After Linda Dziczek of Swartz Creek, Mich., signed up for text messaging with her phone company, she mysteriously started receiving texts about celebrities. "I don't care about Hollywood stars," she told us, saying she never asked for those texts. Her phone company insisted she had to pay for them and billed her $10. She promptly canceled the texting service.
Dziczek was a victim of cramming — the fraudulent billing of unwanted services. It's a well-known problem that, despite ongoing efforts by regulatory agencies, continues to plague consumers.
The Federal Trade Commission is cracking down again on a repeat offender AARP featured in an On Your Side column in 2010. The nation's largest billing aggregator, Billing Services Group (BSG), is now accused of unlawfully putting more than $70 million in charges on consumers' phone bills for services they never wanted or used.
This is the fourth time the FTC has taken action against BSG. The latest filing alleges that BSG received more than 65,000 complaints about bogus fees from one of its client services named "Streaming Flix," and that even after Verizon and AT&T unilaterally refused to accept additional charges for the service, BSG continued to bill customers of other local phone companies.
Photo by iStockPhoto
"BSG violated its previous agreement with the court," said Doug Wolfe, the FTC attorney in charge of the case. BSG billed for $70 million in services "while utterly failing to investigate either the highly deceptive marketing for these services or whether consumers actually used them.
"Rather, in the face of stark evidence of ongoing fraud, BSG continued to bill month after month for these services, even approving billing for new services pitched by the same crammer," Wolfe said.
In a statement, BSG said that information cited in the FTC's motion was obtained through the FBI's investigation of another company. It was formerly a BSG client but "is not an entity of BSG," the company said. "The bottom line is that the FTC is trying to blame BSG for the acts of another party."
While those statements are accurate, they miss the FTC's point, which is that BSG continued to process charges from the other company even after being alerted to fraudulent activity by the major phone companies.
We asked BSG to comment on that specific allegation, but it declined.
Cramming and other types of cellphone and telephone abuse stand in ninth position among the most reported type of fraud, the FTC says. Often, there's little you can do to prevent a crammer from targeting you. But the FTC advises that you can avoid giving would-be scammers an opportunity by becoming 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. Shady promoters sometimes use a contest entry form as "permission" to enroll you in a service.
- 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 that comes with a monthly charge on your phone bill.
- Free prizes that aren't. You may be told you've won a prize, but if it's a 900 number that you dial to claim it, the call itself might not be free. In some cases, you should have warning — every 900 number that costs more than $2 has to have a brief introductory message about the service, the service provider and the cost of the call. After that, you have only three seconds to hang up before you're on the hook for the fee.
If you suspect you're a victim of cramming, you should first contact your phone company — it should be able to tell you about the charge and how to dispute the error. If people there aren't being helpful, you should contact the FTC at ftc.gov or 1-877-FTC-HELP. (And, yes, that's a free call.)
Ron Burley is the author of Unscrewed: The Consumer's Guide to Getting What You Paid For. Have a complaint about customer service? Write to Ron.
Also of interest: A primer on the Do Not Call list. »