Take a close look at your cellphone bill, line by line. If you see charges that don’t make sense, such as “Web hosting” or “member fee,” chances are you’ve been crammed.
Cramming is the illegal practice of placing unauthorized charges on customer’s phone bills. The rip-off started in the 1990s with landline bills, and now it’s a growing problem with cellphone bills. Consumer Reports estimated that landline and mobile cramming could be costing American consumers as much as $2 billion a year.
Forty state and territorial attorneys general have asked the Federal Trade Commission to take action to bolster billing security.
The National Association of Attorneys General submitted comments to the FTC following a May roundtable the agency held about how to stop cramming. Among the attorneys’ concerns is what they call the inadequate disclosure of third-party charges on mobile phone bills and the lack of state and federal statutory protections governing consumer disputes about fraudulent or unauthorized charges placed on the bills.
Stephanie Rosenthal, FTC chief of staff for the financial practices division, said all comments submitted after the roundtable are being considered. The FTC is looking at a couple of options, including filing more cases against the third-party crammers.
In April the FTC filed its first case against mobile phone cramming, taking legal action to shut down Wise Media LLC, an operation that allegedly took in millions of dollars by placing $9.99 charges on consumer’ phone bills. The defendants allegedly billed consumers for services that sent text messages with horoscopes, flirting, love tips and other information.
Many consumers don’t notice the charges. For example, thousands of consumers are complaining on the Internet about being charged $9.99 a month for “mobile purchases” after receiving what they say are unsolicited and unwanted text messages from “Love Genie tips,” a website that says it offers flirting tips.
Rosenthal said cramming typically occurs after a consumer signs up for a sweepstakes or enters a contest and enters his or her phone number. Although the consumer receives a text message, the disclosures are not clear.
Rosenthal said the FTC is hearing that many people are paying their phone bill automatically online, and so they are not reading their bill every month.
Consumers can contact their cellphone provider and request that all third-party charges be blocked, Rosenthal said, and that will keep it from happening.
The Federal Communications Commission last year tightened up the rules for landline bills and now requires third-party charge to be in a separate section of the bill. It didn’t implement the same requirements for wireless carriers because the agency didn’t see cramming as a big problem, Lynn Follansbee, an FCC attorney adviser, said at the roundtable.