‘Cramming’ jams bogus fees onto mobile phone bills

Take a close look at your cell phone bill, line by line. If you see charges that don’t make sense, such as “Web hosting” or “member fee,” chances are you’ve been crammed.

Cramming is the illegal practice of placing unauthorized charges on customer’s phone bills. The rip-off started in the 1990s with landline bills, and now it’s a growing problem with cell phone bills. Consum- er Reports estimated that landline and mobile cramming could cost American consumers as much as $2 billion a year.

Forty state and territorial attorneys general have asked the Federal Trade Commission to take action to bolster billing security.

“Attorneys general throughout the country are increasingly concerned about unauthorized mobile charges,” Florida Atty. Gen. Pam Bondi said in a statement. “We need to consider how best to protect con- sumers against the placement of these unauthorized or fraudulent charges on their telephone bills.”

Attorneys general throughout the nation are still receiving complaints from consumers about charges, often around $9.95, that appear on their phone bills without their authorization — and aren’t always refunded, Bondi said.

The National Association of Attorneys General submitted comments to

the FTC following a May roundtable the agency held about how to stop cramming. Among the attorneys’ concerns is what they call the inadequate disclosure of third-party charges on mobile phone bills and the lack of state and federal statutory protections governing consumer disputes about fraudulent or unauthorized charges on bills.

Stephanie Rosenthal, FTC chief of staff for the financial practices division, said all comments submitted after the roundtable are being considered. The FTC is looking at a couple of options, including filing more cases against third-party crammers.

In April, the FTC filed its first case against mobile phone cramming, taking legal action to shut down Wise Media LLC, an operation that allegedly took in millions of dollars by placing $9.99 charges on consumer’ phone bills. The defendants allegedly billed consumers for services that sent text messages with horoscopes, flirting, love tips and other information.

For example, thousands of consumers are complaining on the Internet about being charged $9.99 a month for “mobile purchases” after receiving what they say are unsolicited text messages from a site that offers flirting tips.

Rosenthal said cramming typically occurs after a consumer signs up for a sweepstakes or enters a contest and enters his or her phone number. Although the consumer receives a text message, the disclosures are not clear.

“Or people think it is a one-time charge but it is in fact a subscription service. Sometimes it is a total fraud,” she said. “Whichever way it happens, they get the charges on their phone bill. Consumers don’t nec- essarily notice it on their phone bill. It is often buried on the phone bill, and it can often go on for months.”

Rosenthal said the FTC is hearing that many people are paying their phone bill automatically online so they are not reading their bill every month.

“One thing we encourage consumers to do is to read their phone bill,” she said.

Consumers can contact their cell phone provider and ask that all third-party charges be blocked, Rosenthal said, and that will keep it from happening.

The Federal Communications Commission last year tightened up rules for landline bills and now requires third-party charges to be in a separate section of the bill. It didn’t implement the same requirements for wireless carriers because the agency didn’t see cramming as a big problem, Lynn Follansbee, an FCC attorney adviser, said at the roundtable.