Have You Been Crammed?

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Cramming is the practice of adding charges to your cellphone bill that you never authorized. It’s a rampant problem, but this week the Federal Trade Commission (FTC) announced a little holiday gift for AT&T users who had extra charges added to their bills—a refund of $80 million dollars in crammed charges.

“According to the FTC’s complaint, AT&T placed unauthorized third-party charges on its customers’ phone bills, usually in amounts of $9.99 per month, for ringtones and text message subscriptions containing love tips, horoscopes, and “fun facts,” FTC’s Office of Public Affairs said.

An estimated 2.7 million customers were impacted by the company’s cramming practices. The FTC alleged that AT&T kept at more than 35% of the charges it imposed on customers, giving the company a huge financial incentive to add the fees.

The practice of cramming has flourished because few consumers view their cellphone bills monthly. Many opt for online billing that can lower the odds of bill review but even if you check your bill, cramming fees can be tough to identify. Often the fraudster has gone to great lengths to disguise their company name or service.

Under the settlement agreement, AT&T has significantly changed how it handles third-party billing to reduce unauthorized charges. It is estimated that less than 1% of users who are crammed ever use the service for which they were billed.

“It’s a high-tech game of whack-a-mole.” That’s how one expert characterized the problem in 2013 when the FTC held its first roundtable to tackle the issue. Shut one operation down, and another pops up.

The cramming ‘opportunity’ is usually delivered via text messages. Some are very cleverly written to disguise the nature of the service or the exact fee. Others just use creative spacing to make the message too lengthy to read effectively. In the FTC’s first mobile cramming case against Wise Media LLC, an FTC spokesman indicated that complaints came in from some consumers who did not even have text messaging capability on their phones. They were signed up anyway!

Derek Halliday of Lookout Mobile Security told participants at the roundtable why it’s so challenging to spot the fraud.

“They lure you with a free game that’s legit (for example), but in the background, they’re sending text messages to initiate the toll fraud,” he said. “Toll fraud is the lowest hanging fruit for these fraudsters.”

Halting the problem completely may require more complex authentication requirements. Two-step authentication could cut down on problems because you have to input a PIN code they text you to make sure you know what you’re doing. Keeping cellphones away from children is another line of defense; many cramming complaints come from parents whose child clicked on the wrong link.

AT&T customers who applied for a refund when the FTC first announced the case two years ago should see credits averaging $31 per phone in an upcoming bill. Former AT&T customers should expect a check in the mail. Learn more about the refund program here.

If you’ve been a victim of cramming with a different carrier, contact the FTC and file a complaint.

 

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