On Wednesday Senator Jay Rockfeller announced that Verizon and AT&T agreed to stop illegal cramming of phone bills, a practice which cost consumers 10 billion dollars in charges over the past 5 years.
The decision came after 15 years of consumer complaints and investigations by MSNBC, FCC, the Senate and a class action lawsuit against Verizon.
Phone cramming first appeared in 1995.
Triggered by the breakup of AT&T’s telephone monopoly it allowed third party companies to apply charges directly onto people’s phone bills as if they were credit cards. Everytime a consumer got billed AT&T would take their cut (sometimes as high as 2$) and send the rest to the third party company.
Special Senate investigation lead by Jay Rockfeller suggests that telephone companies made 650$ million dollars from taking their cut of the illegal phone charges. In a strong statement Sen. Rockfeller suggest that companies knew full well that about these allegations and chose not to do anything about them “It’s something the phone companies do know. And they can’t not know it — because — it’s bringing in a lot of money to them”.
The investigation claims that phone cramming was made easy and certain AT&T employees said they were pressured into accepting applications from companies which seemed dubious.
At the end of 1990s telecom industry groups acknowledged there is a problem with phone cramming and promised to address the issue. As Sen. Rockfeller puts it “Then they made a very good case. Stupidly — we went along with that.”
FCC investigation suggests that as many as 19 out of 20 consumers didn’t know about cramming charges on their phone bills. Stealthiness of these charges is explained by generic descriptions such as “monthly fee” and small amounts that appeared on the phone bills.
Some consumers that noticed charges on their bills had to spend hours on the phone trying to figure out why they were getting charged and trying to cancel future billing from companies that offered them services they’d never heard of.
In one instance a consumer claimed he was getting charged for a toll-free line he’s never knowingly signed up for, in another example a Washington resident entered her phone number on a coupon site and started receiving unsolicited SMS messages, at the end of the month she noticed her phonebill was charged 9.95$ for a service called “Premium Text Message”. In both cases there may have been small text advising the consumers of impending charges, but in other instances consumers were signed up without any action on their part – this is known as “phantom billing” and is a criminal offense.
Consumers need to carefully examine their phone bills when they get them and contact the phone company if a suspicious charge is spotted. You may also report unknown numbers to whycall.me to raise awareness about illegal phone crammers.