For Immediate Release
October 24, 2011
Constance N. Stratton, Senior Assistant Attorney General
Consumer Protection and Antitrust Bureau
Attorney General Michael A. Delaney today called on the federal government to adopt stronger regulations to protect consumers against the telephone bill fraud known as "cramming." Attorney General Delaney, and a multistate coalition of 17 Attorneys General, urged the Federal Communications Commission (FCC) to enact rules that would prevent unauthorized third-party charges on telephone bills – also known as "cramming." A recent US Senate report found that cramming is a fraud that costs consumers approximately $2 billion per year.
"Cramming" occurs when third parties – other than the phone service provider – add unauthorized charges to phone bills for non-call related services like e-mail, Web site hosting, discount buying programs or voicemail services. Investigations by the Attorneys General, as well as complaints received by their offices, reveal that consumers do not intend to purchase these services and rarely make use of them. In addition, most consumers are unaware that they are exposed to such fraudulent billing practices just by using a wireless or landline service.
The rules currently under consideration by the FCC would apply only on charges to landlines and would rely only on better phone bill disclosures and allowing consumers to request blocks on such charges. In comments filed today with the FCC, the Attorneys General explained that based on experiences in their states, federal anti-cramming regulations need to be stronger than those proposed.
Given that landline "cramming" charges are often phony and imposed without a customer's consent, the Attorneys General urged the FCC to ban all non-telephone, third-party charges on landline telephone bills. If the FCC fails to implement such a ban, then the Attorneys General suggested that landline telephone companies be required to automatically block all third-party charges unless and until the consumer opts to accept such charges for a specific vendor by consenting through a phone call to the consumer's telephone company. Consumers would still be free to purchase these third-party services through more traditional means, such as by credit card.
The Attorneys General also called on the FCC to extend its regulations to protect wireless telephone users, as more and more consumers rely exclusively on wireless telephone service. The Attorneys General advised the FCC to require wireless telephone service providers to obtain consumer consent for each third-party charge, verified by either call or text, before being billed. The Attorneys General also recommended that all wireless consumers be provided the option of blocking all third-party charges from their accounts, at no cost.
The Attorneys' General proposed wireless standards reflect the popularity of wireless services, as many consumers replace their landlines with cell and smart phone technology. These devices include features that convert wireless phones into virtual electronic wallets capable of making purchases in many different forms. Even though wireless telephone bills have generated fewer cramming complaints than landline bills to date, the Attorneys General urged the FCC to adopt effective protective measures before "cramming" becomes as bad or worse than seen with landline phones.
The coalition of Attorneys General outlined their recommendations in comments filed today with the FCC. The FCC is currently considering how to address "cramming," following national trends showing increases in both the number of complaints and their associated costs.
New Hampshire Department of Justice | 33 Capitol Street | Concord, NH | 03301