Fraud! FCC Takes Aim at the Scammers Secretly Padding Your Phone Bill

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Phone billA little over two years since it took on the credit card industry, the federal government has found a fresh villain: telecommunications fraudsters. Earlier this week, the Federal Communications Commission proposed new rules designed to crack down on "phone cramming," a widespread, illegal practice that robs billions of dollars from phone users.

Officially, the FCC defines cramming as "the illegal placement of an unauthorized fee onto a consumer's monthly phone bill." Often ranging from $1.99 to $19.99 apiece, these charges are designed to be overlooked. While they sometimes have names like "psychic," "membership," or "mail server," they more often have innocuous titles like "service charge," "minimum monthly usage fee" or "other fees." For the third-party companies that tack these expenses onto your bill, the goal is to create a name that sounds vaguely official and will be ignored by most customers. To this end, many companies also tuck the fees in with a long list of other, more legitimate charges.

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Cramming


Death by a Thousand Cuts

While cramming charges may be relatively small individually, they add up: According to a report issued by the Senate last week, "Telephone companies place approximately 300 million third-party charges on their customers' bills each year, which amount to more than $2 billion worth of third-party charges on telephone bills every year." These charges hit phone users across the spectrum, from military organizations to government groups to businesses to individual consumers.

Part of the reason that phone cramming has been so successful is because the deck is stacked against consumers. Phone bills are already complicated, which makes it hard for customers to recognize that they're being crammed. What's more, even if they find problems with their bills, most customers don't know where to go to complain, and are often given the run-around by their phone companies.

Have you ever had a phone cramming problem?
No388 (4.6%)
Yes, but the phone company took it off2906 (34.4%)
Yes, and I had to argue with the third-party provider2193 (26.0%)
Yes, and I had to go to the FCC198 (2.3%)
Yes, and I had to call a lawyer103 (1.2%)
Not yet...but I'm checking my bill!2662 (31.5%)


The FCC's strategy attempts to combat the problem at several levels. As Joel Gurin, chief of the FCC's Consumer and Governmental Affairs Bureau, explains: "When it comes to cramming, we have three goals: We want to make it easier for consumers to prevent it, detect it, and redress it." The commission's proposed new rules directly reflect this strategy. To begin with, they would change the look of phone bills: Instead of mixing third-party charges together with more legitimate fees, the new rules would require that phone bills clearly separate the phone company's charges from those of third parties. This clear delineation would make it much easier for customers to identify crammed fees.

A second proposed rule would make it much easier for customers to complain about illegitimate fees. If passed, it would force phone companies to prominently place the FCC's contact information on bills and on their websites. As Gurin notes, "Mediating on behalf of consumers is part of our job as an agency." What's more, in addition to helping consumers to deal with phone crammers, the commission also reports any obvious scams: "If we see something that's really outrageous, we pass it along to the enforcement bureau."

If passed, the final proposed rule could fundamentally change the entire cramming problem: It would require many phone companies to inform customers that they can block any and all third-party charges. However, not all companies allow users to opt-out of these charges -- and the proposed rule change would not require phone companies to make this option available.

The Next Steps

Now that the proposed rules have been sent out, the FCC will move on to the public comment period: After any proposed FCC rule change is announced, the public has 60 days to comment on it, after which the FCC takes another 30 days to review the comments before amending its rules. While the commission is soliciting comments from a variety of industry groups and professionals, Gurin emphasizes that he wants to hear from the public: "We would like to hear from ordinary citizens," he notes. "Public comment is very important in any rule-making process."

If you would like to comment about the FCC's new proposed cramming rules, simply click on this link. The text of the proposed rule, 11-116, is visible here, and Gurin's comments on it can be found here. If you have any cramming complaints, you can reach the FCC here.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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189 Comments

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Lloyd

Years ago, AT&T tried the "minimum useage fee" scam on me. I tried for several months to get it removed, but finally had to fire them. It's not all that hard to fire your phone company, there are many options.
By the way, the survey in the article is curiously worded to exclude the customers that have fired their phone companies, and also excludes all of the people who (and this would probably be the largest group) who are currently dealing with the problem and haven't reached a satisfactory resolution. Is this a purposely skewed survey to manufacture an artificial "consensus"? Namely, that "all of the customers who have had problems have satisfactorily resolved them, therefore there is no problem leaving the rules the way they are"?

September 05 2011 at 9:42 AM Report abuse rate up rate down Reply
ebstall

I went to the AT&T office and acted very loud and ugly. After 2 visits in one evening and standing for about an hour and tellign them they were not telling hte truth, they took mine off.

July 19 2011 at 10:05 AM Report abuse rate up rate down Reply
justwayde

Ok, here's the scoop. The FCC has mandated that the local phone companies accept the 3rd party charges ever since the breakup of Bell. They don't even allow them to ask their customers if they want to add a BLOCK on their accounts, as they deem that an unfair trade advatage because it potentially could prevent legitimate billing from other vendors such as competing long distance carriers.
This is what you need to do. Call your local phone provider and request a "CRAMMING BLOCK" be placed on your account. Make sure you get the order number for the block before you end the call. While your at it, you may also ask that a "FREEZE" is placed on you local, region toll & long distance providersso you don't get "SLAMMED" which is another illegal practice some companies play by taking you to another provider without your authorization. This practice can also result in large charges to your account for inflated toll & long distance charges, and early termination feesfrom your chosen carrier because you broke your term agreement with your original carrier - even though you didn't actively request the change. Your local provider will most likely reverse the improper charges, but why let yourself get into the situation when you can proactively stop it before it becomes a problem.
Remember, your best defense is not to respond to ANY phone soliciationsfrom people who say they work for your phone company, or even come to your door wearing a badge with your phone company's name & logo. These people ARE NOT employeesof your phone company. At best they may be an authorized vendor/reseller of the company, akin to the people who work at mall kiosks, but are poorly trained, and tend to make promisesthat will never be met by the carrier, and you will never see them again or be able to reach them or their real employer. At worst, they actually work for a competitor & will either CRAM your bill or Slam you to another carrier. It is always best, if you have any questions about the charges on your bill or want to know what the best rates are, to call your local provider directly either at the number provided on your bill or as listed in the phone directory. Ask to speak to the billing department and directly discuss your questions and/or concerns. You will find most of them are motivated to keep you a happy customer.
Finally, if you are or have been a victim of Cramming or Slamming, write the FCC & complain. Not only about the offending carrier that issued the charges, but also of their mandate that compels the local carriers to accept their charges.

July 19 2011 at 7:53 AM Report abuse +1 rate up rate down Reply
haddockjr

Once again the cell phone companies show their true colors. They could easily have done what the FCC is suggesting and helped their customers along the way. But No! The government has to intervene to tell them to treat their customers properly.
It's a sad commentary on the quality of management.
No wonder their contract chun rates are so high.

July 19 2011 at 7:30 AM Report abuse +1 rate up rate down Reply
Forestnfama

Go back and identify those cramming charges and follow the money.....crimes have been committed.......there is a paper trail.......enforce the damn laws already......

July 19 2011 at 6:44 AM Report abuse +1 rate up rate down Reply
anpra3

Unfortunately,even CELL phone companies pull this on their customers.VERIZON tried it with me and I REFUSED to pay the charges to this day(it happened 8 years ago and they are still hounding me about it).They even sent it to collections and I told the bill collector that I would pay VERIZON before I gave them (bill collector) a single penny.Either way, I still haven't paid it to this day and NEVER will.That's why my means of communication is a 2-way radio.

July 19 2011 at 5:01 AM Report abuse rate up rate down Reply
ddokken69

I have but one word to sum up the biggest, lying, cheating and rip-off artists in the U.S......." VERIZON "

July 19 2011 at 3:53 AM Report abuse rate up rate down Reply
unclecrackre

I don't have those problems. I got rid of my landline phone years ago. Now I just use my cell. I use a prepaid service, so I know what my money is paying for, no contract, if I can't afford it, no big deal. Landlines are obsolete.

July 19 2011 at 3:43 AM Report abuse rate up rate down Reply
Logan Collins

Rockefeller Releases Alarming Findings of Yearlong Committee Investigation Into Mystery Telephone Fees- 1.usa.gov/nLCPmc

July 19 2011 at 3:20 AM Report abuse rate up rate down Reply
Logan Collins

Information regarding the Cram Scam: Rockefeller Releases Alarming Findings of Yearlong Committee Investigation Into Mystery Telephone Fees- 1.usa.gov/nLCPmc

July 19 2011 at 3:17 AM Report abuse rate up rate down Reply