Cell Phone 'Bill Shock' Is History as New FCC Rules Take Effect
As of Wednesday, cell phone companies must send customers four types of alerts when they are in danger of being charged beyond their normal plan price. The practice, which tacks on unauthorized or misleading charges on a bill, is known as "cramming" and has been around for decades with landline phone bills.
A 2011 agreement between the Federal Communications Commission and major cell phone companies included today's deadline that requires them to alert subscribers when they approach, reach and exceed limits on voice, data, text and international roaming charges. Carriers were required to provide two alerts by Oct. 17.
"This is very important consumer protection," says Jack Gillis, Director of Public Affairs for the Consumer Federation of America. "The bottom line is that cell phone charging plans are so complicated it's very easy to go over plans, especially with limited plans. This new requirement at the very least will save consumers thousands of dollars."
According to a 2010 FCC survey, 30 million Americans, about one in six mobile users, have experienced "bill shock," a sudden and unexpected increase in monthly bills not caused by a change in service plans. In 2010, the agency showcased a 66-year-old customer's plight of facing an $18,000 bill after a promotional, limitless data plan expired without warning as why more stringent notifications were needed.
The average wireless contract includes a flat fee for a set number of minutes and data each month and any usage that goes beyond the allotment is charged at a much higher rate. The surge in use of tablets has made consuming data and in turn, exceeding limits, much easier.
The FCC and Governmental Affairs Bureau held a workshop Wednesday on bill shock and cramming and according to attendee John Breyault, vice president of Public Policy for the National Consumers League, the FCC reported the number of complaints over mammoth fees has dropped significantly since October.
The NCL advocated for the new regulations to be implemented two years ago, and Breyault says the wireless companies reported being in full compliance of the alerts on Wednesday, which covers 97 percent of the carrier market.
In some cases when companies incur higher taxes or lose a revenue stream they are forced to increase prices to make up the difference, but Breyault says wireless caries did not view overcharges "as profit centers."
"The dissatisfaction of consumers felts over charges had the companies introduce tiered data plans ... there are still problems with these plans and whether or not they are adequate and will offer enough data at a reasonable price."
Amy Storey, spokeswoman for the wireless association CTIA, told FOX Business that the cost for the alerts is not known, but carriers would not pass them along to consumers.
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