2011-10-28 / Top Stories

Beware Of Phone Bill Fraud

Attorney General Eric T. Schneiderman called on the federal government to adopt stronger regulations to protect consumers against the phone bill fraud known as ‘cramming.’ Schneiderman and a multistate coalition including 16 additional Attorneys General urged the Federal Communications Commission (FCC) to enact rules that would prevent unauthorized third-party charges on telephone bills or ‘cramming’ – a fraud that a recent U.S. Senate report found costs consumers upwards of $2 billion per year.

“Consumers in New York and across the country deserve action against the predatory and exploitative charges that drive up phone bills and impose burdensome costs in money, time and energy to correct,” Schneiderman said. “My colleagues and I strongly urge the FCC to adopt effective regulations that stop cramming, and provide consumers with relief.”

‘Cramming’ occurs when third parties – other than the phone service provider – add unauthorized charges to phone bills for non-call related services like email, website hosting, discount buying programs or voicemail services. Investigations by the Attorneys General, as well as complaints received by their offices, reveal that consumers do not intend to purchase these services and rarely make use of them. In addition, most consumers are unaware that they are exposed to such fraudulent billing practices just by using a wireless or landline service.

The rules currently under consideration by the FCC would be limited to landlines, and rely only on better phone bill disclosures and options to allow consumers to request blocks on such charges. In comments filed with the federal agency, the Attorneys General explained that based on experiences in their states, federal anti-cramming regulations need to be stronger than those proposed.

Given that landline ‘cramming’ charges are often phony and imposed without consumers’ consent, the Attorneys General urged the FCC to ban all non-telephone, third-party charges on landline telephone bills. If the FCC fails to implement such a ban, then the Attorneys General suggested that landline telephone companies be required to automatically block all third-party charges unless and until the consumer opts to accept such charges for a specific vendor by consenting through a phone call to their telephone company. Consumers would still be free to purchase these third-party services through more traditional means, such as by credit card.

The Attorneys General also called on the FCC to extend its regulations to protect wireless telephone users, as more and more consumers rely exclusively on wireless telephone service. The coalition advised the FCC to require wireless telephone service providers to obtain consumer consent for each third-party charge, verified by either call or text, before being billed. The Attorneys General also recommended that all wireless consumers be provided the option of blocking all third-party charges from their account, at no cost.

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