Commissioners Approve Rules to Squash Landline Bill Cramming

Genachowski: “It’s Like Getting a Bill for a Meal you Never Ate”

The FCC continued its streak of implementing consumer empowerment regulations on Friday, April 27 by unanimously approving rules that will combat cramming, or “the illegal placement of unauthorized charges on a consumer’s monthly phone bill.” Despite recent measures by the FCC and Congress to squash fraudulent charges—which consumers often do not even notice—FCC Chairman Julius Genachowski commented, “The bad guys keep trying to rip consumers off.” According to a FCC press release, the new rules will:

• Require telephone companies to notify subscribers at the point of sale, on each bill, and on their websites of the option to block third-party charges from their landline telephone bills, if the carrier offers that option;
• Strengthen the Commission’s requirement that third-party charges be separated from the landline telephone company’s charges on phone bills; and
• Ask whether the Commission should adopt additional protections, such as requiring landline telephone companies to get consumer consent before placing those charges on their telephone bills if the company already offers to block those charges.

Commissioner Mignon Clyburn commented that it is important to educate consumers about cramming so they can “be on the look-out” for these charges, which are especially problematic for low income consumers. Commissioner Robert McDowell added that the new rules will make it easier for consumers to identify fraudulent charges and “shield themselves,” but he warned that new regulations “almost always have unintended effects” and unexpected burdens. Genachowski compared cramming to getting a credit card bill “for a meal you never ate at a restaurant you never went to.”

The new rules will apply to landline carriers, but the FCC will study whether cramming is a problem for wireless carriers, too. Genachowski said “if there’s a problem, we will act.”

FCC Proposes New Cramming Rules

Source: FCC Press Release

The FCC announced it took action to protect Americans from "mystery fees" and "cramming," which is the illegal placement of an unauthorized fee onto a consumer's monthly phone bill.

Specifically, the FCC proposed rules that: (1) would require landline telephone companies to notify subscribers clearly and conspicuously -- at the point of sale, on each bill, and on their websites -- of the option to block third-party charges from their telephone bills, if the carrier offers that option; and (2) strengthen the Commission’s requirement that third-party charges be separated on bills from the telephone company’s charges. In addition, both landline telephone companies and Commercial Mobile Radio Service (“CMRS”) providers, such as wireless telephone companies, would have to include, on all telephone bills and on their websites, a notice that consumers may file complaints with the FCC and provide the Commission’s contact information for the submission of complaints. 

FCC Fines Crammers $11.7 Million

Source: FCC Press Release

The FCC announced that it has proposed a total of $11.7 million in penalties against four companies that appear to have unlawfully billed tens of thousands of consumers for unauthorized charges – a practice known as “cramming.” The proposed penalties were issued against Main Street Telephone ($4,200,000); VoiceNet Telephone, LLC ($3,000,000); Cheap2Dial Telephone, LLC ($3,000,000); and Norristown Telephone, LLC ($1,500,000).

In these cases, the FCC issued Notices of Apparent Liability to each of the four companies for apparently charging thousands of customers for “dial-around” long distance service that they had not ordered. The Enforcement Bureau’s investigation revealed that only a tiny fraction of the affected consumers (about one-tenth of one percent) actually used the services for which they were charged. Nevertheless, the apparently unlawful billing continued for months and sometimes years.

Because these enforcement actions suggest disturbing patterns of deceptive activity, the Commission today also released an Enforcement Advisory on cramming, emphasizing that all charges placed on phone bills must be authorized by the customer, and warning that the Commission will take aggressive enforcement action in this area.