How Cramming Affects Your Company's Bottom Line

By Wayne Rash  |  Posted 2013-11-26

How Cramming Affects Your Company's Bottom Line

Chances are you never look at the detail in those small charges that show up on the cell phone bills your employees submit as part of your company's bring-your-own-device (BYOD) program. But those charges are there if you look, and while they may be small, taken together "cramming" can really add up.

For most people, a charge of under $2 and labeled something like "Voicemail" or "Internet Surcharge" isn't something to turn into a priority requiring follow-up. But maybe it should be. In an announcement last week, the four major wireless carriers in the United States said that they're dropping Premium Short Message Service (SMS) support as a way to crack down on cramming.

"Cramming," if you haven't heard the term before, refers to unauthorized third-party charges that are placed on phone bills as a way to defraud consumers. Cramming has been a problem for years on landlines, ever since carriers were allowed to collect money for services through phone bills.

While many third-party charges for services are legitimate, there's little effective regulation on them beyond consumer complaints, and as a result scammers can rack up billions of dollars a few bucks at a time. The problem has moved on to wireless carriers, where the easiest way to accomplish such a charge is to claim that the phone owner has sent a premium message.

These messages in themselves aren't illegal. In fact, they're a common fundraising method for charities, where you'll often see a request to send a text to a five-digit number to make a donation. But this method of billing also provides a conduit for extracting funds from people who aren't paying attention to their bills.

Now that employees are submitting their phone bills as expense items as part of an agreement with their employers to provide their own cell phone for business use, this problem has become magnified. While each individual charge on a wireless bill may amount to only a few dollars, all of the unauthorized charges on a given bill can be substantial, especially if the employee getting the bill doesn't know what to look for.

Add up several of those charges for each employee, and then multiply them by all of your employees using wireless devices, and it's not hard to see totals adding up to thousands of dollars per month. Multiply that by the months over the course of a year, and it can be tens of thousands of dollars. This money drain is enough to cause nearly any company to take action, especially considering that your company gets no value for that expense.

So what can you do about it?

Even though the major carriers are eliminating a major source of cramming, that doesn't mean the charges will disappear. So you should perform at least a check of a sample of employee wireless bills each month. If you find a suspicious charge, either ask the employee to follow up or ask permission to follow up for them.

Fortunately, follow-up is easy. "What we have always told customers is that if there's a charge on your bill you didn't incur, just get in touch with us and we will credit you for it," AT&T spokesman Mark Siegel told eWEEK in an email. Siegel said AT&T will eliminate the charge with just a phone request.

How Cramming Affects Your Company's Bottom Line

Verizon Wireless, meanwhile, said it has already begun looking for ways to cut out unauthorized charges. "For years, Verizon has been vigilant in protecting our customers from bad actors," Verizon Wireless General Counsel William B. Petersen told eWEEK in an email. "There have been numerous times we have terminated programs and in some cases have taken aggressive legal action in order to ensure our customers were protected.

"Since premium messaging was first introduced, technology advances and smartphone adoption have dramatically changed the way customers access information. Verizon had previously decided to exit the premium messaging business because of these changes as well as recent allegations that third parties have engaged in improper conduct in providing premium messaging services to our customers."

Petersen said Verizon will continue to support text-to-donate for charitable programs and text-to-contribute for political campaigns that use the technology.

Sprint and T-Mobile have said recently that they are also eliminating their premium SMS services.

"T-Mobile will no longer allow third parties to bill customers for premium SMS services," T-Mobile spokesman Glenn Zaccara told eWEEK in an email, noting that there are some exceptions, including text-to-donate services and Google Play charges.

But it's worth noting that those premium services are not the only way that scammers can add third-party charges to phone bills. Those can show up in the guise of charges for nearly anything, but normally they're intended to appear as if they were legitimate charges, and they're intentionally kept small. The idea is that nobody is going to take the time to call to dispute a 99-cent charge.

But remember, those charges add up. A 99-cent charge is a $12 annual fee, and if there's one such charge, there are probably many. It can add up to real money if not kept in check.

In the meantime, perform a random sample of phone bills to get a handle on the size of the problem and create a policy regarding add-on charges for phone bills. For example, you might choose to allow charitable contributions, but you might also choose not to reimburse employees for them. Keeping a lid on these expenses need not take a lot of time, but it can pay big dividends over the long run.

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