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
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 »
ISIS INVOLVED
Niger Attack Possible Terrorist Set-Up
3 hours ago
THE LATEST

"An emerging theory among U.S. military investigators is that the Army Special Forces soldiers ambushed in Niger were set up by terrorists, who were tipped off in advance about a meeting in a village sympathetic to local ISIS affiliates...The group of American Green Berets and support soldiers had requested a meeting with elders of a village that was seen as supportive of the Islamic State, and they attended the meeting at around 11 a.m. local time Oct. 4...Such meetings are a routine part of the Green Beret mission, but it wasn't clear whether this meeting was part of the unit's plan."

Source:
TRUMP’S COMMENTS AT ISSUE
Bergdahl’s Sentencing Delayed Until Wednesday
3 hours ago
THE LATEST

"The long-awaited sentencing of Army Sgt. Bowe Bergdahl was delayed Monday after a legal battle erupted over the word 'but' in President Donald Trump's most recent remarks about the case. Bergdahl's defense team argued that their client could not get a fair shake from the court because Trump, during a Rose Garden appearance on Oct. 16, at first said he couldn't talk about the case and then added: 'But I think people have heard my comments in the past.'" Trump has called him a traitor and suggested he should be executed.

Source:
FOLLOWING DHS’S LEAD
Pentagon to Scrub Kaspersky from Its Systems
5 hours ago
THE LATEST
STATE-CONTROLLED AIRLINE CONNECTED WITH TERRORISM
Trump Admin to Kill Boeing Sales to Iran
7 hours ago
THE LATEST

"The Trump administration is coming under increased pressure from Congress to kill a landmark deal between Boeing and an Iranian airline known for engaging in terrorism over concerns the Western airline company would enable Tehran's transfer of militant fighters across the region, according to multiple sources, who told the Washington Free Beacon the administration is likely to nix the multi-billion dollar deal. The Obama administration's nuclear agreement with Iran paved the way for U.S. aerospace corporation Boeing to ink a deal with Iran's state-controlled airline, Iran Air, which was recently caught using its commercial planes to ferry Iranian militants to regional hotspots."

Source:
PROBE CAME FROM INQUIRY INTO MANAFORT’S FINANCES
Mueller Investigating Tony Podesta and His Firm
12 hours ago
THE LATEST

"Tony Podesta and the Podesta Group are now the subjects of a federal investigation being led by Special Counsel Robert Mueller, three sources with knowledge of the matter told NBC News. The probe of Podesta and his Democratic-leaning lobbying firm grew out of Mueller's inquiry into the finances of former Trump campaign chairman Paul Manafort."

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login