The End of Cramming?

Cramming is the practice of placing unauthorized, misleading or deceptive charges on a consumer’s telephone bill. Crammers rely on the bewildering complexity of phone bills to trick consumers into paying for services they did not authorize or receive.   By giving the crammed charges generic names like like “service fee,”  “special access charge,” or “other fees,”  Crammers are able to slip them in amongst the many other separately listed but legitimate charges related to actual phone usage.

The Federal Communications Commission, which regulates the telecommunications industry, has in the past recognized cramming  an unreasonable practice; however, there are currently no rules that specifically address unauthorized charges on telephone bills.   That’s about to change. On July 12, 2011, the FCC announced a proposed rule to curb cramming, which it described as “a significant and ongoing problem that has affected wireline consumers for over a decade,” and invited consumers and interested parties to file comments regarding the proposed rule.

Telecom carriers are extremely interested parties when it comes to the proposed rule.  Carriers charge companies hefty fees for the privilege of adding charges to their customers’ phone bills, and limitations on the practice has a significant profit shrinking potential.  Their arguments stress the convenience aspect of the practice; for example, enabling those consumers without credit cards to pay for items when they have no cash available.  Nonprofit organizations also benefit from the practice by arranging to receive regular donations through their donors’ phone bills.

Law enforcement agencies fall on the opposite side of the argument.  On Monday, attorneys general from 17 states filed comments with the FCC recommending a total ban on all third-party charges to consumers’ phone bills.  The state AGs informed the FCC that the various measures they’ve employed  to curb illegal cramming (which were among those proposed by the FCC to be incorporated into the rule), were  largely ineffective.

Because of the difficulty stopping cramming and making consumers whole after being victimized, the AGs advocate banning all third-party charges to telephone bills except those directly related to telecommunications services, such as operator assistance and collect calls. Should the FCC not want to adopt a total ban, the AGs asked for measures that ban the addition of third-party charges to consumers’ phone bills unless consumers specifically request that the billing option be made available on their account(s).  The AGs also asked the FCC to expand the scope of anti-cramming measures to include consumers’ wireless telephone accounts as well as accounts for landline telephones, which are the focus of the FCC’s proposed rulemaking.

In my opinion, the only way to stop cramming is to go with the total ban suggested by the AGs,  Rules and regulations are always completely ineffective in curbing criminal activity.  After all, the only reason criminals are criminals is because they willingly disregard the law. Forbidding the carriers from allowing third party charges is really the only way to effectively thwart illegal cramming.

NOTE:  Cramming is not to be confused with “Slamming”, which is the illegal practice of switching a consumer’s traditional wireline telephone company for local, local toll, or long distance service without permission.



Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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