Local Phone Firms Adopt Guidelines to Stem ‘Cramming’
Prodded by federal regulators, local phone companies on Tuesday agreed on voluntary guidelines to fight the mounting telephone industry problem of “cramming,” or placing phony charges on customers’ bills.
The new guidelines, formulated by the major local phone carriers and announced by the Federal Communications Commission, came two days before FCC and telephone industry officials were scheduled to testify today before a Senate subcommittee looking into the problem.
Under the new directives, customers could choose whether to have third-party products and services charged to their phone bill. The phone companies must also verify beforehand that a customer has actually ordered a new service. Also, the guidelines suggest that local phone companies screen third-party advertisements to make sure they’re not deceptive.
“False billing for phone cards, voicemail and other service appearing on consumers’
telephone bills has become a huge problem in the past year,” said Ohio’s Sen. John Glenn, the ranking Democrat on the Senate Permanent Subcommittee on Investigations. “Consumers are victimized repeatedly, first by receiving bills for services they never ordered, and second by being stonewalled . . . when they try to get the charges reversed.”
FCC Chairman William E. Kennard said he was hopeful that the industry’s agreement would finally put a stop to cramming. But he vowed that the commission “will continue to monitor and address consumer complaints involving cramming.”
For years, the telephone industry has contended it was powerless to fight the practice of billing telephone subscribers for unauthorized charges. That’s because most of the bills came from small operators whose charges are consolidated with other service providers by third-party billing agencies and submitted to the phone company as one large request for payment.
The FCC says it receives about 300 written cramming complaints a month.
Unscrupulous companies often get phone numbers and billing information for phony cramming charges by offering raffle tickets or “sweepstakes” cards, which then “registers” an unknowing customer for a new service.
James R. Oxler, director of billing and collection for SBC Communications Corp., the parent of Pacific Bell, said SBC has stopped dealing with about 20 different service providers in the last year due to consumer complaints about cramming. Oxler said SBC recently changed its policy on cramming and now immediately removes contested charges from a customer’s bill rather than forcing the subscriber to pay charges before they are fully investigated.
“I’d like to see these bad actors driven out, but I don’t want to do something that penalizes the good company and makes them lose money,” Oxler said.
The industry guidelines address only the problem of third-party billing disputes, not disputes customers may have with a local phone company itself.
A spokesman for the Senate investigations subcommittee said the panel would keep the heat on industry and regulators to address the cramming problem.
“This is only one part of the solution as far as [we] are concerned,” said subcommittee spokesman Kirk Walder. “The FCC cannot regulate a lot of the companies--like those that don’t provide telecommunications services.” So there may be a need for legislation, Walder said.
A bill that would regulate cramming was introduced last month in the House.
The measure would entitle customers to full credit for charges incurred as a result of cramming, allowing them to have disputed charges dropped from their bill immediately if they notify the carrier within 90 days.
