New ‘Cramming’ Proceeding in the Works, FCC Official Says
The FCC is considering launching a new proceeding that would eventually create formal rules designed to crack down on bill “cramming,” an eighth floor source told us Thursday. The announcement could come as early as next week: The Center for American Progress issued a news release saying that Chairman Julius Genachowski will make a “cramming” announcement on Tuesday. Efforts to reach the chairman’s spokesman for comment were unsuccessful, but an FCC official said Thursday that staff had promised a proceeding on cramming several weeks ago.
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On Thursday, the commission issued notices of apparent liability to four separate small telcos, demanding penalties of $11.7 million. The companies were Main Street Telephone, subject to $4.2 million in apparent liability; Voice Net Telephone, subject to $3 million; Cheap2Dial Telephone, also $3 million; and Norristown Telephone, subject to $1.5 million in apparent liability. “The Enforcement Bureau’s investigation revealed that only a tiny fraction of the affected consumers (about one-tenth of 1 percent) actually used the services for which they were charged. Nevertheless, the apparently unlawful billing continued for months and sometimes years,” the commission said. “Because these enforcement actions suggest disturbing patterns of deceptive activity, the Commission today also released an Enforcement Advisory on cramming, emphasizing that all charges placed on phone bills must be authorized by the customer, and warning that the Commission will take aggressive enforcement action in this area.”
Messages left at numbers listed for Main Street and Norristown weren’t returned. Through a spokeswoman, Voice Net and Cheap2Dial each issued a statement denying that they had “engaged in any fraudulent activity.” Each company pointed out that the FCC has no firm “cramming” rules but only voluntary guidelines. “We will continue to cooperate fully with the Commission’s investigation, and look forward to presenting our case,” Voice Net said in its statement. “We also encourage the FCC to consider developing formal rules around cramming, as we believe this would give clarity to consumers as well as companies like Voice Net that make compliance a top priority."
Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., is “pleased to hear” about the FCC’s notice, he said in a written statement. “However, I don’t believe it will be enough to stop the problem. For the past year, my Committee has examined cramming and third-party billing on telephone bills. What we've found is troubling,” Rockefeller said. “We know that the telephone companies’ voluntary guidelines have failed to stop mystery fees. We know that additional disclosure requirements on telephone bills haven’t fixed the problem.” He said the committee will hold additional hearings and “release a report on this issue shortly.”