Fraud! FCC Takes Aim at the Scammers Secretly Padding Your Phone Bill

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Phone billA little over two years since it took on the credit card industry, the federal government has found a fresh villain: telecommunications fraudsters. Earlier this week, the Federal Communications Commission proposed new rules designed to crack down on "phone cramming," a widespread, illegal practice that robs billions of dollars from phone users.

Officially, the FCC defines cramming as "the illegal placement of an unauthorized fee onto a consumer's monthly phone bill." Often ranging from $1.99 to $19.99 apiece, these charges are designed to be overlooked. While they sometimes have names like "psychic," "membership," or "mail server," they more often have innocuous titles like "service charge," "minimum monthly usage fee" or "other fees." For the third-party companies that tack these expenses onto your bill, the goal is to create a name that sounds vaguely official and will be ignored by most customers. To this end, many companies also tuck the fees in with a long list of other, more legitimate charges.

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Cramming


Death by a Thousand Cuts

While cramming charges may be relatively small individually, they add up: According to a report issued by the Senate last week, "Telephone companies place approximately 300 million third-party charges on their customers' bills each year, which amount to more than $2 billion worth of third-party charges on telephone bills every year." These charges hit phone users across the spectrum, from military organizations to government groups to businesses to individual consumers.

Part of the reason that phone cramming has been so successful is because the deck is stacked against consumers. Phone bills are already complicated, which makes it hard for customers to recognize that they're being crammed. What's more, even if they find problems with their bills, most customers don't know where to go to complain, and are often given the run-around by their phone companies.



The FCC's strategy attempts to combat the problem at several levels. As Joel Gurin, chief of the FCC's Consumer and Governmental Affairs Bureau, explains: "When it comes to cramming, we have three goals: We want to make it easier for consumers to prevent it, detect it, and redress it." The commission's proposed new rules directly reflect this strategy. To begin with, they would change the look of phone bills: Instead of mixing third-party charges together with more legitimate fees, the new rules would require that phone bills clearly separate the phone company's charges from those of third parties. This clear delineation would make it much easier for customers to identify crammed fees.

A second proposed rule would make it much easier for customers to complain about illegitimate fees. If passed, it would force phone companies to prominently place the FCC's contact information on bills and on their websites. As Gurin notes, "Mediating on behalf of consumers is part of our job as an agency." What's more, in addition to helping consumers to deal with phone crammers, the commission also reports any obvious scams: "If we see something that's really outrageous, we pass it along to the enforcement bureau."

If passed, the final proposed rule could fundamentally change the entire cramming problem: It would require many phone companies to inform customers that they can block any and all third-party charges. However, not all companies allow users to opt-out of these charges -- and the proposed rule change would not require phone companies to make this option available.

The Next Steps

Now that the proposed rules have been sent out, the FCC will move on to the public comment period: After any proposed FCC rule change is announced, the public has 60 days to comment on it, after which the FCC takes another 30 days to review the comments before amending its rules. While the commission is soliciting comments from a variety of industry groups and professionals, Gurin emphasizes that he wants to hear from the public: "We would like to hear from ordinary citizens," he notes. "Public comment is very important in any rule-making process."

If you would like to comment about the FCC's new proposed cramming rules, simply click on this link. The text of the proposed rule, 11-116, is visible here, and Gurin's comments on it can be found here. If you have any cramming complaints, you can reach the FCC here.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.
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