Entries in Cramming (3)


FTC Advises Consumers to Keep Eye Out for Unauthorized Credit Charges 

BananaStock/Thinkstock(WASHINGTON) -- The Federal Trade Commission is warning consumers of a new type of “cramming,” unauthorized fees that were once buried in phone bills but are now showing up on credit card statements.

According to an FTC complaint, Ideal Financial Solutions hit tens of thousands of Americans with fake fees mostly for vague financial services like Debt2Wealth — for close to $30 at a time.

In total, the complaint says the company billed consumers for more than $24 million without their consent.

“It’s smart to steal little amounts at a time because you are hoping consumers just don’t spot it,” said Mandy Walker, a Consumer Reports senior project editor.

The FTC says 20 million people a year fall victim to cramming, which until now had occurred mostly in phone bills.

In this most recent case, the FTC said that many of the consumers targeted had recently applied for a payday loan or cash advance.

When they reportedly spotted the bogus charges on their bills, they called the toll-free number next to fees to complain. The FTC said consumers then entered an infuriating maze of call centers around the world.

Walker suggested consumers inspect their bills line by line and dispute any questionable charges immediately with the credit card company.


Copyright 2013 ABC News Radio


FCC, Senate Committee Target Fraudulent Phone Charges

Hemera Technologies/Thinkstock(WASHINGTON) -- Got a landline? Then you might want to review your latest bill for mysterious third-party fees.

One day after the Federal Communications Commission voted to get the public's opinion on new rules intended to target these unauthorized hidden charges, the Senate Commerce Committee held a hearing on the $2 billion a year practice known as "cramming."

"It refers to what we call mysterious charges that appear on American phone bills for services that people don't want and don't use and didn't ask for," committee chairman Sen. John Rockefeller, D-W.Va., said Wednesday.

The telephone industry had promised to make changes but when the committee reexamined the issue, it found the problem of third-party billing to be worse. It is now considering an outright ban.

"Consumers don't know that their phone bill can be used like a credit card," said Illinois Attorney General Lisa Madigan on Wednesday. "From the beginning, third-party charges on phone bills have been an open invitation to fraud and deceit. It's been a scam."

Cramming has been going on for at least 10 years and the committee said today that phone companies have been slow to deal with it because they make so much money from it -- major phone companies make $650 million from third party charges.

"Oh yeah, they make money," Rockefeller said Wednesday.

The illegal charges, which can range from a few dollars to almost $20 a month, can appear under generic descriptions such as minute use fee, activation, member fee or Web hosting. About 15 million to 20 million households are overcharged for their telephone landlines by third-party companies and just 5 percent realize they are victims, the FCC said.

"It is infuriating to me that it is legal for companies to, without authorization, charge our businesses and skew our profit and loss statements and in effect take money out of the hands of hardworking, deserving men and women," said Susan Eppley, whose group of fast food restaurants in Georgia was victimized by crammers.

The FCC's proposed rules include high fines against companies that charge consumers excess fees and requiring landline phone companies to put third-party charges in a separate section of a phone bill.

Walter McCormick, a spokesman for the U.S. Telecom Association, said that third-party billing remained a problem but that "the industry has taken significant steps."  

Copyright 2011 ABC News Radio


Is Your Phone Bill too High? You Could Be a Victim of Cramming

Jupiterimages/Thinkstock(WASHINGTON) -- If you open your phone bill and notice that you've been charged more than you expected, you could be a victim of cramming -- third party fees that have not been authorized by landline customers.

A new Senate report shows that these third party fees amount to a billion dollar industry, with telephone companies raking in over $2 billion each year from the estimated 300 million charges they place on their customers' bills.

Specifically, top companies like AT&T, Qwest and Verizon were found to have profited about $600 million from their cramming practices over the past five years.

The report says the practice hurts consumers, small businesses, non-profits, corporations, government agencies, and educational institutions, and that telephone companies do little when they receive complaints.  It also finds that companies' efforts to fight cramming have largely failed.

Copyright 2011 ABC News Radio

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