Complain about a product or service

"Cramming" Hits Consumers When They Least Expect It

By Mark Huffman
ConsumerAffairs.com

October 14, 2005

Cramming • Wireless Carriers Agree To $1.5 Million Cramming Settlement • Illinois Files "Cramming" Suit Against California Firm • Florida Seeks to Outlaw Cramming • AT&T Settles Cramming Suit • Feds Settle with BSG/ZPDI/Billing Concepts • Verizon Signs Florida Anti-Cramming Agreement • Embarq Agreement Protects Florida Consumers from Cramming • Florida Company Agrees to Repay 'Cramming' Charges • Florida Files "Cramming" Suit • Congress, Feds Sleep While Cramming Charges Afflict Thousands • Florida Seeks Nationwide Telephone Billing Probe • Florida Opens "Cramming" Probe • Cramming Hits Consumers When They Least Expect It • Spitzer Wins Cramming Concessions from Verizon • Mobsters Charged in Cramming Scheme • FTC Opens Hotline for Epixtar Victims --- • ILD Telecommunications • Billing Concepts/ZPDI

"Cramming" used to be what you did the night before a big test. Now the word has a more sinister meaning – like placing unauthorized charges on your telephone bill.

"I have a phone bill that says Voicemail Monthly fee $12.95. I want to know what that is for and if it's not suppose to be on there, I want it off my phone bill," said Deborah of Johnson City, Tennessee, one of hundreds of consumers who have written to ConsumerAffairs.com to complain about mysterious, unauthorized charges appearing on their telephone bills.

"I got my phone bill and ILD charged me $30.88 for some kind of internet service that I never authorized," said Christie, of Connel, Washington. "When I called them, I was kept on hold for over 30 minutes and have not been able to dispute these charges."

Of all the cramming complaints received at ConsumerAffairs.com, nearly 800 are about ILD TeleServices, whose name and telephone number appear next to the unauthorized charge on their phone bills -- and the number of complaints is steadily rising, with 80 filed in just the last three months.

ILD TeleServices claims that it is merely a billing "clearinghouse," meaning it is collecting the money on behalf of other companies – some legitimate and some, perhaps, not – who deliver their services through your local phone company.

If it all sounds confusing, you can blame the Telecommunications Act of 1996. That piece of landmark (others might suggest a different adjective) legislation changed the telecommunications landscape – not entirely for the better, at least not for consumers. Fortunately, there are some little-publicized provisions that give consumers an effective way to fight back.

In deregulating the local telephone markets, the new law required big telephone companies like SBC Communications and Verizon to lease their lines to smaller companies and to bill their customers on behalf of companies providing such deregulated services as pay phones, collect calls and long-distance calls from public places, like hotels, hospitals, airports and prisons.

The purpose was to open local phone markets to competition and create more services at less cost to the consumer. But an unintended consequence has been an outbreak of profiteering by companies eager to fleece captive or unsuspected consumers.

Many of the new entrants are companies that attempt to bill unsuspecting consumers for things they never asked for -- like voice mail -- hoping they will not look that closely at their monthly phone bill and just pay it.

Other shameless profiteers are the hotels, hospitals, universities and prisons that add outrageously expensive charges for the use of their telephone equipment.

With so many layers in the billing process, the system has been open to abuse from the start. The company placing the charge does not bill the consumer directly. Instead, the charge is billed by a "clearinghouse," like ILD, which in turn contracts with your local phone company to place the charge on your bill.

The local telephone company makes nothing but a small administrative fee and has little choice in the matter; it is required to provide billing for these supposedly "competitive" entities.

In the case of ILD, the company says it executes hundreds of thousands of bills each month for a wide variety of companies, and that only a tiny fraction of the charges produce complaints. Company officials say they work with complaining consumers to resolve disputes, and that if one of its clients produces a large number of complaints, it is dropped.

Your Service Can’t Be Terminated

Consumers writing to ConsumerAffairs.com have expressed the concern that their local telephone service would be cut off if they refused to pay an unauthorized third-party charge. It can’t be.

"The Federal Communications Commissions, through the Truth-In-Billing Act, requires telephone companies to clearly show on their bills which charges are 'miscellaneous,' and to cooperate with consumers who dispute them," said Kurt DeSoto, a communications attorney with Wiley, Rein & Fielding, a powerhouse Washington, D.C., firm that includes at least one former FCC commissioner among its partners.

Failure to pay a disputed "miscellaneous" change on a phone bill cannot, under the Truth In Billing Act, be grounds for termination of service, as long as all other legitimate charges are paid. The first step a consumer should take is to call the local telephone business office and speak to a customer service representative.

"Verizon has a first call resolution policy for our customers who call us with a cramming issue," Ells Edwards, a spokesman for Verizon, told ConsumerAffairs.com. "If the customer tells us that the charge is unauthorized, Verizon will remove it from their bill, no questions asked."

Edwards says the only exception is if the disputed charge is for a phone call charged by another carrier. In those cases he says Verizon requests the customer first contact the third-party carrier to dispute the charge. If the customer fails to get satisfaction, at that point Verizon will eliminate the charge.

Preventing Cramming In The First Place

Consumers can take action to block miscellaneous, third party charges of any kind from appearing on their telephone bills.

"For Verizon customers, it’s as simple as calling the business office and asking a customer service representative to place a block of third party billing on their account," Edwards said. Once a block is in place, Edwards said the only charges appearing on a consumer’s phone bill should be for local and long distance telephone services.

How do consumers become targets of cramming scams in the first place? The Federal Trade Commission says it can happen when someone uses your phone to call an 800 number.

"With the right technology, companies can get your phone number when you call them, using a process similar to caller ID. Once they have your number, an unscrupulous company can cram charges onto your phone bill," the FTC said in a release.

"What's more, since this technology can automatically bill the phone number that is called from, other people using your phone can cause charges to be billed to your phone."

The agency also says consumers should carefully read the fine print before they fill out contest forms, especially if they ask for your phone number. Likewise, read the fine print before you place a call in response to a sweepstakes promotion.

Also, avoid placing calls to costly 900 numbers. The FTC says consumers should consider a 900 number block; it stops calls from going through to 900 number services. Blocks also are available for international, long distance, and local toll calls.

Never accept collect calls. If you have a friend of family member who will be traveling, get them a prepaid calling card.

It’s highly unlikely Congress will revisit the Telecommunications Act of 1996 to fix the loopholes that have caused consumers so much grief. Instead, it appears consumers have to educate themselves about their rights and never hesitate to exercise them against those who would manipulate the system for fraud.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |