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Senate report: Phone-bill cramming costs consumers $2 billion

Consumer Reports News: July 13, 2011 03:03 PM

The Senate Committee on Commerce, Science, and Transportation today released a report showing that American consumers pay nearly $2 billion each year when unauthorized charges are "crammed" on their phone bills.

On average, telephone companies place about 300 million third-party fees on consumer bills each year, most of which are unauthorized, according to the report. The report also said phone companies have profited by about $1 billion over the last decade from the fees—despite receiving about 500,000 complaints from consumers over the last five years.

Yesterday, the Federal Communications Commission also addressed the issue by proposing specific rules to prevent cramming.

The FCC proposed the following rules:

  1. Landline phone companies would be required to notify customers conspicuously—at the point of sale, on their websites, and on each bill—of the option to block third-party charges, if the carrier offers that option.

  2. Third-party charges would be required to be separated from the telephone company’s charges.

  3. Both landline and wireless companies would have to include, on phone bills and on websites, a notice that says consumers can file complaints with the FCC. They would also need to include contact information for the FCC.

Last month, the FCC said roughly 20 million Americans are victimized by cramming each year, but that only about 5 percent of those consumers are aware they’re being charged.

The FCC is also seeking additional comment on other issues, such as whether companies should be required to notify consumer if they don’t offer the option to block third-party charges, or whether they should be prohibited from including third-party charges altogether.

Consumer Reports says reading your monthly bill thoroughly is the best way to combat cramming scams. Check out our video below for more tips on how to avoid unwanted charges.

Rockefeller releases alarming findings of yearlong committee investigation into mystery telephone fees [Senate Commerce Committee]
Proposed rules to prevent cramming [FCC]
Cramming tip sheet for consumers [FCC]

Evan MacDonald

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