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Senate Investigation Uncovers 'Widespread' Bogus Cell-Phone Charges Senate Investigation Uncovers 'Widespread' Bogus Cell-Phone Charges

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Senate Investigation Uncovers 'Widespread' Bogus Cell-Phone Charges

Mobile "cramming" cost Americans hundreds of millions of dollars.

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(Scott Olson/Getty Images)

Mobile-phone scams have cost Americans hundreds of millions of dollars over the past several years, according to a new report from the Senate Commerce Committee.

Unauthorized charges by third-party vendors on consumers' phone bills for services such as celebrity gossip, horoscopes, or fake contests—commonly known as "cramming"—is much larger than previously reported, according to the report released Wednesday.

 

Consumers' losses are mobile-phone companies' gains. The report finds companies such as Verizon, AT&T, T-Mobile, and Sprint reap the benefits of this fraudulent activity, generally keeping up to 40 percent of the charges.

Mobile carriers allow third-party vendors to charge consumers for services like music and app downloads and charity or political donations directly through their phone bill.

The wireless industry has adopted voluntary measures to protect consumers from fraud, said Michael Altschul, general counsel for cell-phone lobbying group CTIA, during a hearing on the topic Wednesday.

 

But Senate Commerce Committee Chairman Jay Rockefeller says they are not doing enough.

"Industry representatives told us that their voluntary policies and practices provide consumers—and I quote—a 'robust process designed to protect customers from unscrupulous actors,' and that cramming on wireless phones has been 'de minimis,' " Rockefeller said in a statement Wednesday. "But this report makes it clear that is not the case."

Unwanted third-party charges are often difficult to detect. Customers who do notice unwanted charges often face an uphill battle to refund lost money, because phone bills do not have the same fraud protections as credit cards.

The Senate study comes two days after the Federal Trade Commission released five recommendations to mobile carriers to crack down on cramming, including giving consumers the option to block third-party charges, clearly displaying third-party charges on phone bills, and making it easier for consumers to resolve charge disputes.

 

The FTC filed a complaint earlier this month against T-Mobile for placing millions of dollars worth of unwanted charges on customers' phone bills.

T-Mobile CEO John Legere said the FTC's complaint was "unfounded and without merit."

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