FCC Keeping Close Watch on Bill Shock and Cramming, Monteith Says
The FCC found in a 2011 study that one in six wireless consumers had been the victim of bill shock, Monteith said. “Bill shock can hit consumers hard,” she said. “The commission has reported that two-thirds of complaints show that consumers that have been hit with bill shock have encountered overages in the hundreds of dollars and in some cases even in the thousands of dollars.” Cramming often stands out less on consumers’ bills, Monteith said.
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Charges “can be as low as 99 cents or even $1.99,” Monteith said. “These aren’t amounts that are going to stand out on a consumer’s bill over time but they add up ... Even when they don’t cost us a lot individually, they cost us a lot collectively."
Acting Deputy CGB Chief Michael Carowitz said bill shock “is a problem that all of us need to pay attention to, whether we're calling domestically or travelling internationally.” But Carowitz said carriers have made significant progress in helping subscribers avoid surprises. In 2011, the FCC, CTIA and Consumers Union unveiled “Wireless Consumer Usage Notification Guidelines” as an alternative to bill shock rules proposed by the agency in 2010 (CD Oct 18/11 p1), he noted.
Under the 2011 agreement, Wednesday was the deadline for carriers to provide customer notifications for data, voice, messaging and international roaming overages. CTIA said in a news release all of the carriers that committed to send alerts for the four categories are doing so. The carriers participating in the program cover 97 percent of U.S. wireless subscribers, the group said.
"All of the carriers offer tools that allow you, in the middle, beginning, end of the month to get a sense of where you are with regard to your plan,” CTIA Vice President Chris Guttman-McCabe said at the workshop. “For most of them it’s some version of pound or star followed by a three-digit number. There are also tools in most of the application stores that are free and easy to download that allow you to track your usage.” Carowitz said that it “seems like this is the beginning of an ongoing conversation between advocacy groups, the carriers and consumers, as well as us here at the FCC, to make sure consumers’ needs are responded to and that people get what they pay for, aren’t shocked by things that they're not paying for or don’t intend to pay for."
Carriers and consumer groups offered a bill shock update during the first panel of the workshop. Delara Derakhshani, policy counsel for Consumers Union, said her group is watching closely. “We plan to stay vigilant,” she said. “We are going to keep monitoring how carriers are doing. We're going to keep asking consumers how they believe carriers are doing.” Carriers have addressed most of AARP’s concerns, though work remains, said Marti Doneghy, senior legislative representative.
"Billing surprises are bad for business,” said Kimberly Darrin, director of public policy at AT&T Services. “They upset customers. They threaten their loyalty and in a very competitive wireless industry it’s in our best interest to make sure that customers have information that they need, the resources and tools to help prevent bill shock.” AT&T wanted to be responsive to the FCC, but still had to strike a balance, Darrin said. “We wanted to provide information to customers that was going to be valuable at a frequency that wasn’t going to annoy them and in a manner that wasn’t going to confuse them."
"No carrier wants to annoy their customers,” said Sprint Nextel Vice President Charles McKee. “No carrier wants their customers to be mad at them and surprised by their bill. There was never a great conspiracy to try to do things to ... customers. The goal was to have a happy customer.” Customers value a plan “that allows them to simply use their phone however they want to use it and not worry about what that bill is going to be at the end of the day” and so many Sprint customers are signed up for “unlimited” usage plans, McKee said. Sprint’s message to subscribers is “we want you to be happy,” he said.
McKee said one remaining issue is that Sprint can’t provide real-time alerts to customers roaming on another carrier’s network in another country. “If we don’t have systems that are connected directly to that carrier we can’t provide you the same real time [alerts] but as quickly as we can we'll measure and alert you as that usage [report] comes to us,” he said.
The voluntary agreement “is an example of an extremely successful public-private partnership that benefits consumers,” said Dave Charles, director of legal affairs at T-Mobile. “T-Mobile has worked diligently to implement the technical changes necessary to deliver usage alerts and I'm pleased to report that we've been delivering all four usage alerts types ... since November of last year."
The FCC’s 2012 cramming order was a good first step in addressing the issue, but the agency needs to do more to address the issue as it relates to wireless and VoIP users, said Derakhshani. The consumer group was “disappointed” the FCC chose to only cover wireline cramming in the order, she said. The order required telcos to separate charges between carriers on a bill, and place non-telecom services listed in a bill in a “distinct” section, said Mark Stone, deputy CGB chief. Wireless cramming is covered by the FCC’s truth-in-billing rules, which require carriers to “clearly and conspicuously” note the name of any service provider and the service charge on the bill, as well as a “plain language” description of the services rendered, Stone said. Industry and consumer groups have noted what they feel is the need for additional protections against wireless and VoIP cramming ever since the FCC adopted the order (CD April 30 p7).
The FTC filed its first wireless cramming case Wednesday -- one of several agency actions to combat cramming, said Malini Mithal, assistant director-Division of Financial Practices in the FTC’s Consumer Protection Bureau. The agency said in its complaint, filed in U.S. District Court in Atlanta, that Wise Media crammed unauthorized charges on wireless phone bills for “premium” text messaging services related to dating and horoscopes. Consumers who received charges from Wise Media had often not authorized the messaging services or even heard of the company prior to receiving their bills, Mithal said. The complaint also names Concrete Marketing Research and Wise Media owners Brian Buckley and William Deloney. The FTC asked the court to immediately freeze the defendants’ assets and to order the company to cease its cramming practices. The agency also sought an injunction to force Wise Media to reimburse victims (http://1.usa.gov/11hdHIi). Wise Media had no immediate comment.
Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., praised the FTC’s action, which he said in a statement “confirms my fear that our success in stopping wireline cramming has forced crammers to find other ways to scam consumers.” Rockefeller said he'll “continue to investigate the problem of wireless cramming, and I applaud the FTC for taking the first of what I hope are many actions against these types of companies.” CTIA General Counsel Michael Altschul also praised the FTC’s action. “Nobody supports cramming,” he said during the workshop. “This is fraudulent, criminal activity. It’s the same as robbing a bank or putting false charges on a credit card.” Some carriers had also shut down Wise Media from cramming unauthorized charges on their customers’ bills, Altschul said.
Cramming is a serious problem for wireless consumers, Derakhshani said, saying Consumer Reports data show there are three times as many wireless users as there are wireline. The FCC’s existing truth-in-billing rules don’t combat cramming -- they just help consumers identify cramming after it has occurred, she said. The agency should adopt “more proactive measures” to prevent unauthorized charges from appearing, Derakhshani said.
Data trends indicate wireless cramming frequency is remaining constant and is perhaps even going down over time, Altschul said. FCC data from April 2012 showed the agency received about 510 wireless cramming complaints over the course of 2011, comparable to the 509 complaints the agency received in 2009, he said. That lack of movement is due in part to CTIA’s third-party monitoring of industry best practices, message flows and media ads, which has resulted in 98 percent industry compliance over the last two years, Altschul said.
Cramming compliance data are “really just the tip of the iceberg,” said Vermont Assistant Attorney General Kate Whelley McCabe. Though the state attorney general’s office has only received 25-30 complaints about wireless cramming since 2006, 500 people out of the 1,000 her office surveyed had third-party charges crammed on their wireless phone bills, she said. “It’s time for law enforcement, consumer protection folks and industry folks to really focus on this problem."
Tougher regulations are going to inevitably be necessary, said Jim Chilsen, director-communications for the Illinois Citizens Utility Board. Those regulations will need to include some type of block on third-party charges, though it will need “reasonable and common-sense” exceptions, he said. A move beyond industry self-regulation will be vital to maintaining the wireless industry’s health and credibility, since wireless cramming appears to be the “new frontier for fraud,” Chilsen said.