Dateline: August 4, 2014

When it sued T-mobile over its alleged practice of “cramming” its customers’ bills with charges for apps and services they never asked for, the Federal Trade Commission (FTC) was just getting started.

In a report released July 28, the FTC recommended that all mobile phone carriers take steps to ensure that their customers are never billed for unauthorized services or applications.


“In six recent enforcement actions,” the FTC report states, “the Commission has alleged that such practices have cost consumers many millions of dollars, and in just three of these actions, defendants have agreed to orders imposing judgments totaling more than $160 million.”

In its July 30 report to the Senate, the FTC estimates that mobile cramming has cost consumers hundreds of millions dollars over the past several years.

Monthly charges typically “crammed” onto customers’ bills include subscriptions for ringtones, wallpaper, and scam-filled horoscope texts, flirting tips and celebrity gossip. While most charges for these services range from $1 to $9.99 per month, some can be as high as $20. In all cramming cases, however, the customer did not authorize the services and the charges for them are well-hidden on their bills.

For example, the FTC found that T-Mobile would show charges for unauthorized services on its customers’ bills under cryptic descriptions like, “8888906150BrnStorm23918,” that in no way explained the charge.

While the monthly charges for these third-party services rarely exceed $10, the high volume of the charges yields “substantial cumulative revenues” for the mobile carriers. According to the FTC’s report to the Senate, just one unnamed carrier reported charging for more than 120 million individual third-party transactions on its customers’ wireless bills in 2011 alone, with the mobile providers typically keeping from 30% to 40% of third-party charges.

And Consumers Have Complained

It’s not like consumers haven’t noticed cramming or have just been sitting and taking it, either. According to the FTC, it and other government agencies have received plenty of complaints related to unauthorized third-party charges hidden on their mobile bills. For example, the FTC’s Consumer Sentinel Network has received more than 1,800 complaints of unauthorized charges on wireless bills since 2010.

FTC Recommendations: Regulations Coming?

While its recommendations are not yet laws, by including them in a report to a sub-committee of the U.S. Senate, the FTC pretty clearly indicates that some anti-cramming federal regulations may be coming that would require mobile phone carriers to make some changes.

The Right to Opt-Out

Most importantly, the FTC called on all mobile carriers to give consumers the right to block third-party charges, and to “clearly and prominently” inform customers of that right, both when they apply for service and on an ongoing basis during the term of their contract.

Informed Consent Required

This one seems so obvious you have to wonder why they aren’t already doing it. The FTC recommended that mobile carriers be required to get customers’ “express, informed consent” before putting third-party charges on their phone bills. In addition, FTC said, “Carriers should closely monitor refund rates, consumer complaints and other signs of possible cramming and take action where necessary.”

No More Deception

Mobile carriers should make it clear to customers exactly how to order third-party services and make sure customers understand how much and how often they will be billed for each service. Mobile carriers should also closely monitor third-party service merchants for “risky or suspicious” services and prevent them from charging for such services.

Charges on Bills Must Be Clear

Charge descriptions on phone bills like T-Mobile’s “8888906150BrnStorm23918” just have to go. “Mobile bills should clearly and conspicuously show third-party charges,” recommended the FTC. “Carriers should consider steps to make third-party charges more prominent, such as separate billing lines for third-party charges that make it clear to consumers which charges are directly from a carrier and which are from a third party.  In addition, mobile carriers should give consumers using pre-paid calling plans who do not otherwise receive bills from their mobile carrier to receive specific notification that a third-party charge is being deducted from their account.”

Billing Disputes Must Be Resolved

Finally, the FTC recommended that all mobile carriers should have an easy, clearly stated, and effective process for resolving disputes with customers who question or object to suspicious charges or unauthorized charges and request refunds for those charges.

“As the report notes,” stated the FTC, “consumers have often complained that carrier refund processes are difficult and inconsistent.”

The report also calls on mobile carriers to, “where possible, to give consumers who were crammed refunds of recurring monthly charges including previous months, and when a third-party is stopped from billing due to cramming, to notify consumers whose bills were charged so they can seek refunds for those charges.”