Are phone companies ‘cramming’ charges onto your bill?
Angelique Soenarie, The Arizona Republic
If you haven’t looked at your cellphone bill recently, you may want to start reviewing it for suspicious charges. The practice of placing misleading or unauthorized charges on a consumer’s cellphone bill — also known as cramming — has bilked billions of dollars from customers over the years, according to reports by the Senate Commerce Committee. Last year, the committee introduced legislation that would prevent companies from billing unauthorized third-party charges to consumers’ landline phone bills. In response, wireless telephone carriers vowed to stop “premium text messages,” which represent a majority of third-party charges, according to Law360, a legal-news service.
But consumers can still be vulnerable. Last week, the Federal Trade Commission filed a suit against T-Mobile USA Inc., one of the country’s largest wireless carriers, alleging the company collected millions of dollars from customers in the form of unauthorized charges for premium text subscriptions.
STORY: FTC: T-Mobile knowingly added bogus charges to bills
STORY: T-MobIle CEO: FTC ‘sensationalizing’ bill claims The FTC alleges that the company received up to 40 percent of the total amount charged to consumers for third-party text services such as horoscopes, flirting tips and celebrity gossip that cost $9.99 a month. John Legere, T-Mobile’s president and chief executive officer, wrote in a blog last week that the FTC is “sensationalizing” the issue. “It is true, that back in 2009 thru 2013, all of the big carriers in the wireless industry, including T-Mobile, began carrying what became known as the Premium SMS services. We were all billing for these services on behalf of the content providers who were responsible for obtaining the customers’ authorizations,” Legere wrote. “As we all know now, there were some fraudsters in that bunch. That is why, as we found them, we terminated them and, ultimately, made the decision in November 2013, as did all four of the wireless companies, to eliminate this from our service offerings,” he wrote. Jeff Blyskal, senior editor for Consumer Reports, said phone numbers, like credit-card numbers, can be misused by scammers. He said wireless companies haven’t been required to block out these unauthorized charges because the Federal Communications Commission rule on cramming applies to landlines, not cellphone service. t-mobile T-Mobile says the accusations that it added bogus fees are false.(Photo: John MacDougall, AFP/Getty Images) It’s not unusual for third-party merchants to sell goods and services through phone or wireless carriers. But “when a customer doesn’t authorize the service, it’s called cramming,” said Brian Shull, an FTC attorney with the division of financial practices.
For example, consumers can be tricked into handing over their cell numbers, often because they believe they are signing up for an innocuous text service, such as a daily horoscope. The solicitation often comes via text, and there is usually a charge associated with the service, which is touted by a third-party company working with the phone company. Cramming has been around since the 1990s, when third-party merchants began adding unauthorized charges to customers’ landline phone bills. The FTC has been pursuing third-party merchants who use deceptive practices for some time, but the action against T-Mobile marks the first time the commission has filed such a suit against a wireless carrier. In 2012, Scottsdale technology entrepreneur Jason Hope and his company, Jawa, reached settlements in two separate lawsuits related to allegations of deceptive billing practices by the mobile-phone application developer and its affiliates. Verizon Wireless had accused Jawa of a scheme that used premium text-messaging campaigns to defraud both Verizon and its mobile-phone customers. The Texas Attorney General’s Office accused the Scottsdale company of “improperly adding expensive, unauthorized charges to Texans’ cellphone bills.” In 2004, the Arizona Corporation Commission approved rules against cramming, requiring telecommunications companies to remove charges from bills promptly and give a refund within 45 days from the date the bill is changed. A settlement has not been reached in the T-Mobile case, and it remains in litigation, according to the FTC. Tips for avoiding ‘cramming’ charges According to reports by the Senate Commerce Committee, cellphone consumers have been charged millions in unauthorized fees.
In order to avoid these ‘cramming’ charges, follow these steps: • Don’t enter your phone number online unless it is with a reputable company. • When you get your phone bill, read it closely. • If you don’t understand or recognize an item on your bill, call your carrier. Don’t wait, because some companies have a short window to grant a refund. • Ask your cellular provider if it has a blocking service for cramming. Usually it’s free. • Don’t ignore small charges. Crammers try to go undetected by submitting $1.99 or $2.99 charges. • If you have a prepaid phone, stay on top of how many minutes you have. Instead of being billed for a charge, you could have minutes deducted from your phone. • Read all forms and promotional materials before signing up for a telephone or for services charged to your phone bill
Sources: Federal Trade Commission, Consumer Reports, Arizona Corporation Commission, Federal Communications Commission