Cramming Rising Problem for Wireless Customers

Published September 24, 2010

Cramming—the practice of placing unauthorized, misleading, or deceptive charges on telephone bills—has been a problem with landlines for a while now, but now it has reached wireless phones.

The Federal Communications Commission (FCC) received more than 2,100 cramming complaints from wireless customers in the first two months of 2010, compared with approximately 7,600 in all of 2009.

“Crammers rely on confusing telephone bills in an attempt to trick consumers into paying for services they did not authorize or receive, or that cost more than the consumer was led to believe,” explained Rosemary Kimball, media relations director for the FCC’s Consumer and Governmental Affairs Bureau.

“Cramming is when unscrupulous companies place unauthorized charges on a customer’s cell phone bill, usually after the  customer has responded to an email or downloaded an item that he or she believed was free or of nominal cost,” said Steven Titch, a policy analyst at the Reason Foundation. “That download is followed by ‘premium’ messages and emails for which these companies charge very high rates,” he said.

FCC Investigating
In August 2009 the FCC issued a Notice of Inquiry seeking comment on a number of telephone billing related issues, including cramming. In the NOI the FCC invited comment on the roles of both government and industry in preventing cramming. The FCC is currently reviewing the comments.

The industry has processes in place to prevent such deceptive charges, notes Amy Storey, external communications public affairs director for CTIA-The Wireless Association. “Consumers are increasingly purchasing products and services for their mobile devices by third-party vendors,” Storey said. “In order to facilitate these purchases, wireless carriers work with vendors to have these purchased items appear on a customer’s monthly bill.”

Storey continued: “Before carriers agree to bill their customers for third-party vendors, they require these vendors to agree to the Mobile Marketing Association’s Consumer Protection Standards. This includes a double opt-in requirement, so before you’re charged for a premium service the company must ask you twice to confirm that you want to make that purchase,” she explained.
Industry Constant Monitoring
Storey noted the CTIA and carriers are constantly monitoring complaints to ensure third-party vendors are acting responsibly.

“If a carrier receives a number of complaints about a certain vendor, they will alert the vendor to the problems so they can either fix it or terminate the relationship,” she said.

“Consumers should review all of the charges on their wireless bill and contact their carrier immediately if they believe they have been charged without their consent,” Storey added.

FCC Concerned About Surprises
Kimball said the FCC likewise urges consumers to examine their monthly bills closely.

“When charges seem out of place, consumers should contact their carrier or the biller to question the charge,” she said. “If the charges were not authorized, consumers should lodge complaints with the FCC and/or the Federal Trade Commission.”

Kimball said the FCC has noted the introduction of new categories of service over the past several years has benefited consumers in many ways but may also have generated a great deal of new information for consumers to digest, plus new sources of uncertainty and confusion.

“Ensuring that consumers are not subject to surprise, unauthorized charges plays a central role in maintaining a well-functioning marketplace that encourages competition, innovation, low prices, and high-quality services,” she said.

Consumer Awareness Key
“The problem is some of these crammers can be hard to reach. Government action can take the form of new laws, and such legislation can be effective against very large crammers. Still, government intervention will never make this problem go away,” said Titch.

“This may not be in the spirit of the current thinking that there’s a government answer for everything,” Titch added, “but the best way to fight cramming is for individuals to think for a moment before giving out their cell phone information or responding to a ‘something-for-nothing’ offer,”

Titch concluded: “[Cramming] is a form of fraud, so legislation is one response. Enforcement will still be difficult. More can be accomplished through education and awareness, much like what is being done with identity theft and fraud.”

Tabassum Rahmani ([email protected]) writes from Dublin, California.