The $50 Million Text Message Scam

TL;DR:

Between 2010 and 2014, a network of companies, orchestrated by executives within the mobile payments industry itself, engaged in a massive scheme to defraud American consumers through a practice known as “cramming.” By placing unauthorized monthly charges of roughly $9.99 on mobile phone bills for bogus “Premium SMS” services (such as horoscopes and celebrity gossip) these entities siphoned tens of millions of dollars from unsuspecting account holders.

The scheme relied on deceptive “freebie” websites to harvest phone numbers and utilized a labyrinth of shell companies to evade detection by wireless carriers.

While this summary provides the broad strokes of the theft, the following analysis details the systemic rot and corporate greed that allowed such a digital shakedown to flourish.

The Anatomy of a Digital Shakedown

In the psychopathic tomes of American capitalism, the innovation of the predator class is often lauded as “market disruption.” In the case of MDK Media and its constellation of shell companies, that disruption took the form of a digital pickpocketing operation so vast and automated it rendered the victim almost obsolete in the transaction.

The Federal Trade Commission’s complaint outlines a mechanism of plunder that was not merely a “bad business practice,” but a calculated assault on the financial security of the average worker.

The scheme centered on “cramming”, which is the insertion of unauthorized third-party charges onto mobile phone bills. While the amounts (often $9.99 or $14.99 a month) might seem trivial to the corporate oligarchs running the show, they represent a significant parasitic drain on the working class.

The scammers lured consumers with the mirage of “freebies,” such as gift cards for Walmart or Target, only to use the harvested phone numbers to sign victims up for recurring subscriptions to worthless digital content like “fun facts” and “love tips”. In other instances, they simply began billing consumers who had no contact with them whatsoever, fabricating the “double opt-in” consent required by industry standards!

Timeline of Corporate Misconduct

Neoliberal Capitalism and the “Inside Job”

The true insidiousness of this case lies not in the “cramming” itself, but in who was pulling the strings.

The FTC states that the operation was run by the very executives charged with policing the industry. High-ranking officials at “Mobile Messenger,” an aggregator acting as the middleman between content providers and wireless carriers, were secretly funding, managing, and creating the content provider companies (MDK, Tendenci, etc.) to double-dip into the profits.

This is the quintessential portrait of neoliberal capitalism: the regulatory apparatus is captured by the industry it supposedly regulates, and the infrastructure of commerce is weaponized against the consumer. Executives like Erdolo Levy Eromo and Darcy Michael Wedd used their positions to shield these fraudulent companies from scrutiny, ensuring the flow of ill-gotten monies continued even as carriers attempted to crack down.

When one shell company was “burned” (terminated by a carrier), they simply spun up another, treating corporate charters like disposable masks for their corporate greed.

The Economic Fallout and Public Health of Society

Why does this matter? It matters because it exposes the fragility of corporate accountability in an era of digital extraction. The harms here are not just financial; they represent a degradation of public trust and a direct tax on the poor.

When a corporation can automate the theft of millions through wealth disparity-widening schemes, society suffers a collective “death by a thousand cuts.”

The economic fallout is tangible. Millions of dollars were transferred from the pockets of ordinary citizens (money for groceries, rent, or healthcare and others of life’s essentials) into the offshore accounts and shell companies of a few wealthy executives.

This is wealth redistribution in reverse.

Meowover, the public health of our economy is poisoned when success is defined not by the creation of value, but by the successful deception of the consumer. The sheer effort required for a consumer to notice, dispute, and recover these charges is a “time tax” levied by the powerful upon the powerless²⁴.

A press release about MDK Media running this scam can be found on the FTC’s website: https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-obtains-orders-halting-mobile-cramming-scheme