Apr, 2001 : U.S. court stops Web hosting operation, FTC alleges fraud

📅 April 6, 2001 - A U.S. district court in Minneapolis has stop the operation of a Web hosting service that advertised services for inexpensive flat fees and then billed unauthorized charges of up to $20,000 US onto consumers' credit cards for imaginary "excess bandwidth" use.

At the Federal Trade Commission's request, the district court has halted theillegal billing, frozen the defendants assets and appointed a receiver tooversee the business, pending trial.
The FTC suit names Bryan Kruchten, doing business as Page Creators andTrinity Host, LLC. The Web sites have been disabled.
According to the FTC, the defendants used the Internet to advertise"discount" Web hosting services, including domain name registry, Web sitedesign and customer care for monthly service fees of $10 to $15 US.
Consumers provided credit card numbers so they could be billed. Thedefendants allegedly later charged many of their clientele huge additionalfees without their knowledge or approval.
The FTC alleged the additional charges were fraudulent. Server logs showedcustomers did not use the amount of bandwidth for which they were billed. Inmany cases, the defendants allegedly billed individual customers for usingmore bandwidth than all their customers combined had used.
In addition, the FTC told the court, the defendants charged "excessbandwidth" fees to consumers who had not yet constructed their Web sites,already had canceled their services or had signed up to receive "unlimited"bandwidth.
The FTC will seek to permanently bar the illegal actions and has asked thecourt to order redress for consumers who were overcharged.
This action comes on the heels of a difficult week in the shared Web hostingindustry.
ADDR.com, another prominent virtual hosting firm had been hacked early thisweek, compromising both personal and credit card information for over 40,000clients.
With the advent of all these happenstances, it is evident that 'buyer beware' must become the stalwart adage for the average, shared Web hostingconsumer.