If there was one really dumb move by AT&T in its history of placing unauthorized charges on customers’ cell phone bills, it may have been to charge the official cell phone of the Vermont Attorney General William Sorrell with a premium text message service.
Sorrell was one of the people who took part in a press conference in Washington where the Federal Trade Commission and Federal Communications Commission jointly announced a record $105 million penalty against AT&T for cramming. Cramming is the practice of forcing charges on unsuspecting customers for such things as premium text messaging services.
A typical text messaging service that Sorrell mentioned in the Oct. 8 event was something called “Mobile Love Alerts.” Unfortunately, because AT&T apparently disguised those services as routine AT&T charges, finding them was nearly impossible for most customers. It was only after Sorrell’s staff started investigating that those charges turned up.
Despite the mistake, the much bigger problem was that AT&T apparently forced such added charges on millions of its customers. Worse, the carrier promised the third-party companies benefitting from these charges that they would do everything they could to limit refunds and prevent the true nature of the charges from being revealed, according to a statement by FTC chairwoman Edith Ramirez.
Eighty million of the settlement will be used to refund cramming charges suffered by customers. The other $25 million will go to the government to offset the costs of bringing up the charges and for other fines and penalties. The FTC has set up a Web page for customers seeking recovery of money lost in cramming.
The extent of the cramming problem is much larger than it may seem at first. According to FCC Chairman Tom Wheeler, the typical monthly cramming charge was $9.99, but in some cases the amounts were over $50. If your average company cell phone bill per user is around $100 per month, this could mean that 10 percent of your wireless communications costs are the result of fraudulent activity.
What this means is that you should ask your accounting staff to audit your company’s wireless bills for dubious charges, keeping in mind that in some cases AT&T and perhaps other carriers deliberately concealed the true nature of the costs. You also need to know that while AT&T may have been the most egregious practitioner of this cramming activity, they weren’t alone. The FTC is already suing T-Mobile for similar activity, and Ramirez said in the press conference that there were more such actions to come.
Ramirez also said that there were other types of third-party billing going on besides premium text messaging, so while you’re auditing your wireless billing, you should check for those as well.
AT&T ‘Crammed’ the Wrong Customer’s Mobile Phone Bill
For its part, AT&T notes that the company has discontinued premium text messaging services. “In the past, our wireless customers could purchase services like ringtones from other companies using Premium Short Messaging Services (PSMS) and we would put those charges on their bills,” AT&T spokesman Mark Siegel told eWEEK in a prepared statement. “Other wireless carriers did the same.”
Siegel said that AT&T discontinued such third party services in December 2013, shortly before other carriers did the same. Siegel also notes that AT&T now makes it possible for all customers to block any third party charges.
If your company doesn’t already prevent such third party charges as part of its wireless contract, this is a step you should take. Not all third-party charges are premium text messaging services, nor are all of them part of a cramming scheme. But there’s unlikely to be a business case for such things as special ring tones, which is another hotspot for third party charges.
Perhaps the most concerning part of this action is that phone companies in general, and we’re talking about both wireline and wireless companies here, tend to present themselves as victims in this whole process.
A common thread in similar prosecutions over the years has resulted in statements to the effect that the carrier was just passing along what they thought were legitimate charges and how were they to know there was a scam going on?
But in the AT&T action, as well as in other recent cases, there appears to be a pattern of abuse. Customers are routinely prevented from getting refunds for anything more than a couple of months, they are faced with a range of excuses as to how it is they must have authorized such charges or they’re promised refunds that never come.
One of the most useful parts of the joint FTC–FCC investigation is the revelation that the carriers are actually active participants in at least some of these scams.
They receive a hefty percentage of those third-party charges, amounting to about a third, according to the FTC investigation. Ramirez said that her agency’s investigation showed that AT&T would only refund part of the money for fraudulent charges when the company refunded anything at all.
But this can get worse. If your business BYOD plan is reimbursing employees for their wireless charges, then you also need to audit their phone bills for the same kind of bogus charges that you’re checking your own bills for.
And you need to come up with a policy that clearly says you’re not going to pay for third-party charges. This way your staff can have their custom ring tones, but your company won’t have to pay for them.