As we reported in August, “cramming” refers to the practice of imposing unauthorized charges on consumer’s billing statements. This fraudulent practice has exploded in activity recently. Telecommunication companies, telemarketers, and third parties are posting these fraudulent charges on consumer’s telephone billing statements.
Three telecommunication companies — AT&T, Verizon, and CenturyLink — have profited by over $650 million dollars in fees from cramming practices. These telecommunication giants are able to profit off of third party crammers by receiving a few dollars for each fraudulent charge. Consumers should be aware that these third party crammers provide products and services that are sometimes related to telephone services. For example, they commonly hide their “services” as an unwanted long distance service plan.
Additionally, state Attorneys General across the nation have already filed suit and recovered from deceptive companies engaging in cramming. Florida has negotiated settlements with AT&T, Verizon, MemberWorks, and T-Mobile. Florida was able to obtain $600,000 from T-Mobile and $950,000 from MemberWorks to compensate the State and refund consumers their money. Approximately ten years ago, state Attorneys General filed suit against a third-party crammer formally known as MemberWorks (rebranded as “Vertrue”) for their cramming practices and reached several settlements on behalf of consumers.
Consumers should also be aware that third party crammers fraudulently tack their products and services onto telephone bills that are subscription based. These subscriptions are renewed automatically unless the consumer contacts the third party crammer and asks to cancel the service. Even when a consumer catches cramming activity, it generally takes several communications with the third party crammer to finally stop fraudulent charges.
The Federal Communications Commission issued a report to modify existing rules under the truth-in-billing act to protect consumers on July 12th, 2011. The FCC has proposed rule changes requiring telecommunication common carriers to clearly and conspicuously identify on consumers bills when they are being charged by third party crammers. In addition, the rules would require telecommunication common carriers to disclose how to file a complaint and block these third party charges. Hopefully, when these rules go into effect, they will help consumers to identify fraudulent cramming charges on their telephone bills.
Consumers are encouraged to be vigilant in looking at their telephone bills to make sure they are being accurately charged for the services and products they purchase. Lawyers in our firm continue to investigate claims of cramming practices across the nation. We expect telecommunication giants to reform cramming practices as consumers stand up and demand to be treated fairly and charged only for the services that they request.
For more information on cramming practices, you can contact Andrew Brashier, a lawyer in our Consumer Fraud Section, at 1-800-898-2034 or Andrew.Brashier@beasleyallen.com.
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