Traxler’s scam lasted from May to August 2021, during which he was “repeatedly involved in conduct that violated the federal fraud statute and Commission rules,” according to the FCC. The proposed $220,210 forfeiture is “the legal maximum we can impose, and reflects the scope, duration, seriousness and egregiousness of Cleo’s apparent violations,” the committee said.
When Cleo applied to participate in the EBB program, the FCC initially told the entity that its application “would be rejected due to insufficient information for approval.” But Cleo subsequently gained FCC approval by providing documents, including copies of two invoices “with customer identification information removed, which Cleo said was ‘due to CPNI and privacy’.” Cleo also claimed to the FCC that it has “high-speed wireless Internet” to 500 customers.
Dozens of almost identical complaints
The FCC said it has reviewed 41 complaints about Cleo, all of which “focused on the same types of allegations. According to the complaints, consumers searched the list of participating EBB program providers through individual states’ Universal Service or EBB program websites, the FCC website, or USACs [Universal Service Administrative Company] website and followed links to Cleo’s website. According to the complaints, Cleo electronically accepted payment for EBB program discounted broadband services or connected devices from these consumers, did not ship the ordered product or provided the requested services, and subsequently did not issue refunds.”
The FCC interviewed eight of the consumers who filed complaints, who live in Alabama, Arizona, Colorado, Illinois, Massachusetts, New York, Washington state and Wisconsin.
An Illinois woman ordered a laptop from Cleo for $50 using the Venmo payment service. The woman received no response when she contacted Cleo to report that she had never received the laptop, the FCC said. She then “tried to reach Cleo through social media (Facebook) and by phone, but Cleo was unresponsive and blocked her on both Facebook and phone,” the FCC said.
A New York woman “ordered a discounted tablet, laptop, ‘wifi box’ and hotspot service with EBB program from Cleo’s website on July 13, 2021 and arranged the payment of $108.94 on the website via PayPal the FCC said. This consumer “told Agency staff that she had emailed Cleo when she had not received the ordered devices and that Cleo’s staff was “being rude to her and told her not to provide her with any service.” She said someone at Cleo’s told her to ‘read the fine print.’ She exchanged a few emails with Cleo until she finally stopped responding.”
Other complainants similarly said Cleo stopped responding to messages seeking information about the devices they never received. Some consumers were able to cancel payments via credit card or PayPal.
“The eight consumers interviewed by the Agency and other consumers who filed complaints with the FCC’s Consumer Complaint Center all stated that Cleo failed to provide the EBB-supported services or devices they ordered, and the company refused to issue refunds. Some consumers stated in their complaints that Cleo claimed it would sue them if they asked for a refund,” the FCC said.
Shady Terms of Service Prohibited Refunds
The terms of service Cleo cited in refusing refunds said that the company “DOES NOT nor will ever imply or agree to any refund, credits or other refunds of service and money that will be returned to you.”
Cleo Communications operates a PREPAID service. All services are sold as in [sic] and without warranty. Under no circumstances does Cleo Communications represent any warranty or provide refunds of any kind for any services offered,” the terms and conditions read, according to the FCC. The Cleo Terms additionally said that “chargebacks made to us through a customer bank will conflict with contract at any time and is subject to further legal action up to but not limited to small claims lawsuits for breach of contract in the amount of what is disputed, all legal fees, court fees, attorneys’ fees, filing fees, interest at 9.9% and a breach of contract fee of $300.00.”
Rude comments: “You will be sued”
The FCC document detailed incidents in which Cleo responded to customers seeking refunds by threatening a lawsuit or harassment charge:
As an example, on August 2, 2021, when a customer sent an email requesting a refund, Cleo replied: “[y]our desire to hide behind PayPal instead of contacting us. We will not issue you a refund. We will not allow you to use your benefits as we have claimed them. And you will be taken to court. Cleo Care.”
On August 10, 2021, when another customer requested a refund, Cleo replied, “Refund declined. Please see the terms of service which set out your rights and our obligations and rights that will be imposed. Your EBB has also been claimed. Use us credit somewhere else and you will receive an invoice and collections. Cleo Collections.” Cleo continued in a later email with that client by saying, “[n]ext time read before ordering. Since we no longer communicate. Any further emails will result in harassment charges in Ohio. Cleo Legal.”
On August 12, 2021, Cleo stated to another customer: “[w]I’m not ignoring you, and we’re not accusing you either. You have requested a refund and refund will not be given and you have been notified and someone would decide to [sic] one would be issued or not. See-kyty.xyz/terms.html. Is what was sent to the FCC. With You and Not Ignored Documents stating your claims [sic]† Cleo Legal Affairs.
This story originally appeared on Ars Technica†