Alyon Settles With States Over Online Billing

Rhett Pardon
SECAUCUS, N.J. — Alyon Technologies Inc. has entered into a consent agreement with nearly two dozen states and will refund online adult consumers who paid bills but submitted complaints about them before June 2003.

The company, accused of linking unwitting Internet users to pop-up images and billing them for services not requested by consumers, also agreed to cancel debt and halt collection activities, according to New Jersey Attorney General Peter Harvey. The agreement prohibits Alyon from billing minors for its Internet services.

In addition, Secaucus, N.J.-based Alyon is required to implement a verification program titled “Expressly Verifiable Authorization” for all future Internet transactions. The company also must present ``clear and conspicuous'' information about terms and conditions, including information on charges and how to contact Alyon.

“Internet businesses certainly have a duty to act responsibly and within the law, but consumers also need to protect themselves by being extra vigilant about what they are ‘clicking on’ when surfing the web, and about sharing credit card and other personal data,” Harvey said. “Although the Internet can be a great tool for entertainment, communication and research, it is also fraught with potential dangers and headaches for consumers and their children.”

The states claim that Alyon used a modem dialing program that disconnected consumers from their own Internet service providers and reconnected them to the Internet sites Alyon billed for without the consumers’ authorization or approval.

Using the dialing program, Alyon captured the telephone number used by the modem and matched it against several databases of line subscriber information, officials say.

The line subscribers identified as responsible for the captured telephone number later received bills charging them $4.99 a minute for each minute the defendants claim services were purchased, regardless of whether the line subscribers authorized the purchase.

Harvey said in a statement that more than 700 consumers complained about being billed an average of $150 for online adult content they never requested or accessed.

The Federal Trade Commission, which also received complaints about Alyon, estimates that more than 200,000 people were affected. Alyon agreed to forgive $17 million in bills under a separate agreement with the federal government.

Alyon President Stephan Touboul could not be reached by XBiz for comment Friday.