June 7, 2013
Washington, DC – A coalition of public interest organizations today called on the Federal Trade Commission to consider additional regulations to address the growth of cramming fraud on cell phones. Cramming – the unauthorized placement of charges on consumers’ phone bills – is a threat to millions of wireless subscribers that demands action by federal regulators.
Based on data reported by the California Public Utilities Commission, the Federal Communications Commission and the Vermont Attorney General’s office, the public interest organizations estimated that wireless cramming costs American consumers as much as $887 million per year.
“Wireless cramming fraud is practically the perfect scam for unscrupulous con artists,” said Sally Greenberg, Executive Director of the National Consumers League (NCL), which organized the coalition. “Most consumers don’t even know that their cell phone bills can be used to commit fraud. Add in an insecure wireless third-party billing ecosystem and scam artists are set up to have a field day at consumers’ expense.”
In comments filed at the FTC, the groups urged the Commission to consider the failure of more than a decade of self-regulation and limited “Truth-in-Billing” rules in preventing cramming on landline phone bills. Instead the groups called on the FTC to take a more active role in regulating billing aggregators and third-party content providers to address wireless cramming fraud. The groups called for a range of reforms, including requiring third-party service providers to post bonds before being allowed to begin billing, prohibiting the use of negative option confirmations, and better reporting of consumer cramming complaints.
NCL was joined on the comments by the Center for Media Justice, Citizens Utility Board (CUB) of Illinois, Consumer Action, Consumer Federation of America, National Consumer Law Center, on behalf of its low-income clients, Public Knowledge and the Virginia Citizens Consumer Council.
To view the organizations’ comments, click here.