As we reported in the August issue, the Federal Trade Commission (FTC) filed suit against T-Mobile making allegations related to cramming bogus charges on consumers’ cellphone bills. The FTC has now taken the matter a step further and testified before Congress. Testifying on behalf of the Commission before the Senate Committee on Commerce, Science and Transportation, FTC Commissioner Terrell McSweeny told lawmakers that the Commission believes mobile cramming represents a significant consumer protection issue. He stated in his testimony:
Mobile cramming is a significant problem that threatens to undermine confidence in the developing payment method known as ‘carrier billing.’ As stakeholders have noted, carrier billing of third-party charges may be particularly beneficial for unbanked and underbanked consumers. Additionally, consumers have used text messages to donate funds to a charitable organization, with the charge placed on their mobile phone account. As carrier billing has developed, however, fraud has become a significant problem for consumers.
Cramming originated as a landline issue but, not surprisingly, it has evolved to include cellphones as more and more consumers move away from traditional landline phones. Over a time spanning two decades, the FTC brought more than 30 cases to combat landline-cramming. Through those cases, brought in cooperation between the FTC and state attorneys general, tens of millions of dollars were returned to consumers in the past 20 years. Tracking the migration to cellphones, the FTC has brought six cases against mobile cramming since the Spring of 2013. Of those, three have been partially or totally resolved, bringing judgments of more than $160 million and court orders preventing further illegal cramming.
The FTC is not the only federal agency investigating cramming issues. The Federal Communication Commission (FCC) announced on July 1, 2014, that it too had opened an investigation into T-Mobile’s cramming practices. Like the FTC, the FCC has investigated several other cramming cases, which have resulted in more than $33 million in proposed fines for the U.S. Treasury. The two agencies are coordinating their efforts regarding T-Mobile. If you need more information on this subject, contact Rebecca Gilliland, a lawyer in our firm’s Consumer Fraud Section, at 800-898-2034 or by email at Rebecca.Gilliland@BeasleyAllen.com.
Sources: http://www.ftc.gov/news-events/press-releases/2014/07/ftc-testifies-congress-mobile-cramming-issues?utm_source=govdelivery; http://www.fcc.gov/document/fcc-investigates-cramming-complaints-against-t-mobile
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