How to Prevent 'Cramming' Charges on Your Phone Bills
New FCC rules make it easier to block unauthorized monthly fees, but you still need to take some steps to protect yourself from this lucrative scam
Caroline Mayer is a consumer reporter who spent 25 years working for The Washington Post. Follow her on Twitter @consumermayer
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There’s a pretty good chance that you’ve been a victim of cramming — the practice of placing unauthorized, misleading or deceptive monthly charges of $1.99 to $19.99 on your telephone bill — and don’t even know it.
The Federal Communications Commission estimates that as many as 20 million American households a year have cramming fees tacked onto their landline bills (the agency doesn’t have a similar figure for wireless bills). These fees show up on bills with vague descriptions, like “service charge,” “membership,” “calling plan” and “voicemail.” Sen. John D. (Jay) Rockefeller (D-W.Va.), whose Senate Commerce Committee investigated cramming, calls the practice a “nationwide epidemic.”
The FCC, which says only 1 in 20 victims may be aware of the unauthorized charges, recently enacted a new set of rules to crack down on cramming; the regulations are expected to take effect by the end of the year.
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The FCC’s anti-cramming rules are commendable. Trouble is, many consumer activists believe they don’t go nearly far enough. As Yogi Berra said, it's deja vu all over again; the FCC recently came out with anti-robocall rules and they were laden with loopholes, too.
A Cramming Primer
Before I tell you about the new rules and the best ways to protect yourself against phone crammers, here’s a little primer on the scuzzy practice:
For more than two decades, phone companies have permitted other firms — or, in industry parlance, “third-party companies” — to place charges on a consumer’s phone bill. Initially, the third-party charges applied to telephone-related services, like long-distance and paging services, that you could buy from an independent, possibly less expensive, firm.
But phone bills proved so hard for consumers to decipher that some third-party companies soon saw an opportunity to scam them by leveling cramming fees and scooping up the cash.
As law-enforcement officials and telephone companies started paying attention, the scammers’ methods became more sophisticated. They began discreetly hiding charges within the fine print of online sweepstakes, contests or “free trial” offers. Sometimes, they sent out checks that, when endorsed and cashed by a customer, signified approval of the cramming charges. The phone carriers themselves bore no responsibility for oversight.
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The cramming grab has sometimes been enormous. Last month, the Federal Trade Commission went after a company called Billing Services Group, trying to get the firm to pay back $52 million in bogus, unauthorized cramming charges for “enhanced services,” like voicemail and streaming video.
Despite — or perhaps because of — growing consumer attention, including Bob Sullivan’s MSNBC blog, The Red Tape Chronicles, and The New York Times’ Haggler column by David Segal, cramming remains one of the top billing complaints at the FCC.
Loopholes in the Cramming Rules
That brings me to the FCC’s new anti-cramming rules.
Virtually every major phone company now lets consumers block all third-party charges on their landlines if they call and ask — but this service isn't advertised. Under the FCC's new rules, phone companies will be required to clearly and prominently tell you about the option to block third-party charges from your landline bills when you sign up for service, as well as on each monthly bill and the firms’ websites. The carriers won't need to explain them to you, though.
The rules, however, have three enormous loopholes:
Loophole 1: Third-party billing is still allowed. Although you’ll now know how to opt-out of cramming, phone companies can keep letting third-party services charge the unwanted fees. “I was disappointed,” says Susan Grant, director of consumer protection for the Consumer Federation of America.
Loophole 2: The consumer protections are weak. Grant says the FCC should have given phone customers more protection if they refuse to pay cramming charges that show up on their bills.
Today, phone companies can decide whether to refund a contested fee and the FCC isn’t altering that policy. Many consumers have complained that their carriers have refused to give them a credit for the unauthorized charges.
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Loophole 3: The FCC anti-cramming rules apply only to landline phone bills, not wireless charges. This is probably the biggest loophole of all. The FCC said it didn’t include wireless companies because the agency gets twice as many complaints about landline cramming as opposed to wireless. But the agency acknowledged that the percentage of wireless cramming complaints is growing rapidly; it doubled from 2008 to 2010.
Wireless-bill cramming may become an even bigger problem, says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. “Our fear is with the crackdown on landline phones, crammers will move over to wireless bills to make money.”
And here’s the kicker: The FCC anti-cramming rules fall short of what three major phone companies said they’d do voluntarily later this year.
Verizon, AT&T and Century Link (the new owner and name for Qwest), announced that they’d end most third-party billing on their landline accounts. They’ll still bill for telecommunication-related services, like long-distance, conference calling services and directory assistance, however.
“We believe that what the carriers have already decided to do voluntarily will have more impact than the FCC’s new rule,” Breyault says.
5 Steps You Can Take
Consumer advocates recommend you take these five steps to prevent cramming charges on your phone bills and to complain if you become a cramming victim:
1. Regularly check all your phone bills for unauthorized charges. Then, call your phone company to ask about any fees you don’t understand and dispute all suspicious activity.
You should call the phone company, rather than the firm that smacked you with the cramming charge, because it’s often hard to find crammers, especially if they’re scammers.
Your phone company might refund fees if you protest, but probably only a few months’ worth of recurring charges. That’s why it’s so important to review your bill carefully every month.
2. Ask your phone company about imposing a “bill block” on all third-party billing charges. You’ll want to check with your carrier to see what a block would mean. For some phone companies, like AT&T, a total third-party block could bar you from buying apps for your smart phone or making text donations to charitable causes. If that’s the case, you may decide not to block, but just to become more vigilant reading your bills.
3. Read the fine print for anything you’re signing that asks for your telephone number. By entering an online sweepstakes or contest, for instance, you may unknowingly be agreeing to pay monthly fees to the company behind the promotion.
4. If you’re a cramming victim, file a complaint with the FCC. Call (888) CALL-FCC or fill out a complaint form online at the FCC’s website. The FCC says it will continue monitoring cramming grievances to see if additional protections are needed. So, like the proverbial tree falling in the forest, if the FCC doesn’t hear from consumers, it won’t know there’s a problem.
5. If you’re just mad about cramming, tell the FCC. The agency is asking for public comments on its new cramming rule to see if further action is necessry. So consider this an opportunity to speak out. You just might save yourself — and millions of other Americans — some money on monthly phone bills.