I doubt that many of our readers have heard the term “cramming” used in relation to their telephone bills. That type cramming has become a big problem for folks and businesses. Mysterious fees and services “crammed” onto phone bills are a nationwide problem for U.S. consumers, resulting in a huge source of revenue for some of America’s biggest telecommunications companies. A report issued last month by Sen. John Rockefeller, D-W.Va., resulting from a year-long congressional investigation, says that three firms — Verizon, AT&T and CenturyLink/Quest — earned $650 million as their cut of cramming charges levied by third-parties since 2006. Cramming charges — such as unwanted $10-per-month voicemail or Web design services — have been frustrating phone customers for more than 15 years. This was due in part by ill-considered rules designed to enhance competition in local phone markets.
Most consumers don’t spot the small monthly fees, but even when they do getting refunds is extremely difficult. The telephone provider that sends the bills often refuses to issue refunds, instead referring consumers to the third-party firms, which are often unresponsive. The Federal Communications Commission estimates that 15 million to 20 million consumers are crammed every year. Sen. Rockefeller’s report says cramming could cost U.S. consumers $2 billion annually. Unfortunately, Congress has refused to fix the problem for more than a decade. Sen. Rockefeller had this to say:
I think it’s embarrassing for the Congress … but they’re big companies. They don’t have to make money that way. I think it’s reprehensible and … shameful behavior. And don’t tell me they don’t know about it. They have to know about it.
Crammers have jammed unauthorized charges onto dead people’s phone bills, government agencies’ telephone lines — even onto lines owned by AT&T. The report stated:
Committee staff has found hundreds of egregious examples of cramming. Third-party vendors have enrolled deceased persons in their so-called services and charged family members’ telephone bills for it. They have charged telephone lines dedicated to fire alarms, security systems, bank vaults, elevators and 911 systems. Senior citizens’ telephones have been enrolled in web-hosting services, even though they have never used them. A children‘s hospital was charged for a celebrity tracker e-mail service that provided daily celebrity news feeds, photos, and videos. A national bank‘s telephone lines were charged for credit protection plans.
The FCC has proposed new rules that would require more obvious disclosures by third parties on phone bills. Under current rules, providers are forced to give third-party firms the chance to market services like toll-free numbers or website hosting using the providers’ equipment and billing services through an arrangement that has its origins in the original breakup of AT&T’s telephone monopoly. But it appears to be much too easy for third parties to attach unwanted items to consumers’ bills. Previous investigations have found that firms frequently trick consumers into signing up by using sweepstakes entries or cashing small checks that also serve as authorization forms for unwanted services. In other cases, the third-party firms simply lie about getting authorization, a scam called “phantom billing.”
While crammers collect billions of dollars, telecom firms get a percentage of each payment for passing along the charge. According to Sen. Rockefeller, that has added up to $650 million for the three big firms in the last five years. The phone companies have to know about cramming because it’s bringing in lots of money to them. Also, the practice is bringing them a lot of complaints. The report says more than 500,000 customers have contacted AT&T, CenturyLink/Qwest, and Verizon to complain about cramming in the past five years. The report also claims that phone companies put pressure on employees to grant shady third-parties access to consumers’ accounts for billing purposes.
Products such as prepaid calling cards, voice mail service, credit repair services, cell phone warranties, local singles matching services, Web page design, and toll-free numbers were most frequently crammed. More recently, the scams have evolved to include credit repair, identity theft prevention and monitoring, business advice, online photo storage, roadside assistance, online yellow pages listings, and many other services. They have a common denominator: Consumers pay for them, sometimes for years, but don’t want them or use them.
Sen. Rockefeller plans to introduce legislation that would make cramming explicitly illegal, but that kind of consumer protection is still in the future. In the meantime, the best way for consumers to protect themselves is to call their local phone company and request that it shut off third-party billing services — many will, for free. Consumers who’ve been crammed and scammed should call their local phone company and insist on a refund. They should also file a complaint with their state attorney general’s office and the FTC. But most importantly, folks must scan those phone bills every month for surprise charges and unwanted services. They are very easy to miss. More will be reported on cramming in the September issue.
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