FTC files first cellphone ‘cramming’ case


Regulators have asked the U.S. District Court to freeze Wise Media's assets and order it to cease illegal activities. They also want the company to return money to victims of the scam.

The case is the first of its kind against unwanted cell phone fees.

“The concept of ‘cramming’ charges on to phone bills is a not a new one,” said FTC Chairwoman Edith Ramirez in a statement. “As more and more consumers move to mobile phones, scammers have adapted to this new technology, and the Commission will continue its efforts to protect consumers from their unlawful practices.”

“The FTC’s action today confirms my fear that our success in stopping wireline cramming has forced crammers to find other ways to scam consumers,” said a statement from Sen. Jay Rockefeller (D-W.Va.), the chairman of the Commerce, Science and Transportation Committee, which has investigated use of the practice against landline phone bills.

“Cramming has already cost consumers billions of dollars on their wireline bills and we need to make sure that consumers aren’t unfairly charged billions more on their wireless bills. I will continue to investigate the problem of wireless cramming, and I applaud the FTC for taking the first of what I hope are many actions against these types of companies,” Rockefeller said.

In 2011, Rockefeller’s committee revealed the results of a yearlong investigation into landline cramming fees, which showed that the practice could be costing Americans up to $2 billion per year. The revelations led telephone companies to crack down on third-party charges to landline phone bills.

Last summer and again in March, Rockefeller sent letters to the four major wireless expressing concern about cramming. 

Wireless service carriers praised the action, and noted that most subscription text message campaigns, such as those affiliated with sports leagues or charities, comply with an industry code of conduct. "To those companies that are not compliant, they must change their practices, or we will continue to aid the FTC to find and shut down any improper business," Michael Altschul, a vice president and general counsel of the wireless carrier trade group CTIA, said in a statement.

Consumers have complained about companies like Wise Media, which has previously been targeted by a class action lawsuit, on websites like SMS Watchdog.

A person claiming to be affected by one Wise Media subscription service, LoveGenie, wrote on the site: "Got four spam texts Sep 12. I received cell phone bill yesterday, there is a $9.99 charge. I did not 'subscribe' to these dirtbags. AT&T reversed the charge and has blocked them from future charges — my 'subscription' would have been renewed Oct 12 and I would have been slammed with another $9.99."

--This report was updated at 3:31 p.m.