WASHINGTON (MarketWatch) – For more than a decade, unsuspecting Americans have been paying charges on their phone bills for unauthorized services, according to a Senate investigation released Wednesday, and lawmakers said it’s time for the government to set some rules.
Each year, about 20 million households are estimated to be the victims of the fraudulent practice of sneaking charges onto a customer’s phone bill, dubbed “cramming.” The bogus charges, ranging from $10 to $50, are for services like long-distance calls, voicemail or even diet plans or yoga classes that the customer neither requested nor used.
The charges have cost consumers, small businesses, nonprofits and even government agencies billions of dollars, according to a study presented by Senate Commerce Committee investigators. The report said most victims don’t know they’re being overcharged.
At a hearing on the issue, Senate Commerce Committee Chairman Jay Rockefeller of West Virginia noted that after insisting for more than ten years it would solve the problem, the phone industry still hasn’t been able to stop the practice.
“The minute Congress decided to trust that the industry would fix this problem, the crammers moved right back in,” Rockefeller said at the hearing. “And American families and businesses have been paying the price ever since.”
The Senate hearing was held one day after The Federal Communications Commission proposed new rules to combat the mystery fees.
Walter McCormick, president of the United States Telecom Association, which represents phone companies and broadband providers, acknowledged the cramming problems.
“Consumers should not be charged for services they did not purchase,” he said.
But service providers have trouble stemming such consumer fraud because technology and sophistication of scammers is increasing so rapidly, McCormick said.
Rockefeller said it’s pretty obvious at this point that voluntary guidelines aren’t solving the problem. “It’s time for us to take a new look at this problem and find a way to solve it.”
The new proposed FCC rules would require landline service providers to notify customers about how to block the fees and to separately list any additional charges added to a bill. They also would require both landline and wireless phone companies to put FCC contact information on their bills so that consumers can contact them more easily about bogus charges.