Tougher Vigilance From LECs, Aggregators Said Imperative To Stop Bill Cramming
LECs and bill aggregators must do more to protect consumers’ phone bills from containing unwanted charges from third parties, or bill cramming, panelists said Wednesday at an FTC forum. “The verification process alone is not sufficient,” said John McGlamery, Nevada’s deputy attorney general. “Scammers already know how to get around it.” Aggregators and LECs are well-positioned to do more, said Laura Kim, FTC assistant director of the marketing practices division. The aggregator is “the gatekeeper charged with the responsibility for screening out the bad actors,” she said. Aggregators have direct contact with the vendor and they “receive complaints from all sources about their vendors” from consumers, LECs and regulatory authorities, she said. Aggregators should be looking at the trends in complaints from all across the country from all of these sources, she added.
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LECs should inform customers about third-party billing and help the customers identify those third parties, some panelists said. “LECs have to hold the aggregators accountable for allowing fraudulent actors to access their bills,” Kim said. A problem is that LECs will give a refund for a month, even when a person was billed for several months, McGlamery said. “The industry’s making money on it.” There’s an incentive not to take the necessary steps, he said. The current regime is a “haven for scammers,” he added.
A Florida man engaged in cramming fraud while serving a prison term, said Richard Goldberg, assistant director of the Justice Department’s Office of Consumer Protection Litigation. Willoughby Farr had bought lists of people’s names, phone numbers, addresses and other information and submitted it to billing aggregators, who then submitted it to the LECs, Goldberg said. “What is being done is clearly not enough,” he said, “if somebody can, from a jail cell, have other people operate on their own behalf to submit bills for completely fraudulent charges."
A lot has changed in the LEC industry and “industry has struggled to keep up,” said President Don Teague of payment consultant MORE International. “We need standards that are ubiquitous across all phone companies.” All telemarketing calls should be recorded, stored and made available to enforcement agencies, third parties and other entities, he said. That would be a “slam dunk” in dealing with cramming, he said. Detection and prevention take vigilant law enforcement, but “scam artists are going to continue as long as there is LEC billing for these services,” Goldberg said.
Initial blocking could be implemented for all third-party charges on landline bills, said Keith Dooren, assistant Florida attorney general. Blocking could be removed with proper authorization by the account owner and clear and “conspicuous disclosure of terms and conditions,” he said during a different FTC panel. “Clear and conspicuous” written confirmation on separate billing page is needed, he said. Regarding carrier add-on charges, Dooren said prohibition could be initiated against billing based on oral offers and acceptance.
Phone companies should offer customers the option of blocking third-party services, said John Breyault, vice president with the National Consumers League. He also called for ongoing and strengthened auditing and controlling practices. Existing audit and control practices appear to be insufficient, he said. Agencies and phone operators need better coordination to prevent cramming, he said. Better cramming detecting system and consumer education are also needed, he said. The Vermont legislature recently passed H-254, a bill to protect Vermonters against deceptive business practices, said Elliot Burg, senior assistant Vermont attorney general. The bill makes it illegal to charge consumers for goods or services in a phone bill, unless they're explicitly authorized, and legitimate supplemental charges are protected, he said. He expects Vermont Governor Peter Shumlin to sign the bill into law soon. The legislation could be a model for other states to deal with cramming, said Burg.
The FCC gets thousands of cramming complaints every year, said Joel Gurin, chief of the Consumer & Governmental Affairs Bureau. The complaints include unlawful charges on long-distance and international calls as well as unauthorized add-ons like texting and security services on wireless services, he said. The FCC’s practices against cramming are complementary to the FTC, he said, saying the agency goes after initial crammers with enforcement actions. Attorneys general in more than 25 states have told the FCC that cramming is a significant problem, he noted. Wireline dominates the cramming complaints, but wireless cramming increasingly needs attention, said Gurin. He acknowledged that wireless cramming could be much more complex. It’s clear that a lot of third-party charges on wireless services are legitimate, he said.