U.S. mobile phone users have likely paid hundreds of millions of dollars in unauthorized
charges "crammed" onto their bills, according to a report released by the U.S. Senate Commerce
Committee. The cramming often originates with small companies that provide celebrity gossip,
ring tones or similar services. But the money is collected by cellphone providers, including Verizon,
AT&T, T-Mobile US Inc or Sprint, owned by SoftBank Corp, which typically keep 30 to 40 percent of
the revenue, the staff report found."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 report found.
A federal court in California shut down six companies accused of cramming more than $100
million in unauthorized charges on consumers' cellphone bills, according to the Federal Trade
Commission. The FTC also filed a complaint against T-Mobile, the fourth-largest U.S. wireless
carrier, on July 1 accusing the company of charging customers for subscriptions to services, like
flirting tips, for which they did not sign up. It is asking the company to refund the unauthorized charges.
T-Mobile CEO John Legere said that the FTC had "sensationalized" the problem. The company
has stopped billing for text services and said in June it would help consumers recover unauthorized
payments.
But Senator Jay Rockefeller, Democrat from West Virginia, said companies must do more to
combat fraud in phone bills. "Industry representatives told us that their voluntary policies and
practices provide consumers – and I quote – a 'robust process designed to protect customers
from unscrupulous actors,'" Rockefeller said in a statement. "But this report makes it clear that
is not the case. Cramming on wireless phones has been widespread and has caused consumers
substantial harm."
Source: Reuters