FCC Unveils Plan to Help Consumers Prevent Cramming
Building on the Federal Communications Commission's Consumer Empowerment Agenda, FCC chairman Julius Genachowski announced plans to propose new rules that would increase transparency and disclosure on phone bills, with the aim to protect Americans from "mystery fees" and "cramming," which is the illegal placement of an unauthorized fee onto a consumer's monthly phone bill.
The charges are for services like long distance calling, voicemail, or even diet plans or yoga classes that the consumer neither requested nor used. Speaking at the Center for American Progress, Genachowski also unveiled an FCC Cramming Tip Sheet to help consumers identify and resolve this type of mystery fee if they've been affected.
"Cramming is not only illegal, it erodes consumer trust in communications services. The FCC will not tolerate cramming, and we are turning up the heat on companies that rip off consumers with unauthorized fees," Genachowski said. "We want to send a clear message: If you charge consumers unauthorized fees, you will be discovered and you will be punished."
A recent survey showed that only 5 percent of consumers who were impacted by a particular cramming company were aware of the monthly charges. Based on the same survey and state data, the FCC believes an estimated 15 million to 20 million U.S. households a year potentially have these mystery fees on their monthly landline phone bills.
One example of cramming involves a St. Louis woman who was charged for 25 months of long-distance service she never authorized or used. When she protested the charges, the company sent her a copy of the form that she had supposedly used to authorize the service. It had a different name, address, email and birth date than she did. Even so, the long-distance company offered to credit her only a fraction of the cost.
"Our Consumer Empowerment Agenda is focused on harnessing technology and transparency to empower consumers with the information they need to make smart decisions and to make the market work," he said. "When abusive practices require action, we will act. We are focused on empowerment, education and enforcement."
The FCC Enforcement Bureau issued Notices of Apparent Liability last week to four companies for allegedly charging thousands of consumers for long distance service that they had not ordered. The companies targeted in the FCC Notices of Apparent Liability are Main Street Telephone ($4.2 million), VoiceNet Telephone ($3 million), Cheap2Digital Telephone ($3 million) and Norristown Telephone, ($1.5 million). The unlawful billing appears to have continued for months, the FCC noted.
According to the Enforcement Bureau, only one-tenth of one percent (0.1 percent) of consumers in two of the cases reviewed actually used the additional services for which they were being charged. "Today, we are saying loud and clear to consumers trying to navigate the complex and constantly changing communications landscape: The FCC is on your side," Genachowski said. "We are focused on helping all Americans seize the tremendous opportunities of communications technology."
FCC Commissioner Michael J. Copps said in a statement: "These charges can be heavy and, if undetected, repeated for months and even longer. I congratulate Chairman Genachowski for his statement today, and I look forward to working with him and all my colleagues to move us expeditiously to a final order to enhance basic consumer rights," Copps said.