arrested at their homes in California and Texas. Pearse and Liu are residing in Australia and remain at large.
“The arrests today highlight the magnitude of this complex e-commerce fraud against unwitting consumers. Crimes like ‘auto-subscribing’ undermine the integrity of our economic system. Working closely with our law enforcement partners, IRS plays an important role in unraveling complex financial transactions where individuals attempt to conceal the true source of their criminal proceeds,” said IRS Special Agent-in-Charge William Offord.
“The six defendants charged today are alleged to have profited from the unlawful billing of consumers for unsolicited services. Hundreds of thousands of customers collectively lost tens of millions of dollars in this far-reaching scheme. Behavior of this nature has a devastating impact on people, companies, and the integrity of mobile phone industry. We are putting those persons who engage in this type of fraud on notice: Your actions can result in serious charges carrying severe penalties and consequences,” said FBI Assistant Director-in-Charge Diego Rodriguez.
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