Feature Article

August 01, 2014

Senate Holds Hearing on Cell Phone Cramming

A growing number of U.S. mobile users are finding themselves saddled with unauthorized charges on their bills, a practice known in the industry as “cramming.” The problem has grown so severe that it’s attracted attention from Congress, according to Reuters.

The U.S. Senate has held a hearing on the practice coinciding with a new report from the U.S. Senate Commerce Committee on cramming.

Scammers figured out a way to beat the system," Connecticut Democrat Senator Richard Blumenthal, said at the hearing. "They have been absolutely relentless in doing so."

Cellphone customers get suckered into these programs by ads from small “fly-by-night” operations promising ringtones, celebrity gossip and other fun things for their phones, only to find that these things come at a cost of hefty charges on their monthly bills.

Michael Altschul of CTIA said that cramming was “wrong and simply not acceptable”

Despite how wrong and simply not acceptable carriers say that it is, they still benefit substantially from cramming, taking 30 to 40 percent of the charges these companies get. That means there’s a financial incentive to quietly tolerate the practice.

"Some carrier policies allowed vendors to continue billing consumers even when the vendors had several months of consecutively high consumer refund rates – and documents obtained by the committee indicate this practice occurred despite vendor refund rates that at times topped 50 percent of monthly revenues,"  the Senate Commerce Committee report said.

The Federal Trade Commission even filed a complaint against T-Mobile for allowing these kinds of charges, but T-Mobile CEO John Legere said that the FTC had “sensationalized” the problem.

The carriers agreed last November to stop billing for premium SMS messages, which was one of the main source of complaints.

Vermont Attorney General Bill Sorrell said that that caused the number of complaints to “drop off a cliff.”

As premium SMS messages decline, direct carrier billing has become the next major source of cramming. The FTC  is urging carriers to do something about it, namely cutting off vendors who have high complaint rates and explaining charges on their bills in detail.

Edited by Maurice Nagle

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