Entries in Telephone (3)


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


How To Spot and Prevent Unauthorized Telephone Bill Fees

Jupiterimages/Thinkstock(WASHINGTON) -- You could be paying unauthorized fees on your telephone bill -- sometimes for months or years -- and not even be aware of it.

About 15 to 20 million households are overcharged for their telephone landlines by third party companies and only 5 percent realize they are victims, according to the Federal Communications Commission.

But the FCC is about to propose high fines against companies that charge consumers excess fees, or "cramming" on their telephone bills.  The majority of cases, 82 percent, take place on landline phone services, according to the FCC.  Nearly 16 percent of cases are on wireless phone bills, while 2 percent are on "other" bills, such as voice over Internet Protocol, or VoIP.

One FCC investigation found only 22 of 18,571 consumers surveyed used the third-party dial-around long distance service for which they were billed, which was roughly a 0.1 percent usage rate.

On Monday, Chairman Julius Genachowski said the FCC proposed high fines for companies that have taken millions of dollars from consumers through these unauthorized fees.  The FCC is also taking steps to educate consumers against companies charging hidden fees.

"These are important next steps to protect consumers from hidden fees that can cost them money, take valuable time to resolve, and undermine the public's confidence in our communications system," the chairman said.

The cramming terms sometimes used on telephone bills include: service fee, service charge, other fees, voicemail, mail server, calling plan, or membership.

Last week, the FCC proposed penalties of $11.7 million against four companies in Pennsylvania that may have billed tens of thousands of consumers in cramming charges.  The FCC charged Main Street Telephone ($4.2 million), VoiceNet Telephone, LLC ($3 million), Cheap2Dial Telephone, LLC ($3 million), and Norristown Telephone, LLC ($1.5 million).

Both cellphone and landline consumers may overlook these fees, which can range from $1.99 to $19.99 a month, on their telephone bills.  To help consumers, the FCC offers these tips to prevent and spot cramming charges:

-- Read all forms and even promotional materials, including the fine print, before signing up for telephone or other services.

-- Review your telephone bill every month, just as closely as you monitor your monthly credit card or bank statements.

-- Ask yourself if you recognize the companies, services, charges, and rates on your bill.

-- Don't ignore small charges, which can add up to big amounts.

Copyright 2011 ABC News Radio

ABC News Radio