Fee schemes on cell phone bills increase

As posted on September 11, 2010 on www.ajc.com

By Lucy Soto

Cramming, an old ploy that can net scammers millions of dollars, appears to be making a comeback as more consumers use their wireless phones for services ranging from news and weather reports to daily jokes and psychic connections.

Crammers hide unauthorized charges, often too small to attract notice, in the baffling list of numbers on phone bills.

Consumers’ Union, a nonprofit advocacy group that publishes Consumer Reports magazine, says the practice is evolving from its beginnings a decade ago as a scam adding bogus 800- and 900-number charges to land lines.

“As you see more consumers making the shift from land lines to mobile phones, you see the complaints shift as well,” CU spokesman David Butler said.

“The bills tend to be very complicated,” Butler said. “And we’re living in a world where most people get the information online as well and so it’s even more important for people to read their bills and go through them very carefully.”

The Federal Trade Commission recently called cramming “a significant area of increasing consumer complaint.”

According to an October FTC report, more than 3,000 people complained about cramming in the previous year for land line, mobile wireless and Voice over Internet Protocol [VoIP] telephone services.

So far this year, consumer questions about cramming to the Federal Communications Commission are outpacing last year’s number. In the first three months of 2010, the FCC, which regulates telephone companies, received 2,142 inquiries about cramming. That’s compared with 6,714 in all of 2009.

Telephone companies bill customers for services offered by outside parties, such as souped-up voice mail or music downloads. Those charges often are handled by third-party firms – aggregators — who process billing for companies that provide the add-on services. Major phone carriers, such as Verizon Wireless and AT&T, contract with those companies.

So, as both land lines and cell phone bills have become more complicated, crammers have fertile ground to slide in small charges in the hope consumers won’t catch on.

Earlier this month, a Florida man was sentenced to 21 months in prison for running a cramming scam from a jail cell. His third-party companies charged $35 million in collect calls that typically appeared on the last pages of consumers bills and escaped notice, federal prosecutors said.

In March, the FTC halted a cramming scheme that took in $19 million over five years in charges from $12.95 to $39.95 a month.

The FTC says Inc21 and its companies hired offshore telemarketers to call prospects and offer “free” trials for services such as website hosting, directory listings, search-engine advertising, and Internet-based faxing, without explaining they had to take steps to avoid charges.

Consumers also can unwittingly give permission to charge for unwanted services when they fill out sweepstakes entry forms or use a toll-free service like a date line or psychic line.

Such charges can be difficult to pin down, appearing just once or as a monthly subscription charge, with innocuous descriptions like “service fee,” “calling plan” or “minimum monthly usage fee”.

With so many separate companies involved in billing, consumers can have difficulty getting someone to take responsibility for unauthorized charges.

When the Georgia Public Service Commission receives cramming complaints, it first sends them to the telephone company, said Consumer Affairs Director Mike Nantz. Usually, he said, that fixes the problem.

Last year, the Georgia Legislature adopted a bill requiring carriers to provide a way for consumers to block third party charges from their bills.

In addition, wireless carriers ask vendors to abide by the Mobile Marketing Association’s standards, said Amy Storey, a spokeswoman for CTIA-The Wireless Association, a nonprofit industry group.

The MMA’s guidelines say third-party vendor companies always should ask consumers twice before they can begin charging for any add-on service. Consumers also should be given a simple way to stop the service, such as sending or texting a “stop message,” Storey said.

Enforcement of those standards is left to individual carriers.

“Carrier members are constantly monitoring, ensuring our vendors are acting responsibly,” Storey said.

Verizon Wireless is working to educate the public about their telephone bills, spokeswoman Sheryl Sellaway wrote in an e-mail. Now that consumers can sign up for weather alerts, music subscriptions and other “premium” services through cell phones and websites, Sellaway said, it’s much easier to get confused.

“Frankly, the diverse wireless market place, which now consists of children, teens, young adults and others, has led to a heightened conversation about premium messaging and how to best manage and understand cost of premium services,” she wrote. “That’s why education has been the key for us. And, beyond premium messaging, we provide services to help customers manage content, block numbers, activate time restrictions, usage allowances, overage alerts and more.”

She suggests Verizon customers go to the safeguards section of their “My Verizon” page for information.

The best defense, said Shawn Conroy of the Governor’s Office of Consumer Affairs, is vigilance.

“We encourage consumers to do three things,” Conroy said. “Read your bill read your bill, read your bill. Look at it thoroughly. If you have a land line and a cell phone, sometimes it can be a few pages, but take the time to look for it.”


How to dodge cramming

Examine your telephone bills closely. Make sure you got the service you pay for, even for small charges. Crammers often try to go undetected by submitting $2 or $3 charges to thousands of consumers. Check past bills for unnoticed fees.

Be wary of contests, clubs and “free” calls. Read the fine print because crammers sometimes use entry forms as “permission” to enroll you in a service you only discover you signed up for when you get the bill. And calling to claim your “free” prize might entail calling a 900 number that costs you.

Block your account. Ask your phone company to put a cramming block on your account to stop third-party charges. Make sure you check on any costs involved.

Call the company that charged you for calls or services you didn’t make or authorize. Ask for a detailed explanation and request an adjustment to your bill.

Call your telephone company. The Federal Communications Commission requires companies to place toll-free numbers on their bills for customers with billing inquiries. Ask about their procedure for removing incorrect charges.

 

Where to get information

Visit these links for further information and suggestions:

/cell_phones/ild.html

Georgia law allowing consumers to block third-party billing: bit.ly/a8smgQ

Florida attorney general settlement with Verizon and Alltel over ring tone cramming: bit.ly/aRp3ca

Federal Communication Commission advice: www.fcc.gov/cib/consumerfacts/cramming.html

Federal Trade Commission tips: bit.ly/dmSdZ5

Verizon’s information on cramming and bill blocking: bit.ly/btvvmA

Governor’s Office of Consumer Affairs tip sheet: bit.ly/b9LYG8

Consumers’ complaint site that features cell phone cramming: www.consumeraffairs.com?/cell_phones/ild.html

FTC actions related to cramming, including cracking one scam that raked in $19 million in five years:

www.ftc.gov/opa/2010/03/inc21.shtm

www.ftc.gov/opa/2008/03/phone.shtm

www.ftc.gov/opa/2003/02/800connect.shtm

Sample phone bills, for land lines and wireless, with charges explained:

www.fcc.gov/cgb/phonebills/samplePhonebill.html

www.fcc.gov/cgb/phonebills/WirelessPhonebill.html

 

Filing a complaint

For non-telephone services, for example “content” services such as web hosting, online games or psychic hot lines, call the Federal Trade Commission 1-877-382-4357 , or use their complaint form: www.ftc?complaintassistant.gov

For telephone charges related to service between states or internationally, contact the Federal Communications Commission, 1-888-225-5322, or e-mail: fccinfo@fcc.gov. Or use their online complaint form: esupport.fcc.gov/complaints.htm

For telephone charges for services within Georgia, contact the Georgia Public Service Commission at 404-656-4501 , or see www.psc.georgia.gov