Senate Investigation Uncovers ‘Widespread’ Bogus Cell-Phone Charges

Mobile “cramming” cost Americans hundreds of millions of dollars.

Telephone bills, which contain information for an AT&T customer, lie in a pile May 12, 2006 in Chicago, Illinois.
National Journal
Laura Ryan
Add to Briefcase
See more stories about...
Laura Ryan
July 30, 2014, 12:56 p.m.

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.”

What We're Following See More »
TWO MONTHS AFTER REFUSING AT CONVENTION
Cruz to Back Trump
2 days ago
THE LATEST
WHO TO BELIEVE?
Two Polls for Clinton, One for Trump
2 days ago
THE LATEST

With three days until the first debate, the polls are coming fast and furious. The latest round:

  • An Associated Press/Gfk poll of registered voters found very few voters committed, with Clin­ton lead­ing Trump, 37% to 29%, and Gary John­son at 7%.
  • A Mc­Clatchy-Mar­ist poll gave Clin­ton a six-point edge, 45% to 39%, in a four-way bal­lot test. Johnson pulls 10% support, with Jill Stein at 4%.
  • Rasmussen, which has drawn criticism for continually showing Donald Trump doing much better than he does in other polls, is at it again. A new survey gives Trump a five-point lead, 44%-39%.
NO SURPRISE
Trump Eschewing Briefing Materials in Debate Prep
2 days ago
THE DETAILS

In contrast to Hillary Clinton's meticulous debate practice sessions, Donald Trump "is largely shun­ning tra­di­tion­al de­bate pre­par­a­tions, but has been watch­ing video of…Clin­ton’s best and worst de­bate mo­ments, look­ing for her vul­ner­ab­il­it­ies.” Trump “has paid only curs­ory at­ten­tion to brief­ing ma­ter­i­als. He has re­fused to use lecterns in mock de­bate ses­sions des­pite the ur­ging of his ad­visers. He prefers spit­balling ideas with his team rather than hon­ing them in­to crisp, two-minute an­swers.”

Source:
TRUMP NO HABLA ESPANOL
Trump Makes No Outreach to Spanish Speakers
2 days ago
WHY WE CARE

Donald Trump "is on the precipice of becoming the only major-party presidential candidate this century not to reach out to millions of American voters whose dominant, first or just preferred language is Spanish. Trump has not only failed to buy any Spanish-language television or radio ads, he so far has avoided even offering a translation of his website into Spanish, breaking with two decades of bipartisan tradition."

Source:
$1.16 MILLION
Clintons Buy the House Next Door in Chappaqua
2 days ago
WHY WE CARE

Bill and Hillary Clinton have purchased the home next door to their primary residence in tony Chappaqua, New York, for $1.16 million. "By purchasing the new home, the Clinton's now own the entire cul-de-sac at the end of the road in the leafy New York suburb. The purchase makes it easier for the United States Secret Service to protect the former president and possible future commander in chief."

Source:
×