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
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 »
PROCEDURES NOT FOLLOWED
Trump Not on Ballot in Minnesota
2 days ago
THE LATEST
MOB RULE?
Trump on Immigration: ‘I Don’t Know, You Tell Me’
2 days ago
THE LATEST

Perhaps Donald Trump can take a plebiscite to solve this whole messy immigration thing. At a Fox News town hall with Sean Hannity last night, Trump essentially admitted he's "stumped," turning to the audience and asking: “Can we go through a process or do you think they have to get out? Tell me, I mean, I don’t know, you tell me.”

Source:
BIG CHANGE FROM WHEN HE SELF-FINANCED
Trump Enriching His Businesses with Donor Money
3 days ago
WHY WE CARE

Donald Trump "nearly quintupled the monthly rent his presidential campaign pays for its headquarters at Trump Tower to $169,758 in July, when he was raising funds from donors, compared with March, when he was self-funding his campaign." A campaign spokesman "said the increased office space was needed to accommodate an anticipated increase in employees," but the campaign's paid staff has actually dipped by about 25 since March. The campaign has also paid his golf courses and restaurants about $260,000 since mid-May.

Source:
QUESTIONS OVER IMMIGRATION POLICY
Trump Cancels Rallies
4 days ago
THE LATEST

Donald Trump probably isn't taking seriously John Oliver's suggestion that he quit the race. But he has canceled or rescheduled rallies amid questions over his stance on immigration. Trump rescheduled a speech on the topic that he was set to give later this week. Plus, he's also nixed planned rallies in Oregon and Las Vegas this month.

Source:
‘STRATEGY AND MESSAGING’
Sean Hannity Is Also Advising Trump
5 days ago
THE LATEST

Donald Trump's Fox News brain trust keeps growing. After it was revealed that former Fox chief Roger Ailes is informally advising Trump on debate preparation, host Sean Hannity admitted over the weekend that he's also advising Trump on "strategy and messaging." He told the New York Times: “I’m not hiding the fact that I want Donald Trump to be the next president of the United States. I never claimed to be a journalist.”

Source:
×