m-Qube to Pay $500K for Unauthorized Billing

Florida’s Attorney General Bill McCollum announced that his office has reached a settlement with a company involved in billing for cell phone content. Massachusetts-based m-Qube is a billing aggregator, meaning it acts as an intermediary between wireless carriers and third party content providers. The settlement requires the company to modify its business practices, submit to monitoring by the Attorney General’s CyberFraud Section, and pay half a million dollars to the Attorney General’s Office, in part to cover fees and cost.

“CyberFraud often has many layers, but we’re going to address them all - from wireless carriers all the way to third party content providers and another other parties in between,” said Attorney General McCollum.

The large number of CyberFraud complaints led to a widespread investigation by the CyberFraud Section which revealed thousands of cell phone consumers had received charges on their cell phone bills for third party services they did not authorize. Often, these charges were for ringtones which were advertised as “free,” but resulted in customers unwittingly being signed up for costly monthly subscriptions. Because the charges were billed under unfamiliar names, including “m-Qube,” consumers were frequently unaware of what they were paying for or from where the charges originated.

In its role as a billing aggregator, m-Qube is responsible - by contract - to the cell phone companies for the manner in which the content being billed is advertised. The third-party content in question also included horoscopes, wallpaper and “jokes of the day.” These offers frequently target teens who respond because they believe the services are free and download them to their cell phones, not knowing their parents will later be charged.

Under the agreement, which will be applied nationwide, m-Qube will adopt and enforce strict standards for internet advertising as developed by the CyberFraud Section. The company, through its contracts with content providers and advertisers, will now require those entities to clearly and conspicuously disclose the true cost of ringtones and other content in all online advertising to potential customers nationwide. Attorney General McCollum intends to use the m-Qube agreement as a model in his investigation of other billing aggregators in the cell phone content industry. A portion of the money recovered will be used to further CyberSafety education and repay the costs of the state’s investigation.