Published: December 2011

FCC must protect consumers from cramming fraud and abuses

Coalition: Telecommunications

A coalition of consumer groups, with Consumer Action, urged the Federal Communications Commission (FCC) to adopt its proposed rules on cramming or to, at the very least, strongly consider more aggressive action such as banning wireline third-party billing.

Below is an excerpt from the letter:

In response to the Cramming NPRM, the Commission received initial comments from a wide range of consumer and public interest groups, federal and state law enforcement agencies, public utility advocates, third-party service providers, billing aggregators, local exchange carriers (LEC’s) and wireless carriers. Among virtually all commentators there was overwhelming consensus that cramming is a problem that deserves the Commission’s attention. However, there was a clear demarcation as to what the Commission should do to address the issue. On one side, consumer and public interest groups, state attorneys general, utility consumer advocates and the Federal Trade Commission urged the Commission to adopt its proposed rules at the very least, and strongly consider more aggressive action such as banning wireline third-party billing. On the other side, the various participants in the third-party billing ecosystem – LEC’s, wireless carriers, third-party service providers and billing aggregators – urged the FCC to allow the status quo to endure or, at the very least, allow industry participants the flexibility to address cramming through light-touch regulation.

Public Interest Commenters believes that the status quo is unacceptable. The record in this proceeding clearly demonstrates that cramming fraud hurts millions of consumers. More than a decade has passed since the industry promised to get its “house in order” and reign in the crooks that perpetrate cramming fraud. Unfortunately, as the Senate Commerce Committee’s investigation of cramming vividly illustrated, the practice has only intensified as fraudsters learned to evade industry countermeasures. Far from reigning in the problem, evidence suggests that the three major actors in the third- party billing ecosystem – LEC’s, billing aggregators and third-party service providers – continue to turn a blind eye to the rampant abuse of the third-party billing system by fraudsters.

The time has come for the Commission to take more aggressive action to address cramming once and for all. This is a solvable problem. Wireline third-party billing for so-called “enhanced” services is a hopelessly broken billing model. Recent legislative action in Vermont should be a model for common-sense consumer protection regulations

that allow legitimate third-party billed services while prohibiting third-party billing for services that bear little or no relation to the underlying wireline telephone service.
While the scope of cramming fraud – at this time - is not as great on wireless telephone bills, addressing cramming on wireline bills should not preclude the Commission from considering how wireless consumers can be better protected. Sensible disclosure rules and consideration of an opt-in rule for third-party billed charges could do much to prevent the epidemic of wireline cramming fraud from migrating to wireless services.

Finally, the Commission should refrain from adopting rules that preempt stronger state consumer protections against cramming.

Lead Organization

National Consumers League and Consumer Action

Other Organizations

John Breyault, National Consumers League | Susan Grant, Consumer Federation of America | Irene Leech, Virginia Citizens Consumer Council | Michael Scott, Utility Consumers' Action Network

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