The scheme victimizes all of us really – from people using their phone at home to small and large businesses, schools, hospitals and every level of government. Cramming has been around for a while, but with the explosion of wireless devices like cell phones and smart phones, it has become an even bigger issue.
Regulators at both the Federal Communications Commission and the Federal Trade Commission have tried to address it by requiring phone companies to make bills that are easier for customers to read and truly understand. These so-called “Truth-in-Billing” rules have been successful in helping consumers identify charges they did not authorize.
Just this week, the FCC unveiled new rules aimed at the problem. The commission proposed rules that, among other things, would require providers to separately list any additional charges added to a bill. For now, the FCC says consumers should scrutinize charges for services that are explained on a telephone bill in general terms, such as a service fee, service charge, other fees, voicemail, mail server, calling plan or some form of club membership.
Regulators also have been going after companies behind bogus charges and have yielded some of the largest penalties and consumer refunds on record. The FCC recently fined four long-distance companies $11.7 million for placing cramming charges on consumers' bills.
Still, cramming continues – as a couple of recent cases from Florida illustrate. Last year, a Port St. Lucie resident was shocked when she saw an obscure $13.97 charge on her phone bill for voicemail. When she called to question the charge, she was told her husband had ordered it. She told the phone company that was impossible, her husband had died three months before. Another woman reportedly spent nine months trying to remove an $11.01 charge on her phone for web-hosting services she never ordered.
Unfortunately, fines and refunds are just a cost of business for many of these third-party scammers, and the profit they make usually far exceeds any penalties or fines they have to pay back. If we want to stop cramming, we have to take the profit out of it. The penalties have to be harsh enough to deter vendors. We also have to ensure that telephone companies know when third-party charges are bogus and they have the proper incentives to avoid doing business with these scammers.
Not only are these charges unfair to consumers, but this scheme undermines consumer confidence in our regulators. If we want to keep climbing out of this recession, consumers need to trust that businesses, regulators and lawmakers are responsive to and crackdown on these types of scams.
That is why the Commerce Committee conducted its investigation into cramming and its impact on American consumers, and why we’ll find solutions.
One place regulators likely will be eyeing is Vermont. There, state legislators just two months ago passed a new law that is believed to be the first in the nation to ban the addition of most third-party charges on local phone bills.
Sen. Bill NelsonBill NelsonTrump's Commerce pick admits to unknowingly hiring undocumented worker Senate Democrats brace for Trump era Senators introduce dueling miners bills MORE (D), Florida's senior senator, serves on the Senate Commerce, Science and Transportation Committee.