Traxler’s fraud ran from May to August 2021, during which he “repeatedly engaged in conduct that violated the federal statute of frauds and the Commission’s rules,” the FCC said. The proposed forfeiture penalty of $220,210 is “the statutory maximum we can impose and reflects the scope, duration, seriousness and egregiousness of Clea’s apparent violations,” the commission said.
When Cleo applied to be in the EBB program, the FCC initially told the entity that its application would be “denied because there is insufficient information for approval.” But Cleo subsequently won FCC approval by offering documents including copies of two invoices “with customer-identifying information removed, which Cleo claimed was ‘for CPNI and privacy reasons.'” Cleo also claimed to the FCC that it “delivered fast speed.” wireless internet” for up to 500 users.
Dozens of almost identical complaints
The FCC said it reviewed 41 complaints about Cleo, all of which “focused on the same types of allegations. According to the complaints, consumers searched for a list of participating EBB program providers through the Universal Service or individual state EBB program websites, the FCC’s website , or USAC [Universal Service Administrative Company] website and followed the links to Cleo’s website. The complaints allege that Cleo electronically accepted payment for discounted EBB Program broadband services or connected devices from these consumers, failed to ship the ordered product or provide the requested services, and then failed to issue a refund.”
The FCC interviewed eight 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 did not receive a response when she contacted Cleo and reported that she never received the laptop, the FCC said. She then “attempted to contact Cleo via social media (Facebook) and by phone, but Cleo did not respond and blocked her on both Facebook and phone,” the FCC said.
On July 13, 2021, a New York woman ordered a tablet, laptop, ‘Wi-Fi box’ and hotspot service with a discounted EBB program from Cleo’s website and arranged to pay $108.94 on the website via PayPal, according to the FCC. This consumer “told Bureau staff that she emailed Cleo when she didn’t receive the devices she ordered and that Cleo staff were ‘rude to her and told her they didn’t have to service her.’ someone at Cleo said to ‘read the fine print.’ She exchanged several e-mails with Cleo until she finally stopped responding.”
Other complainants similarly said Cleo stopped responding to messages asking for information about devices they never received. Some consumers were able to cancel payments via credit card or PayPal.
“Eight consumers interviewed by the Bureau and other consumers who filed complaints with the FCC’s Consumer Complaint Center all stated that Cleo did not deliver 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 when they sought refunds,” the FCC said.
Shady Terms of Service prohibit refunds
In the terms of service that Cleo cited when denying the refund, it says that the company “does NOT imply or will ever agree to any refunds, credits or any other refunds for services or money that will be returned to you.”
“Cleo Communications runs a PREPAID service. All services are sold as in [sic] and without warranty. Under no circumstances does Cleo Communications make any warranty or provide refunds of any kind for the services offered,” the terms state, according to the FCC. The Cleo terms further state that “refunds through any customer bank constitute a violation contract at any time and subject to further legal action up to, but not limited to, small claims for breach of contract in the amount in dispute, any and all legal fees, court fees, attorneys’ fees, filing fees, interest at 9.9% and a breach of contract fee of $300.00.”
Rough answers: “You will be taken to court”
The FCC document details incidents in which Cleo responded to customers seeking refunds by threatening to sue or seeking harassment charges:
For example, on August 2, 2021, when a customer sent an email requesting a refund, Cleo responded: “[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 in the way we requested them. And you will be brought to court. Cleo Care.”
On August 10, 2021, when another user requested a refund, Cleo responded: “Refund denied. Please see the terms of service that describe your rights and our obligations and the rights that will be imposed. Your EBB was also requested. You will not use our credit anywhere else and you will be invoiced and charged. Cleo Collections.” Cleo followed up in a later email with that customer saying, “[n]Please read the deadline before ordering. As now we will 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]We are not ignoring you, nor are we accusing you. You requested a refund and the refund was not given and you have been notified and someone will decide [sic] one would be issued or not. Please see -kyty.xyz/terms.html. That’s what was sent to the FCC. With documents that you are and are not neglected, your claims state that [sic]. Cleo Legal Affairs.
This story originally appeared on Ars Technica.