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Federal crackdown on cramming is a win for consumers

You should be asked for permission before any third-party charge is placed on your wireless bill

Published: May 16, 2015 10:15 AM

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You've probably seen TV ads enthusiastically urging you to text a number to get your horoscope, find out the name of your perfect match, or get the latest celebrity gossip. Those promos should have included a warning to read your wireless bill—carefully—because you might get more than you bargained for, like months of charges for services you never agreed to hidden in your phone bill.

These types of charges that appear on your phone bill for services offered by another business are known as third-party billing. When these charges are put on your bill without your permission, it’s called cramming, and it’s illegal. The pernicious practice cost consumer hundreds of millions of dollars in unauthorized charges.

Consumers who have been hit by cramming earned a big victory this week when the Federal Communications Commission and the Consumer Financial Protection Bureau announced that Verizon Wireless and Sprint will pay a combined $158 million settlement for deceptive mobile cramming practices. 

While wireless customers ended up shelling out millions for things they never purchased, Verizon and Sprint profited from the predatory practices, retaining 30 percent or more of each unauthorized third-party charge that it billed, which typically were $9.99 per month. Customers who called to complain were often denied refunds, but when the FCC requested proof that customers had authorized charges, the carriers were unable to prove that these services were ever requested.

Consumers Union, the policy and advocacy arm of Consumer Reports, applauds the government's efforts to crack down on this predatory practice. Cramming isn’t a new scheme, but it has quickly infiltrated newer technologies. That’s why we pushed for tougher consumer protections to prevent cramming when it first appeared on landline phone bills in the 1990s and continue working for cramming protections on wireless bills.

Verizon and Sprint, which was sued by the CFPB in December for cramming, are just the most recent to come under fire. Both T-Mobile and AT&T agreed to refund consumers millions of dollars for cramming unwanted third-party charges on their bills. While the major carriers say they have stopped charging for premium text services in the face of all these complaints and penalties, regulators are seeing other types of billing, such as charges that may be pushed to smart phones through apps that could be just as tricky.

It’s only right that consumers who were wrongly charged should be refunded. But we also think you should be asked for permission before any third-party charge is placed on your bills, which is why we’re encouraged that Verizon amd Sprint will also now be required to get customer approval prior to any third-party charges. Getting customer consent before allowing third-party billing is the most effective way to shut down cramming schemes before they start.

If you are a Verizon or Sprint customer who got hit with these bogus cramming charges, the CFPB is overseeing consumer refunds. Verizon customers can submit claims for refunds at www.CFPBSettlementVerizon.com or can learn more information about the Verizon settlement by calling 888-726-7063. Sprint customers can submit claims for refunds at www.SprintRefundPSMS.com or can learn more information about the Sprint settlement by calling 877-389-8787.

This feature is part of a regular series by Consumers Union, the policy and advocacy arm of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.


Read other installments of our Policy & Action feature.


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