Bell faces “modem hijacking” class action lawsuit over unauthorized long-distance calls

Modem hijacking scams led victims to file a class action lawsuit against Bell Canada on July 22 in the Ontario Superior Court of Justice asking for damages and reimbursement of all faudulent long distance telephone charges paid by customers. Edith Carriere, a resident of Monetville ON, is the first person named in the lawsuit, having incurred $1,000 of long distance charges on her phone bills earlier this year for calls that she did not make and that were initiated only as a result of modem hijacking. The lawsuit, conducted by class action specialist David Thompson, is now open to anyone who paid Bell Canada for fraudulent long distance telephone charges for calls to foreign locations such as Sao Tome, the Cook Islands, Nauru, Guyana, Guinea-Bissau, Tuvalu and Tokelau. "It was one of those things that kept happening, but wasn’t brought to the CRTC’s attention until a large number of people complained in an organized fashion," says John Lawford, a representative of Ottawa’s Public Interest Advocacy Centre (PIAC), an organization which had been working in parallel for the past few months to bring the issue of modem hijacking to the attention of proper authorities. The phenomenon is not new - reports of modem hijacking were made as early as 1999 - but just as in the case of Internet-based fraudulent credit card activity, police forces have to deal with nearly untraceable perpetrators. Any computer with a modem connected to regular telephone lines can be the victim of modem hijacking. It’s enough for the unsuspecting user to visit certain sites and/or click on pop-up browser windows (even when trying to close them) for a small executable program, similar to a virus, to install itself surreptitiously and dial international numbers billed at several dollars per minute. "I was in bed, at night, around 3 a.m. in the morning, and I suddenly heard my modem dial a very long number, 10, maybe 12 digits, and nobody was at the desk. I jumped and literally tore the modem cord from the wall plug immediately" says Montreal resident Theodor Ban, whose computer was infected in February. While Ban may have been lucky, many others were not. An Ontario police officer, coordinator for PhoneBusters, an anti-fraud call centre run by the Ontario Provincial Police and Royal Canadian Mounted Police, recently estimated the number of complaints his office received this year at over 2,000. The current Statement of Claim for the class action lawsuit, initiated in July, alleges that Bell Canada has known or ought to have known about these modem hijacking scams since at least January 1, 2002, and ought to have warned its customers in that regard. The document says Bell Canada, as the largest telecommunications company in Canada, was uniquely positioned to monitor, become aware of, investigate and take proactive steps to prevent such fraudulent schemes. To further complicate things, Bell Canada has already attracted a lot of antipathy for its attitude in this matter. PIAC and other consumer groups have testimony from people who were told by the telephone company that they have to pay the long-distance bills resulting from modem hijacking, regardless of whether they actually made the calls willingly or not. Failing that, these people were threatened with the interruption of their telephone service and referral to collection agencies. "The CRTC has explicitly forbidden Bell to cut local telephone service in the case of non-payment of long-distance charges," says Lawford, "but how many people can really afford to stay without long-distance access, and with the prospect of having collection agencies knocking on their door?" PIAC, along with two other groups, Option consommateurs and l’Union des consommateurs, had initiated talks with Bell Canada and the CRTC earlier this summer, asking the telephone giant to take at least three steps in resolving this problem: 1) adopt a policy to forgive consumers for the first instance of unauthorized long-distance calls (a similar measure was introduced for 1-900 numbers); 2) launch a sustained campaign to actively educate customers about the dangers of modem hijacking; and, 3) implement technical measures, such as blacklisting "hot" areas or even installing special switches on telephone lines. The Quebec-based consumer groups were especially efficient in representing their interest, says Lawford, adding that Bell had agreed to present them with concrete proposals by September 30. But that was before the class action lawsuit hit them. The law firm Scarfone Hawkins LLP had acted for class members on another recently settled claim against Bell Canada, involving Bell Canada’s First Rate long distance telephone savings plan. Under that settlement, Bell Canada is responsible for reimbursing customers close to $10 million. Thus, the telephone company is now under attack from two sides, and observers say the legal battle will be long, and the outcome is far from clear, because the problem is hard to fix, and it uncovers complicated industry arrangements, such as the way in which Bell deals with other carriers.

Bell faces “modem hijacking” class action lawsuit over unauthorized long-distance calls

News | 09/01/2004 4:00 am EDT

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