Cramming Makes a Comeback

This may sound obvious, but it’s important to not only pay those pesky phone bills, but to read and understand them as well. Although I have made a career out of reading and knowing the ins and outs of telecom contracts and bills, and while I’m very happy with the work that I do, regardless of how complex and dry these documents may be to the average corporate or government consumer, I can’t say strongly enough that in this context (and almost all others—with the limited exception of hot dog production), knowledge is power. Regardless of the carrier, phone bills are designed to be complicated and difficult to understand. Unfortunately, a consumer who cannot distinguish between charges that are valid and those that are not, is ripe for abuse. Further, because these charges are often relatively small, they’re easily missed…Death by a thousand little cuts…

Aside from the knowledge that the charges on the bill are accurate (often a challenge in and of itself to make sure that legitimate taxes, surcharges and fees have been calculated and applied correctly), it’s also imperative to know that the bill represents a reflection of the services that have been agreed upon and have been ordered and does not include a group of “phantom” charges that were neither ordered nor authorized. Unfortunately, this kind of fraud, which is called “cramming” is once again rampant. 

Crammers have been very successful largely because of the fact that they know that most phone bills are not examined carefully. They also know that many people who go to the trouble to review their bills and who find irregularities that are relatively small, will just nod in disgust and pay the bill rather than question a line item that seems inconsistent with the services that were ordered. Often, when a crammed charge is discovered and brought to the attention of the carrier, the process of securing a credit is as time consuming and painful as a root canal.

With this in mind, the FCC has taken a major step to thwart crammers and assist consumers (both individual and enterprise) in both detecting cramming charges and receiving credit for “bad” charges, as well as preventing further cramming activity with a notice of proposed rulemaking (NPRM), published in July. This action is likely the result of a recently released report from the Senate Committee on Commerce, Science and Transportation, chaired by Senator Jay Rockefeller (D, WV), and released in July of this year. Who knows? Maybe Senator Rockefeller got fired up about the issue because he was a cramming victim too…

Back in the dark ages when dinosaurs roamed the earth and the 1996 Telecommunications Act was enacted, telephone companies allowed their existing billing platforms to be used by third parties. It was thought that people could—and would--use their phone numbers like credit cards. While this never actually took off, the single largest beneficiaries have been the third party billers, most of whom applied charges without permission, and, more disturbingly, the providers of local service who send bills to consumers every month.

In fact, according to The Rockefeller report, since 2006, “AT&T, Qwest (now CenturyTel) and Verizon have earned more than $650 million [themselves] through third party billing.” It’s now easy to understand why cramming charges have been so tough to shake—the carriers are making money as well!!

When cramming first became an issue in the 1990s, and consumers of all shapes and sizes began to complain, both the FCC and lobbyists for the telecommunications providers (United States Telephone Association or USTA) convinced Congress that what was needed was not firm regulation, but rather flexibility and voluntary guidelines would address the problem. Uh, not so much.

As a result, the recently proposed rulemaking raises issues that clearly indicate that the FCC is not satisfied with the voluntary approach the carriers currently in place. The fact that consumers of all shades and stripes have been repeatedly victimized by third party billers and their official providers, both when the charges appear on bills, and again when they seek to get the improper charges removed, suggests that it’s time for something that’s much more iron-clad and enforceable than “voluntary.” And this is only for those consumers (again—the list of victims is not limited to residential consumers, but includes everyone from the U.S. Postal Service, to AT&T itself) who recognize that there is a problem. If bills aren’t monitored and checked, it’s impossible to know how many of these charges have been paid simply because they went undetected. A thousand little cuts…

Interestingly, while much of the history of cramming has involved traditional landlines, Verizon Wireless recently settled a matter with the FCC over $50 million in “mystery fees” that were placed on bills for services that were never ordered. In addition, in June the FCC issued additional Notices of Apparent Liability amounting to $11.7 million against four smaller crammers. Finally, while the FCC has taken the lead in these matters, the Federal Trade Commission has also been intimately involved in thwarting crammers.

Both the FCC and the New York Public Service Commission have posted useful and consumer-friendly information on their websites on identifying and preventing cramming. FCC information is available here. The New York PSC’s information is available here. 

In summary, without understanding the monthly phone bill, consumers, be they enterprise or residential or any combination thereof, are ripe for abuse by often unscrupulous third parties and carriers. If something on the bill looks peculiar or incorrect, it’s imperative to contact the provider first for clarification and/or credit. If that conversation does not yield satisfactory results (read: an explanation and/or a prompt credit—key word here is “prompt”), then the issue should be raised to a higher level—either the PSC, the FCC or the FTC.

A thousand little cuts…