Schumer Reveals: Mystery Charges Added to NY'ers Cell Phone Bills Without Their Notification - Costs Countless NY Phone Users Hundreds Every Year

Press Release

Today, U.S. Senator Charles E. Schumer called on the Federal Trade Commission (FTC) to take immediate action to stop the companies behind the precipitous rise in so-called "cramming" -- when companies add charges to consumers' and small businesses' phone bills that they did not order, agree to, or use. Recent reports suggest that New Yorkers are seeing an increase in suspicious charges appearing on their phone bills and are increasingly dissatisfied with the oftentimes herculean efforts it takes to get those charges removed. The scam artists hard at work deceiving and ripping off consumers and businesses and Schumer is calling on the FTC to put a stop to it.

"Consumers and businesses are being swindled by cramming charges and it's time to put a stop to it," Schumer said. "Cramming is an annoying scam that is not only costing people thousands of dollars in bogus fees, but countless hours of valuable time trying to get those charges removed. During these tough economic times, it is more important than ever that we take every possible step to address these types of costly scams."

The practice of cramming came about after the deregulation of the telephone industry. Deregulation opened up the system and forced local phone companies to lease their phone lines to outside firms to sell competitive services. So what happens now is, both for landlines and cell phones, a third-party company sells home voice mail and other services to the customer but it's billed through your primary phone bill. Cramming occurs when phone companies add new third-party services to a customers bill without their notification or approval, for services customers did not order, agree to, or use.

According to a recent FTC filing, cramming has become a significant area of increasing consumer complaint. The FTC received over 3,000 complaints over the last year regarding unauthorized charges on telephone bills, including landline, mobile wireless, and VoIP services.

Cramming happens when a company adds a charge to a phone bill for a service you didn't order, agree to, or use. Cramming charges can be small, say $2 or $3, and easy to overlook. But even when the phony charges aren't small, they may sound like fees you do owe. That makes them tough to pick out, especially if your phone bill varies month to month. There's no one type of cramming charge. Some charges appear just once; others are "subscription" charges that show up every month.

The New York Times recently reported a case of cramming in which a Verizon customer's bill contained an $8.67 charge for unsolicited services from a company called Enhanced Billing Services Inc. The customer had never signed up for the service and while EBSI agreed to cancel the service, they said it would take two to three billing periods before the correction appeared in their Verizon bill. After some digging, Verizon explained that EBSI is not owned by them, but part of a company called BSG Clearing Solutions. After a call to EBSI, they revealed a company called MyTeleServices had actually charged the customer the bogus fee. MyTeleServices could not explain how they ended up charging the Verizon customer the $8.67 fee.

Crammers rely on misleading or vague service descriptions to sneak bogus charges into already confusing phone bills. Charges for services that are explained on telephone bills in general terms such as "service fee," "calling plan" or "minimum monthly usage fee" could be cramming charges, but often are hard to detect or distinguish from legitimate telephone company charges.

To make matters worse, telephone companies make it difficult and time-consuming to fight phony charges, putting the burden on consumers and businesses to follow up with the third-party company that billed them in the first place. Telephone service providers that send short bills with little detail also add to consumers' and small businesses' woes in trying to track and eliminate fake third-party charges.

The practice of cramming came about after the deregulation of the telephone industry. Deregulation opened up the system and forced local phone companies to lease their phone lines to outside firms to sell competitive services. So what happens now is, both for landlines and cell phones, a third-party company sells home voice mail and other services to the customer but it's billed through your primary phone bill. Cramming occurs when a phone companies add new third-party services to a customers bill without their notification.

While the FTC has previously taken many positive steps to investigate and address fraudulent phone billing practices and treats cramming as both "deceptive" and "unfair" conduct under the Federal Trade Commission Act, Schumer says consumers and businesses deserve immediate relief from the recent surge in unauthorized and misleading cramming charges.

Schumer today called for a joint FTC and Federal Communications Commission crackdown down on cramming. Schumer called on the FTC to aggressively to pursue any third party company found to be adding charges on to phone bills without customer notification and agreement.

Schumer also called on the FCC, which regulates the phone companies, to draw up new rules that require notification before any new charge is added to a phone bill and that any charge found to be unfairly added to a phone bill be immediately removed.

Schumer added, "Consumers and small businesses alike need help to thwart the fraudulent tactics of crammers."

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