You might not be familiar with the term "cramming." But if you're not careful, it could be costing you money on your mobile phone bill each month.
"Cramming," as federal regulators call it, is a process where consumers are tagged with bogus hidden charges. The practice grabbed fresh headlines earlier this month when the Federal Trade Commission accused T-Mobile of making hundreds of millions of dollars by charging subscribers for SMS features that many never actually ordered. For its part, T-Mobile calls the FTC's suit "unfounded and without merit", with president and CEO John Legere accusing the regulator of unfairly singling out his company "rather than the real bad actors."
The implication: cramming is--or at least has been--a common practice in the wireless industry. So what do you need to know about it?
What is cramming?
Cramming is the act of placing unauthorized charges onto your phone bill. Per the Federal Communications Commission, "if a local telephone company, long distance telephone company or another type of service provider either accidentally or intentionally places unauthorized, misleading or deceptive charges on your bill, you may have been crammed.'"
How does cramming work?
Crammers charge small monthly fees for a service delivered through the phone, month after month after month. Crammers hope that subscribers don't notice the charge among the litany of fees contained within their monthly statement.
So how do these charges wind up on your bill in the first place? A common method of cramming occurs when you respond to an unsolicited text message. Your response triggers acceptance of an unwanted service or subscription. However, that's not the only way to get crammed. You could enter a contest or free giveaway where you include your phone number, unaware that the fine print deems your entry as consent to some digital subscription. And sometimes, cramming results from outright theft, with a third-party placing a charge on your bill you did not authorize in any way, not even inadvertently.
In all instances, cramming is made possible because your phone service provider allows charges placed on your monthly bill for services offered by third-parties. Much of the time, this is mutually beneficial. A third-party offers a service you want--a text of the day's lucky Lotto numbers, for example, or virtual coins for your favorite online game--and the phone company takes a 35 to 40 percent cut of the fee. Everybody wins! Except, of course, if you never really agreed to those fees everyone's splitting up.
Phone companies and any billing aggregators they contract with probably can't vet every service, every charge, and every third-party service provider. So you need to be vigilant.
Is cramming a new phenomenon?
No. As Legere has pointed out in his response to the FTC allegations, cramming has been an ongoing problem within the industry.
"It is true, that back in 2009 thru 2013, all of the big carriers in the wireless industry, including T-Mobile, began carrying what became known as the Premium SMS services," Legere wrote. "We were all billing for these services on behalf of the content providers who were responsible for obtaining the customers' authorizations." Legere added that T-Mobile terminated fraudulent content providers as it became aware of them, and stopped allowing third parties to bill customers for premium SMS services in November 2013. (Both AT&T and Sprint ended that practice at that time too, as part of an industry-wide concession on premium text messages.)
Jack Gold, a long-time telco analyst, says that cramming "has been going on for years, and not just with T-Mobile." According to Gold, cramming thrives in part because government regulatory bodies have failed to demand greater bill transparency for consumers. While bills are still difficult to decode, Gold tells me that government is now more aggressively going after carriers and content providers for "excessive and sometimes unwarranted fees."
How can I tell if I've been crammed?
Read your bill. No, really. Read it. Keep an eye out for words like "membership," "member fee," "subscription," "activation," or "calling plan." If you're not sure, call your phone company. The FTC says the most common dollar amount for a cramming charge is $9.99, though very often the chargers are for smaller amounts that are easy to overlook.
OK, I've been crammed. What do I do now?
Contact your phone carrier if you don't recognize a specific charge. Ask that any unauthorized charges be removed and refunded. You should also file a complaint with the FTC online or call 1-877-FTC-HELP.
Does the government go after crammers?
Yes. Last year, the National Association of Attorneys General (NAAG) declared "mobile cramming" a consumer protection priority. Soon after, federal and state authorities pressured the major wireless carriers, including T-Mobile, to stop offering "premium text message" services, long the primary money spigot for third-party crammers--hence that November 2013 move to drop premium SMS services billing.
Earlier this year, the FTC settled what it called a "massive mobile cramming scheme." The case was brought against providers of premium text message services, which included services like daily "love tips," "fun facts" and "celebrity gossip alerts."
The government is also going after carriers, with its case against T-Mobile just the latest instance. In 2011, the FCC settled a cramming case against Verizon, where the nation's largest wireless carrier agreed to pay a $25 million fine.
Is T-Mobile being singled out?
Unlikely, despite the public protestations of the "Uncarrier." A central element of the FTC's complaint against T-Mobile is that its bills, including its online bill site, made it extremely difficult for customers to uncover any bogus charges. In addition, the FTC alleges that rather than offering a full or even partial refund when its customers spotted a charge they didn't authorize, in many cases T-Mobile simply referred the customer to the third-party operating the disputed service.
Can I get a refund on a charge, even if the cramming has stopped?
T-Mobile declined to directly answer my questions on cramming, though a spokesperson pointed me to its Premium Services Refund Program FAQ. The FAQ says that refunds for "unauthorized premium text message charges" have already been issued to some customers, with the remainder scheduled to receive their refunds between the end of this month and September.
Note: if you believe you are the victim of cramming for a charge other than "premium text message" services, you should contact T-Mobile directly.
Isn't cramming easy to spot?
No. When the FTC examined cramming on landlines back in 2012, they estimated only 1 in 20 victims were aware of the unwarranted charges. Blame your bill, which is oftentimes long and confusing. The FTC's investigation of T-Mobile for example, revealed a 123-page bill, with many hidden charges inside.
But T-Mobile is hardly alone here. AT&T's own sample bill, which the carrier uses to educate consumers, contains three pages of charges, fees, taxes, plan descriptions and advertisements--and this does not include the numerous additional pages which break out the various calls, texts, and data services for the prior month.
How can I prevent from getting crammed?
Start by reviewing your bill every month--yes, that won't be a highlight of your month, but it's the best way to spot unauthorized charges. Contact your carrier as soon as you spot any charge that looks suspicious. Even small amounts, such as $1.99, add up. If you did not authorize a charge, you are not responsible. However, there are no set rules for how long a carrier must refund a disputed charge.
The CTIA, a lobbying organization for the wireless industry, told me that if you are still receiving a "premium content subscription" you wish to cancel, simply text "stop" to the content provider. If the provider is following industry rules, your text will stop the recurring charges.
If you receive a call from an unrecognized area code, don't call back. Type the code into your search engine of choice. You may discover a fraud alert notice. If the area code is from outside the US and you don't know anyone there, it could very well be a cramming attempt.
Other preventative measures you can take, include:
- Asking your carrier to block all third-party services for all the phones in your service plan;
- Avoiding the use of your mobile phone number when entering various contests or sweepstakes since the fine print may state that you have agreed to a monthly subscription service;
- Using your credit card instead of carrier billing when shopping by phone, as credit cards provide additional consumer protections;
- Not entering your phone number into unsecured websites, as this can be used as a sign-up proxy for a costly, unwanted services
- Not accepting collect calls unless you absolutely know the person and number; and
- Not responding to unsolicited text messages from unknown senders.
The CTIA contends that fraudsters responsible for cramming also victimize wireless carriers, noting that some content providers go to extreme lengths to deliberately circumvent mobile industry guidelines. That may not help you, but the fact is, your phone company can't always know what services you have expressly signed up for. Bottom-line: you are your first line of defense. Vigilance and common sense go a long way.