FCC fines Verizon over 'mystery' fees $25 million and $52 million in refunds – 10/28/2010
How to Find Them, Eliminate Them & Get Your Money Back!
If your business still gets its phone service through the old "AT&T and Verizon, etc" local phone company (as opposed to one of the newer competitive phone providers) then you need to double check your phone bill each and every month for charges you did not authorize. You may not know it but the local phone company allows other companies to bill you through your local phone bill. And while the local phone company allows other businesses to bill you through your local phone bill, the local phone company does not verify that the charges being billed to you by the other company are valid. When these unauthorized charges fraudulently appear on your phone bill it's called "cramming". Unfortunately you as the business owner or manager are the only one that can spot the unauthorized charges and if you don't comb over your bill every month to spot these unauthorized charges - you'll pay for them.
In theory, before these charges can be placed on your phone bill, the company that is originating the third-party billed charges is supposed to have a verification of the order like a voice recording. In reality though, all the company needs to do to initiate the charge is submit your name and phone number to the billing entity. The verifications are only required to be produced if a complaint is filed.
To prevent these charges from appearing on you business phone bill it's helpful to understand the four parties that make unauthorized third party phone charges a costly reality. Party number one is any employee who can answer your business phones. The un-authorized charge is rarely random and it usually happens after one of your company employees gets a telemarketing call. Employees should be instructed to document and report any overly aggressive telemarketing calls they receive. Party number two is the telemarketing company that originates the unauthorized charges by trying to get your employee to accept some service for which you'll be billed through your local phone bill. Party number three is the third-party billing company that has billing agreements with your local phone company. The name of the third-party billing is the one that is prominently displayed on your phone bill. After the third-party billing company's name is the name of the company that is originating the unwanted charges. Party number four is your "former Ma Bell" local phone company that collects the unwanted charges (keeps a share for "Ma") and then passes the rest to the third-party billing company (who keeps a big share) and then passes the balance on to the company that initiated the unwanted charge.
Telephone carriers have made more than $1 billion[b] in revenue from third-party charges in the past decade, said Senator John "Jay" Rockefeller, a West Virginia Democrat and committee chairman. Carriers get a fee for placing third-party charges on bills, according to the report.
The best way for consumers to protect themselves is to call their local phone company and request that it shut off third-party billing services -- many will, for free. Consumers who've been crammed and scammed should call their local phone company and insist on a refund; they should also file a complaint with their state attorney general's office and the FTC. But most important: Scan those phone bills every month for surprise charges and unwanted services. They're easy to miss.
**Following are some of the top third-party billing names and unauthorized charge originators you'll find on your phone bill. If you see these names on your phone bill you'll want to call the toll free number listed next to the charge to confirm it's a charge that's been properly authorized to be placed on your bill. Following are actual examples that we've recently found while auditing business phone bills.
We recommend customers should review any utility bills issued by deregulated utility companies. (In most instances today, consumers are paying higher charges to the deregulated gas and electric supply companies).
All Utility - Energy, gas, electric and water bills should be reviewed for proper reading and tariff.
If you suspect that you have been overcharged ask for detailed explanation and or file a complaint with your State Utility Commission.
YJ Draiman for Mayor of LA
The Federal Communications Commission Tuesday proposed new rules designed to reduce a common telephone billing scam called cramming.
Customers get crammed when a dishonest company puts charges on their phone bill (landline or wireless) for services that were not wanted or authorized.
On Wednesday, the Senate Commerce Committee, chaired by Sen. Jay Rockefeller (D-W. Va.) will hear testimony on the issue.
Cramming has been around for more than a decade — ever since phone companies were allowed to make extra money by billing for other companies. Until recently, the phenomenon had been largely limited to landline phones. But it’s become a growing problem for cell phone customers, too.
Stay up to date with the latest consumer news
The FCC estimates that as many as 20 million people are crammed each year. The bogus charges are for everything from yoga classes and psychic hotline memberships to cosmetics and diet programs.
More alarming, a commission study found that only 1 in 20 cramming victims realizes they’ve been scammed.
That’s because the crammers are clever. They know how to make their illegal fees easy to miss. They keep the dollar amounts small (sometimes as little as $1.99) and list them on the bill as something innocuous, such as “monthly charge” or “service fee.”
“People don’t see it, and if they do see it, they don’t pay attention to it,” says Joel Gurin, chief of the FCC’s Consumer and Governmental Affairs Bureau. “Month after month it adds up to millions of dollars across the country.”
Reduce your risk
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Sometimes, there’s nothing you can do to prevent a determined crammer from adding fake charges to your phone bill. However, you can avoid giving would-be scammers the opportunity by being wise to some common ploys:
Enter to win: You think you’re entering a contest, but you’re actually giving your information to strangers who might be up to no good. Before you fill out a contest entry form, consider whether you know the company, and be sure to read the fine print. Shady promoters sometimes use an entry form as “permission” to enroll you in a service. You find out you’re enrolled only if you notice the fee on your phone bill.
Join the club: The ad says it’s free, and in fact, the number you call to join may be toll-free. All you have to do is say your name and “I want the service.” But you may end up enrolled in a club or service program that comes with a monthly charge on your phone bill.
More: Cramming: Mystery Phone Charges
Source: Federal Trade Commission
By the time Alan Cooper of Bellevue, Wash., spotted the $9 fee crammed on to his wireless phone bill, had already paid $117. He complained to his wireless company, but they didn’t help.
“I’m angry,” Cooper says. “Wouldn’t you get angry if someone was stealing $9 a month from you?”
Cooper was being charged for an 800-number he had never ordered from a company he had never contacted.
“Unfortunately, you cannot assume that every charge that’s on your phone bill is a charge that should be there,” Gurin says. “The more we can make people aware of that and give them the tools to really deal with this problem, the more rapidly we’ll see some major progress in the fight against cramming.”
The new rules proposed by the FCC today would do that in three ways:
* Notification: Many landline companies make it possible for customers to block all third-party charges, eliminating cramming. The new rule would require phone companies that offer a blocking service to tell customers on every bill and on the their website.
* Separation: Landline companies would be required to have billing statements that show third-party charges in a different section from the phone company’s charges. This should make it easier to spot charges that might be fraudulent.
* Contact Information: Both landline and wireless phone companies would be required to put FCC contact information on their bills. The FCC will try to help and use those complaints to go after crammers.
The FCC’s Gurin says the FCC will continue to prosecute crammers. Within the last month, the commission has proposed fines against four companies totaling almost $12 million for allegedly billing thousands of people for unauthorized long distance service. (Click here to read FCC news release.)
Cramming moves to wireless phones
The problem is especially thorny for cell-phone users, because many bill legitimate third-party services (such as ringtones and downloads) to their wireless bills. That makes it even harder to spot an unauthorized charge.
Janie Smoter of Bonney Lake, Wash., got burned by a crammer after she went to a coupon website that required her email address (common practice) and cell phone number (risky).
“Immediately after I did that I started getting text messages for different things like daily horoscopes and love lines and that kind of thing,” she tells me.
Smoter did not sign up for any of the services. In fact, she says, she declined them all. But about a week later, when she checked her wireless bill and spotted a "premium text message" charge of $9.95 for that day.
After getting the runaround from the company that billed her, she was able to get her wireless company to remove the charge.
“It’s infuriating,” Smoter says. “I spent hours trying to get this resolved. And I was lucky because I caught it right away. I was reading stories of people online and some of them had hundreds of dollars on their bills from this company and they weren’t able to get any resolution.”
Be on guard
You’d think the phone companies would be responsible for any charge they put on your bill. But that’s not the way it works. It’s your job to watch out for erroneous charges and fight to get them removed.
That’s why you need to check your bills carefully each month. Look for anything that doesn’t seem right. This is especially important if you use automatic payment, since you’re probably less likely to check your bill each month.
Go on the offense: Contact your landline phone company and see if they offer a service where you can block third-party charges. I did that with my home phone a long time ago and I’m glad I did.
If you are crammed and can’t get the problem solved, contact the Federal Communications Commission. They are one of the few federal agencies that will actually go to bat for you. You can reach them online or by phone at: 1-888-CALL-FCC. You should also file a complaint with the Federal Trade Commission which also prosecutes cramming cases.
More information:
Blumenthal Introduces Legislation To Stop Cramming On Telephone Bills
(Washington, DC) – U.S. Senator Richard Blumenthal (D-Conn.) joined Commerce Committee Chairman John D. (Jay) Rockefeller IV and Senator Amy Klobuchar (D-MN) today in introducing legislation that would prevent telephone companies from “cramming” unauthorized third-party charges onto consumers’ landline phone bills. Cramming happens when businesses place multiple illegitimate, misleading or deceptive charges on a customer’s telephone bill. According to a Commerce Committee investigation, consumers have already lost billions of dollars through mysterious and unauthorized charges for services that they never purchased.
The Fair Telephone Billing Act of 2013, introduced this week, would bar any local exchange carrier or provider of interconnected VoIP services from placing any third-party charge on a customer’s bill – unless the charge is for a telephone-related service, like a long distance or collect call, or a “bundled” service, like satellite television service, that is jointly marketed or sold with a company’s telephone service.
A 2010 investigation by the Senate Commerce Committee uncovered widespread abuse of unauthorized third-party charges on phone bills, affecting millions of customers, including small businesses, non-profits and even government agencies. The report estimated that telephone companies placed 300 million third-party charges on customer bills each year, totaling over $10 billion in charges over a period of five years, largely unauthorized. Among the charges detailed in the report include a children’s hospital charged for a “celebrity tracker” e-mail service, a bicycle store owner charged $1,500 for virtual fax and voicemail services she did not authorize or use, and a national bank charged for credit protection plans. An auditor uncovered $550,000 in unauthorized third-party charges billed to the United States Postal Service, according to the committee report.
Telephone bill “cramming” first began to appear in the 1990s. At the time, the Federal Communications Commission attempted to fix the problem through a series of voluntary guidelines for the telecommunications industry. “Truth-in-Billing” regulations required the disclosure of third-party charges on all phone bills. Years later, the problem continues to impact millions of customers.
“This legislation would prevent fraudulent phone fees from being disguised as a tax or some other common charge,” Blumenthal said. “Third-party companies should not be able to nickel and dime consumers for charges without their consent.” (It is a multi-billion dollar nationwide fraud)
How to avoid expensive and unnecessary cell phone charges
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While many of us are now willing to pay upwards of $100 per month to connect our smartphones and tablets to cellular networks, there is still the potential for “bill shock” if we don’t read the fine print.
From the man who was charged more than $62,000 for downloading Wall-E while traveling to Mexico, to the two buddies in Philadelphia who were hit up for $26,300 after attempting to set a world record for text-messaging, there are many cellular horror stories that will motivate us to abide by even the most arcane rules and regulations. There are also more hidden and less outrageous charges found in practices like text-message “cramming” and in-app purchases that can add to your monthly bill.
Here are the five most common and potentially budget-breaking types of cell phone charges, along with some best practices for avoiding them.
1) Roaming charges when travelling abroad
Even if you pay close to $200 for all the unlimited bells and whistles on your cell phone plan, you can still incur additional and exorbitant fees if you travel outside of the country without first changing to an international plan. Most carriers will allow you to upgrade to international voice, data and text plans for an extra $30 or $40 per month (and on a month-to-month basis). While those plans are annoying and inflexible, it is better to shell out $40 rather than $2,500 or even $200,000 in international roaming fees.
Last year Florida resident Celina Aarons was hit with a $201,000 bill from T-Mobile when her brother – who is legally deaf and on her family plan – spent two weeks in Canada frequently texting and downloading videos to YouTube. Although Aarons legally did not have a case against T-Mobile, she shared her story with the local media. Subsequent public pressure helped motivate T-Mobile to lower the bill to “only” $2,500. Ouch.
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Thankfully, the major cell phone carriers are all pledging to send consumers alerts before they incur international roaming as well as other overage charges. This is scheduled to begin on October 17, and all carriers should be compliant by April 17 of next year. Still, it’s better to get organized ahead of travel than to be notified while traveling (or even worse, after the fact).
Even if you never place a call, send a text, or download an app or game while out of the country, you could still be charged international roaming fees just for having your phone turned on. Your phone may have apps that consume data without you knowing it. You are also subject to extra fees for incoming calls and texts. So if you don’t plan to use your phone at all, make sure to power it off completely. If you want the flexibility to make calls in the countries where you travel, another option is to purchase a prepaid SIM card that is connected to a local number.
2) Consuming extra minutes from checking voicemail
While the chances are extremely low that you will get hit with triple-digit or higher charges for checking your voicemail, chances are you are paying a few extra bucks per month than necessary for checking your messages. Every time you check your voicemail from your phone, you are using up precious minutes on your plan. A recent study from consumer research service BillShrink shows that Verizon customers on average pay $3.61 per month to get access their voicemail. It’s not much better for AT&T customers, who pay about $2.44 each month to hear who called them.
If you have a plan with unlimited minutes, feel free to check your voicemail as often as you’d like. However, if you are on a plan with a predetermined number of minutes and want to save an extra $30 or $40 per year, than retrieve your messages for free from a landline whenever possible.
3) Falling prey to cramming scams
Have you ever inadvertently clicked on a spammy text message sent to your cell phone? If you have, you may want to double check your cell phone bill as you might be a victim of a practice known as “cramming.” Some nefarious outfits even cram services like ringtones, horoscope readers or cheesy quiz games onto your phone by barraging you with text messages until you overtly text back “no” or stop”. Making matters worse, many of these services appear as legitimate looking names and acronyms on your cell phone bill. So you can be incurring $10 per month (or more) for these scams and think they are just one added charge from your cell phone carrier that you do not understand or notice.
The Federal Trade Commission estimates that consumers are losing approximately $2 billion per year in cramming scams. While federal government agencies are paying closer attention and many states are introducing legislation designed to outlaw and eradicate cramming, it’s never too early to investigate if this is already happening to you. The Federal Communications Commission offers tips on how to identify crammers. In addition to analyzing your phone bill for unrecognized charges, the FCC site outlines actions you can take from contacting your cellular carrier to issuing formal complaints against crammers.
4) Not having control over in-app purchases
Just because there is no download charge for an iPhone or Android game doesn’t mean it is necessarily free. Many smartphone games – among other applications – let users play a session or two for free before charging anything. And while most of us can budget whether or not we want to invest in an extra life or special power in that first-person shooter game, it’s not as easy for younger children to make that determination. Up until last year, it was easy for young children to pay for in-app services without having access to a parental password for Apple’s iTunes App Store. While Apple – responding to legal pressure – has tightened up its restrictions for in-app purchases, it is very possible that your kids know your password (and are paying for expensive games as you are reading this article).
The safer call is to disable in-app purchases altogether for Apple’s iDevices. Here’s how you do it. Just go to the “Settings” app on your home screen and once there scroll to “General.” From there, you will see the option to enable or disable “Restrictions.” To enable restrictions for in-app purchases, you can set up a separate passcode from your iTunes account that you can hopefully keep secret.
5) Too much texting and data
The two texting buddies in Philadelphia we told you about not only set a record for the number of messages sent in a month, but also were able to get out of the $26,300 price tag after it was revealed they both had unlimited texting plans. Even if you text infrequently, it’s worth it to invest in an unlimited domestic plan if you want to put a cap on the potential cost. And while most carriers offer unlimited texting plans (which are standalone or rolled into voice and texting plans), only Sprint offers unlimited data for surfing the web, downloading videos and running games and applications. The other major carriers – AT&T, Verizon and T-Mobile – either charge overage fees once you go beyond your monthly data allocation, or more recently throttle and slow down data speeds once you reach a certain threshold.
There are several ways to lower your data bill, including accessing wireless Internet connections whenever possible, turning off GPS tools and other apps while not using them, and downloading iPhone and Android applications that help you monitor data usage and consumption.
No-cost and low-cost energy savings tips
Little things can add up. You can have an impact on your energy bill by implementing the energy-saving tips listed below.
Cooling
During the summer, air conditioning can account for 50% or more of your total energy bill. Here are some tips to help save on your cooling costs:
No-cost tips
- Leave draperies closed during the day to help keep out the heat.
- Leave the air vents open in your home. Closing air vents can create pressure imbalances resulting in increased air conditioning costs.
- Clean debris and obstructions from around outdoor air conditioning components.
- Make sure your fireplace damper is closed when operating your air conditioner so your cooling dollars don't go up the chimney.
- Don't place lamps or TV sets near your air-conditioning thermostat. It senses heat from these appliances, which can cause the air conditioner to run longer than necessary.
- Set your thermostat between 78 to 80 degrees when you are home and up to 85 degrees when you are away. For every degree you set your thermostat above 80 degrees, you can save approximately 2 to 3% on cooling costs.
- Set your air conditioning fan to "auto." This reduces the negative impact of improper air balances and turns the fan motor off when the unit is not cooling. Using "auto" rather than "on" can save you $15 to $25 each month on your energy costs.
Low-cost tips
- Replace disposable air filters or clean permanent ones at least once a month. A dirty filter forces your equipment to work harder, causing higher energy bills.
- Run the exhaust fan while cooking to force hot air and pollutants out of the kitchen.
- Use the bathroom fan to remove the heat and humidity from your home when you shower or take a bath. Remember to turn it off when you are finished.
- Set your ceiling fans to blow downward during the summer to circulate air rather than lowering your thermostat.
- Maintain the effectiveness of your cooling system by having it serviced by an SRP Certified Contractor at least once a year.
- Help your air conditioner by doing moisture-producing chores, such as washing clothes and dishes or mopping floors in the early morning or at night when it is cooler. If you are on SRP's Time-of-Use price plan, doing laundry during the off-peak hours will help you save money.
Heating
Even though your energy consumption may decrease during the winter months, there are still ways to save:
No-cost tips
- Keep draperies open during the day to help let in the heat and close them at night to help retain the heat.
- Never use your stove, oven or portable grill to heat your house. This creates a safety hazard.
- Make sure to close the damper after using your fireplace. This will help keep the warm air inside your house and stop your heating dollars from going up the chimney.
Low-cost tips
- Replace disposable air filters or clean permanent ones at least once a month. A dirty filter forces your equipment to work harder, causing higher energy bills.
- Set your thermostat between 68 to 70 degrees when you are home and 65 degrees or lower when you are away.
- Change your ceiling fan's position to "up" and run the fan on "low" to help circulate the warm air trapped at the ceiling.
- Install weather stripping and seals around doors and windows. It minimizes gaps and reduces heat loss, helping you keep heating costs down and save energy.
Pool
If you own a pool, your pool pump can be the second largest energy user in your household. Follow these tips to keep your pool's energy use to a minimum:
No-cost tips
- Run your pool pump eight to 12 hours during the summer in general. During the winter, only six to eight hours are necessary.
- Clean strainer baskets and filters regularly to help your pool pump run more efficiently.
- Avoid draining and refilling your pool by using new technologies that can remove excess hard minerals.
Low-cost tips
- Keep your pool chemicals properly balanced. Balanced chemicals are more effective for clean water than operating the filter for longer periods.
Water heating
Approximately 12 to 20% of your annual energy usage goes to producing hot water for cooking, bathing, laundry, dishwashing and miscellaneous other uses:
No-cost tips
- Take short showers instead of baths. A five-minute shower typically uses less than 15 gallons of water while a bath can use 30 to 40 gallons.
- Approximately 90% of the energy used to wash clothes goes to heating water. Save money by washing as many loads as possible in cold water.
- Set your water heater thermostat to 120 degrees. Turning the thermostat down from 140 degrees to 120 degrees can save up to $7 per month.
- Fill washer tub with the least amount of water necessary.
- Check for leaks around your water heater by looking for standing water. Also, put your ear to the water heater to listen for water running when no faucets are on. This can indicate a cracked or broken water line.
Low-cost tips
- Repair leaking water faucets and make sure faucets are turned off completely. A dripping hot water faucet can leak hundreds of gallons a year, adding to your water heating costs.
Lighting
On average, lighting accounts for about 8 to 10% of the energy bill, so it will pay off to look at the following tips:
No-cost tips
- Turn off lights when not in use. You save more energy turning them off than leaving them on.
Low-cost tips
- Replace standards bulbs with CFLs. According to the U.S. Environmental Protection Agency, ENERGY STAR qualified bulbs:
- Use about 75% less energy than standard incandescent bulbs and last up to 10 times longer.
- Save about $40 or more in electricity costs over each bulb's lifetime.
- Produce about 75% less heat, so they're safer to operate and can cut your cooling costs.
- Replace your highest-use bulbs and fixtures first to save the most energy and money. Focus on the kitchen ceiling lights, the living or family room table and floor lamps and outdoor porch or post lamp.
- Paint interior walls a lighter color. This will reflect light throughout your house and limit the need for additional lighting.
Refrigerator and freezer
After your water heater, your refrigerator is typically the next costliest appliance to operate. These tips can help you take a bite out of the cost of running your refrigerator:
No-cost tips
- Open the refrigerator door only when necessary. Every time you do, 30% of the cool air escapes.
- Avoid placing a refrigerator or freezer in your garage or on your patio. During the summer, an older model refrigerator in your garage or on your patio can cost $15-20 a month to operate.
- Keep your refrigerator or freezer full, but not overcrowded. Use water containers or bags of ice to fill empty space.
- Don't keep your refrigerator or freezer too cold. Manufacturer recommended temperatures are 35 to 38 degrees for the fresh food compartment of the refrigerator and zero degrees for the freezer section. Test the exact temperature by placing an outdoor or refrigerator thermometer on the middle shelf overnight.
- Check the door gaskets on both the refrigerator and freezer to make sure they are in good shape and form tight seals. Close the door on a dollar bill. If you can remove the bill without feeling any friction or tightness, you may need to replace your gasket.
- Clean the coils on the bottom or back of the refrigerator several times a year to keep the unit operating properly.
Evaporative cooler
The following tips can help make your evaporative cooler work more efficiently:
No-cost tips
- Make sure you install the baffle plate (cookie sheet damper) in the unit before you switch over to air conditioning.
- Close any updraft vents, install the baffle plate (cookie sheet damper) and cover the unit before switching over to heating in the winter.
- Do not run your evaporative cooler and air conditioner at the same time or within the same day. The evaporative cooler increases humidity in your home while the air conditioner works to remove humidity.
Low-cost tips
- Change the pads on your evaporative cooler before each summer. Make sure the pads are evenly installed in the frames with no gaps around the edges. Don't throw the pads off the roof onto your lawn. The salt and mineral content in the pads can be tough on your grass.
Washer and dryer
Typical households wash nearly 400 loads of laundry each year. Conventional clothes washers consume 40 to 50 gallons of water per load. Energy-efficient washers use as little as one-third the water. Follow these easy tips to help reduce the cost of doing laundry:
No-cost tips
- Dry consecutive loads to take advantage of the heat stored in your dryer.
- Combine clothes that require approximately the same amount of drying time so that you don't over-dry your clothes.
- Clean the lint filter after each dryer load.
- Vent the dryer to the outside to reduce heat and moisture in your home. Periodically, inspect the dryer vent and clean when necessary.
- Avoid adding heat and humidity to your home during the hottest part of the day by running your washer and dryer during the early morning or late evening during the summer.
Range and oven
Here are a few ideas to make cooking and baking a bit easier on your energy bill:
No-cost tips
- Don't preheat the oven longer than necessary.
- Don't preheat your oven for long cooking foods and turn off the oven 15 minutes prior to completion.
- Leave the oven door closed during cooking. Each time you open the door, you lose about 25 to 50 degrees of heat.
- Prepare your foods when the kitchen is the coolest, usually during the early morning.
- You can get the most out of your oven or range by using it to capacity. If possible, cook everything at the same time.
Low-cost tips
- Minimize heat loss by using flat bottom pans with tight fitting lids that match the size of the burner.
- Grill outside or use your microwave in the summer to keep your kitchen cool and reduce energy costs.
Dishwasher
Approximately 70 to 80% of the energy used to wash dishes goes to heating water. Here are some suggestions to help your dishwasher run more efficiently:
No-cost tips
- Use the "energy saving" button on your dishwasher or air-dry your dishes and save up to 20% of your dishwasher's electricity cost by eliminating the heating function.
- Run your dishwasher on a full load.
- Run your dishwasher during the cooler parts of the day (early morning or late evening) when your air conditioner will have to work less to reduce the added heat and humidity from dishwashing.
Electronics/general
No-cost tips
- Beware of Energy Vampires. Many electronics (chargers, computers, etc.) use power even when you're not using them. Unplug them when not in use and save energy.
Low-cost tips
- Create a "charging station" connected to a power strip that includes power cords for laptops, cell phones and digital cameras. Turn the strip off when nothing is being charged.
