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FCC proposes crackdown on phone-bill cramming

The Federal Communications Commission proposed new rules today that are designed to reduce a common telephone billing scam called cramming.

The Federal Communications Commission Tuesday proposed new rules designed to reduce a common telephone billing scam called cramming.

Customers get crammed when a dishonest company puts charges on their phone bill (landline or wireless) for services that were not wanted or authorized.

On Wednesday, the Senate Commerce Committee, chaired by Sen. Jay Rockefeller (D-W. Va.) will hear testimony on the issue.

Cramming has been around for more than a decade — ever since phone companies were allowed to make extra money by billing for other companies. Until recently, the phenomenon had been largely limited to landline phones. But it’s become a growing problem for cell phone customers, too.

The FCC estimates that as many as 20 million people are crammed each year. The bogus charges are for everything from yoga classes and psychic hotline memberships to cosmetics and diet programs.

More alarming, a commission study found that only 1 in 20 cramming victims realizes they’ve been scammed.

That’s because the crammers are clever. They know how to make their illegal fees easy to miss. They keep the dollar amounts small (sometimes as little as $1.99) and list them on the bill as something innocuous, such as “monthly charge” or “service fee.”

“People don’t see it,  and if they do see it, they don’t pay attention to it,” says Joel Gurin, chief of the FCC’s Consumer and Governmental Affairs Bureau. “Month after month it adds up to millions of dollars across the country.”

By the time Alan Cooper of Bellevue, Wash., spotted the $9 fee crammed on to his wireless phone bill, had already paid $117.  He complained to his wireless company, but they didn’t help.

“I’m angry,” Cooper says. “Wouldn’t you get angry if someone was stealing $9 a month from you?”

Cooper was being charged for an 800-number he had never ordered from a company he had never contacted.

“Unfortunately, you cannot assume that every charge that’s on your phone bill is a charge that should be there,” Gurin says. “The more we can make people aware of that and give them the tools to really deal with this problem, the more rapidly we’ll see some major progress in the fight against cramming.”

The new rules proposed by the FCC today would do that in three ways:

* Notification: Many landline companies make it possible for customers to block all third-party charges, eliminating cramming. The new rule would require phone companies that offer a blocking service to tell customers on every bill and on the their website.

* Separation: Landline companies would be required to have billing statements that show third-party charges in a different section from the phone company’s charges. This should make it easier to spot charges that might be fraudulent.

* Contact Information: Both landline and wireless phone companies would be required to put FCC contact information on their bills. The FCC will try to help and use those complaints to go after crammers.

The FCC’s Gurin says the FCC will continue to prosecute crammers. Within the last month, the commission has proposed fines against four companies totaling almost $12 million for allegedly billing thousands of people for unauthorized long distance service. (Click to read FCC news release.)

Cramming moves to wireless phones  
The problem is especially thorny for cell-phone users, because many bill legitimate third-party services (such as ringtones and downloads) to their wireless bills. That makes it even harder to spot an unauthorized charge.

Janie Smoter of Bonney Lake, Wash., got burned by a crammer after she went to a coupon website that required her email address (common practice) and cell phone number (risky).

“Immediately after I did that I started getting text messages for different things like daily horoscopes and love lines and that kind of thing,” she tells me.

Smoter did not sign up for any of the services. In fact, she says, she declined them all. But about a week later, when she checked her wireless bill and spotted a "premium text message" charge of $9.95 for that day.

After getting the runaround from the company that billed her, she was able to get her wireless company to remove the charge.

“It’s infuriating,” Smoter says. “I spent hours trying to get this resolved. And I was lucky because I caught it right away.  I was reading stories of people online and some of them had hundreds of dollars on their bills from this company and they weren’t able to get any resolution.”

Be on guard
You’d think the phone companies would be responsible for any charge they put on your bill. But that’s not the way it works. It’s your job to watch out for erroneous charges and fight to get them removed.

That’s why you need to check your bills carefully each month. Look for anything that doesn’t seem right. This is especially important if you use automatic payment, since you’re probably less likely to check your bill each month.

Go on the offense: Contact your landline phone company and see if they offer a service where you can block third-party charges. I did that with my home phone a long time ago and I’m glad I did.

If you are crammed and can’t get the problem solved, contact the Federal Communications Commission. They are one of the few federal agencies that will actually go to bat for you. You can reach them or by phone at: 1-888-CALL-FCC. You should also file a complaint with the which also prosecutes cramming cases.

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