IE 11 is not supported. For an optimal experience visit our site on another browser.

Crooks 'cram' phone bills with bogus charges

unauthorized amounts, sometimes as little as $2 or $3. And the FTC says enough is enough.

There are two ways a con artist can get rich: Steal a lot of money from a few people or steal a little money from a lot of people. Crammers work on volume. They bill telephone customers for small unauthorized amounts, sometimes as little as $2 or $3.

“These charges don’t leap off the page,” says Lois Greisman head of the Division of Marketing Practices at the Federal Trade Commission.  “They’re banking on the fact that people are not scrupulous in reading their phone bills and if the amount is low enough, you’ll miss it.”

Cramming started in the 1990s, when local phone companies began billing for independent content providers businesses — everything from daily horoscopes to adult chat. That made it possible for crammers to charge for services that were not requested or authorized.

Jennifer Perrigo got crammed. She works for a swimming pool contractor in Oakland Park, Fla. One day she got a call from someone who just wanted to confirm the company’s phone number and business address.

“All I said was yes, yes, yes,” Perrigo tells me.

The company's next phone bill had an unauthorized charge of $57.24 on it for a fax-by-computer service she never ordered. Perrigo called the vendor to complain. Not only was she treated rudely, she was played a tape that supposedly had her approving the charge.

“It was so obvious that it was edited,” Perrigo says. “The whole experience was horrible. It was absolutely disgusting and I was very angry.”

About 5 years ago crammers started shifting their focus to wireless customers. Cell phone users have become comfortable downloading content and having it billed to their wireless number. For crammers, that’s created a new avenue to commit their fraud.

In the first three months of this year, more than 2,100 people filed cramming complaints with the FCC.

“It’s a problem that’s on the increase right now,” says Joel Gurin, chief of the Consumer and Governmental Affairs Bureau of the Federal Communications Commission. “We’ve been seeing an uptick in complaints about this issue.”

Gurin says crammers have all sorts of “devious ways” to ring up a charge on your bill for a service you didn’t want or didn’t realize you were signing up for.

Maybe you think you’re downloading a free ringtone, wallpaper, game or song. Maybe you’re entering an online contest. Without knowing it, you could be signing up for a monthly membership that will be automatically billed to your cell phone via your wireless carrier.

But you don’t have to do anything at all to get crammed. Between 2003 and 2005, by cramming charges for collect calls that weren’t made on people’s bills. And get this – the criminal was in jail at the time.  Last month Willoughby Farr pled guilty to mail fraud for that scheme. He was sentenced to another 21 years behind bars.

Feds score another huge victory
This week a U.S. District Court permanently shut down a California Internet service provider called Inc21. The Federal Trade Commission had charged Inc21 with cramming tens of thousands of people and businesses across the country for a variety of Internet services they never ordered.

The FTC’s lawsuit says Inc21 hired off-shore telemarketers to do the dirty work. Some of the victims were told they were being called simply to verify business contact information. Others were never contacted at all. People who declined the offer were billed anyway via their local phone company. Prices ranged from $12.95 to $39.95 a month. Read the FTC press release .
The court ordered the owners of Inc21 to refund nearly $38 million to consumers, the estimated total of their ill-gotten gains between 2004 and 2009.

What are wireless companies doing?
The industry says it works very hard to make sure the third-party vendors it bills for are legitimate and follow the consumer protection standards set by the Mobile Marketing Association. According to MMA guidelines, mobile content providers should have a customer confirm the purchase of an add-on service (such as joke of the day, enhanced voice mail or sports scores) twice before they bill for it.

Attorney Rafey Balabanian, who has sued numerous companies for cramming, says wireless companies do more than pass along third-party charges to their customers.

“The fact of the matter is the carriers get a percentage of each charge and that’s whether the charge was authorized or not,” he says. “They get tons and tons of complaints from their subscribers about cramming. So they know about the problem. They benefit from it.”

“There are bad actors out there,” says Amy Storey, a spokesperson for CTIA — The Wireless Association. “But our member carriers are constantly monitoring to ensure that these third-party vendors are acting responsibly.”

John Breyault, who runs theFraud Center at the National Consumers League, would like to see wireless companies do a better job of screening the companies they bill for. He wants them to “redouble their efforts to prevent the out-and-out fraud” that takes place through their billing systems.

Breyault is also concerned about what happens when people complain to their wireless company about being crammed. All too often, he says,the phone company tells customers there is nothing it can do. They are told to contact the company that crammed them.

“The consumer should not have the headache of trying to get in touch and get this figured out with a third-party vendor they may not even know,” Breyault says.

Some wireless companies now have “one and done” policies that let customers call about a questionable charge and have it resolved on the spot. The Wireless Association says this has reduced cramming complaints.

Protect yourself
The best protection is vigilance. Anytime you give your phone number to an unknown company you open yourself up to being crammed. Ask yourself, “Would I give them my credit card number?” If the answer is no, don’t give out your cell number.

Be suspicious of all offers for prizes or free stuff from unknown companies that require you to provide your cell phone number. The fine print could say that by providing your number you agree to have a charge put on your bill.

Read your monthly phone bill very carefully. You can check online in between statements. Look for anything charges that shouldn’t be there. If you find something questionable, talk to your phone company. Demand a refund. Don’t take no for an answer. Let them know you are their customer and you expect their help.

If you don’t plan to buy products or services and have them billed to your phone number, contact your phone company and ask to have a cramming block put on your account.

If you’ve been crammed, file a complaint with the Better Business Bureau, your state attorney general or consumer protection office, the Federal Communications Commission and the Federal Trade Commission. In many case, complaints result in lawsuits which get money back for victims.