“DON’T Put It on My Bill!”: ‘Cramming’ Sticks Telecom Users With Fraudulent Charges

Ever seen a mysterious charge on your phone bill for a service that you don’t remember ordering? You wouldn’t be the only one. Each year, 15 to 20 million U.S. households find unauthorized telecom charges on their landline, wireless or VOIP phone bill, according to statistics from the Federal Communications Commission (FCC). These households have been the victims of a practice known as “cramming.”

Cramming occurs when unauthorized charges are tacked on to a customer’s phone bill, most often by a third party rather than by the telecom carrier itself. The charges are for supposed services that may carry a very vague description on the bill or invoice such as “MISCELLANEOUS” or just “MONTHLY SERVICE FEE.”

Often the charges are for such small amounts that they go unnoticed or unchallenged. Crammers are counting on the fact that many residential customers won’t find it worth their time to question a mysterious charge of a few dollars, at least not right away. Corporate telecom customers who don’t do regular a phone bill audit may let such charges slip through the bureaucratic cracks of their own complex telecom invoice approval processes. In any case, it works. The FCC cites a survey that showed that one cramming company’s charges were noticed by only 5 percent of its victims.

Some common services “sold” through cramming schemes include:

  • Toll-free 800 service lines
  • Text messaging services for daily horoscopes or celebrity news
  • “Psychic” hotline services
  • Web design or web hosting services
  • Credit protection plans

Even by inserting bogus charges as low as $2 a month, crammers stand to earn millions from their fraudulent practices. And sometimes the monthly charges can be much higher – up to $20, according to the FCC. Telecom carriers are complicit in cramming because even though the charges don’t originate with them, they get a cut from the crammers for handling the billing charges. The telecom carriers collect the money on behalf of the third-party vendor but don’t feel obligated to issue refunds if the charges are challenged. Perhaps not surprisingly, the third-party vendors customers get referred to are often very unresponsive.

How might charges get placed on your phone bill? Sometimes it’s out-and-out fraud, or “phantom billing.” The fact is, having your phone number fall into in the wrong hands can be almost as bad as having your credit card number stolen. Crammers who get ahold of your phone number can send billing information to your telecom carrier even if they’ve never made the pretense of trying to sell you their service.

Other times charges are tacked on after a customer gives verbal “approval” in response to a misleading phone sales pitch. A customer may assent to receive something for free or to enroll in a free trial offer without realizing that they’re also being automatically signed up for an ongoing service that will incur a monthly fee. Crammers can actually record their sales calls and use recordings of customers saying “yes” to the freebie as proof that he or she agreed to the whole package deal. According to the Federal Trade Commission (FTC), other methods used to get people to unwittingly sign up for or use services that will be tacked onto their phone bills include:

  • Contest or sweepstakes entries that contain fine-print language stating that your entry constitutes permission to sign you up for a certain service. Be careful when any such entry asks for your phone number; again, the best rule of thumb is to guard it like you would your credit card numbers.
  • Clubs that you join by calling a toll-free number. The ads for these cramming clubs are purposely confusing. It may sound at first like the membership is free, when a closer look reveals that actually only the 800-number call to join is free. The membership itself incurs a monthly charge, which of course appears on your phone bill.
  • Free prizes that you claim by calling a 900 number. The “prize” is likely some cheap or worthless item on which you may even have to pay exorbitant shipping and handling charges. It’s not a value, only an inducement to get you to call the 900 number. Remember, 900 numbers aren’t free; in fact they’re “premium” service numbers that will cost you dearly for each minute you’re connected. In this cramming scheme, you will most likely be purposely left on hold for a while, breathlessly waiting to hear about your prize, in order to let the toll charges rack up.

The telecom companies are not too motivated to verify the legitimacy of third-party charges because they profit from them, too. The FCC estimates that just the “Big 3” telecom companies – AT&T, Qwest/CenturyLink and Verizon – have taken in well over $100 million per year as a result of cramming since 2006. That’s their cut of the estimated $2 billion collected annually by crammers.

Congress began looking into cracking down on cramming again this summer because the telecom carriers’ self-policing efforts over the past 15 years have failed miserably. Cramming has also been slowly changing from a landline-only phenomenon to a problem that also affects wireless and VOIP accounts. Today, cramming cases involve wireless or VOIP 18 percent of the time.

Federal regulations in the works would fight cramming by requiring that:

  • Telecom carriers must offer customers the ability to block third-party charges to their accounts.
  • Third-party charges must be shown separately from phone company charges on phone bills, in order to avoid confusion as to the source of the charges.
  • Telecom carriers must print FCC contact information on each phone bill, so that customers can easily contact the FCC to file cramming complaints.

The most common-sense measures that you can take now to avoid being a cramming victim, without waiting for government regulations to go into effect, are

  • Have your telecom carrier block third-party charges to your account if possible
  • Carefully read the whole form, including the fine print, any time you sign up for anything, especially if you’re being asked for your phone number
  • Check every phone bill thoroughly, and ask questions if any of the charges don’t look right.

Telanalysis is an experienced telecommunications management company that has been saving its clients money since 1985. Telanalysis can handle your organization’s telecom bill payments and keep a watchful eye out for bogus charges from cramming or from any other sloppy or unethical practices by third-party vendors or telecom carriers. Call Telanalysis today at 866-300-6999 to find out all the ways we can bring down your firm’s telecom spending.

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