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FCC Announces Plans to Crack Down on Unauthorized Phone Charges FCC Announces Plans to Crack Down on Unauthorized Phone Charges

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Technology / TECHNOLOGY

FCC Announces Plans to Crack Down on Unauthorized Phone Charges

FCC Chairman Julius Genachowski plans new rules targeting "cramming" -- putting deceptive charges on phone bills.(Samantha Celera)

photo of Josh Smith
June 20, 2011

Federal Communications Commission Chairman Julius Genachowski said on Monday he will be announcing new rules to prevent deceptive charges on telephone bills.

Last week, the FCC proposed fining four companies almost $12 million for billing customers for unauthorized phone charges, a practice known as “cramming.”  The companies will have a month to either explain themselves or pay the fine.

The FCC will “explore new ways to empower consumers and protect Americans against cramming and mystery fees,” Genachowski said in a speech at the Center for American Progress on Monday.

 

He said he plans to circulate a proposal on Tuesday. What exactly that proposal may include is unclear, but Genachowski said the FCC is focused on “empowerment, education, and enforcement.”

“Our consumer empowerment agenda is focused on harnessing technology and transparency to empower consumers with the information they need to make smart decisions and to make the market work,” he said. “When abusive practices require action, we will act.”

The FCC estimates that 15 million to 20 million American households may have unauthorized fees on their landline phone bills. And according to the Federal Trade Commission, only 5 percent of victims ever realize that they are overpaying.

In October 2010, Verizon agreed to pay the federal government $25 million and refund another $52.8 million to more than 15 million customers after an FCC investigation uncovered overcharges. The settlement was the largest in FCC history.

“We all want to send a clear message: if you charge consumers unauthorized fees, you will be discovered and you will be punished,” Genachowski said on Monday. He noted that there is no substitute for consumers checking their own phone bills for suspicious charges. “We also want to communicate to consumers that they should be vigilant in protecting themselves from crammers.”

All that is fine and good, says Senate Commerce Chairman Jay Rockefeller, D-W.Va., but it hasn’t stopped phone companies from gouging their customers.

“For the past year, my committee has examined cramming and third-party billing on telephone bills. What we’ve found is troubling,” Rockefeller said after the FCC announced the fines last week. “We know that the telephone companies’ voluntary guidelines have failed to stop mystery fees. We know that additional disclosure requirements on telephone bills haven’t fixed the problem.”

Rockefeller expressed doubt that the FCC’s fines would be enough to solve the problem. He plans to release a report and hold a hearing on cramming soon.

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