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Edition : 3748 Monday 24-Feb-1997 Circulation : 3463

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VNS COMPUTER NEWS: [Tracy Talcott, VNS Computer Desk]

Internet - FTC shuts down 3 sites for phone fraud {The Wall Street Journal, 20-Feb-97, p. B11} A federal court in New York last week under seal granted the Federal Trade Commission's request for a temporary restraining order against two Long Island companies, Audiotex Connection Inc. and Promo Line Inc., and 3 individuals. A lawyer representing the companies and the individuals denied the allegations. As investigators describe it, the alleged scam was cutting edge - and world-wide. The 3 sites - www.beavisbutthead.com, www.sexygirls.com, and www.ladult.com - required Internet visitors to download a special computer program onto their PC before letting them see the adult material. The sneaky program quickly went to work: it lowered the volume on the computer modem and the silently hung up on the visitor's own local Internet service before redialing a phone number in tiny Moldova, a former Soviet republic. Visitors to the Web site remained connected to the Moldova number until they flipped off their computers, FTC officials said. So the meter on the international phone call kept ticking away - at more than $2 a minute - while computer users cruised to other sites or merely used their own programs. All that calling started showing up in recent telephone bills, some of which ran as much as $3,000, according to the agency. Overall, more than 800,000 minutes of calling time were billed to U.S. consumers, according to Eileen Harrington, the FTC's associate director of its marketing-practices division. Many more minutes were billed to customers from Canada, New Zealand and other nations. AT&T said it will make some special arrangements, but isn't cutting consumers much slack. "Ultimately, we expect all consumers to pay their bills," said Richard Petillo, AT&T corporate security manager. If AT&T is required to pay under international agreements, so must its customers pay, he said. Sprint and MCI Communications said complaints would be handled case by case. Joel Dichter, a New York lawyer representing the companies and the 3 individuals - owners Anna Grella and Bill Ganon, and David Zeng, who wrote the suspect program - said in a statement that the FTC "has sued the wrong individuals and entities." The web sites, he said, gave consumers a clear warning that international phone charges would apply.

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