Florida Seeks to Outlaw Cramming

Proposals would prohibit billing of third-party charges by phone companies

February 18, 2009

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Florida officials are trying to put a stop to one of consumers' biggest complaints — unauthorized third-party charges on local phone bills, generally known as "cramming."

Florida Attorney General Bill McCollum and Public Counsel J. R. Kelly filed a petition before the Florida Public Service Commission (PSC) seeking a prohibition against all Florida telecommunication companies placing unauthorized third-party charges on consumers’ telephone bills.

Such charges are usually for products or services not requested, authorized, needed or used by the consumer. The companies named in today’s petition include Embarq, and Verizon, as well as BellSouth Telecommunications, Inc., which does business as AT&T Florida and AT&T Southeast.

“This practice of phone companies placing unauthorized charges on telephone bills has increased dramatically in recent years and must not be allowed to continue,” said McCollum. “Florida consumers have a right to expect their telephone bills will not be used as a billing and collection service for every vendor selling its wares.”

McCollum and Kelly asked the PSC to declare that the telephone companies do not have the right to bill customers for non-telecommunication vendor products and services.

“Telecommunication companies should be concerned with serving their customers, not adding on third-party charges for profit," said Public Counsel J. R. Kelly. "Consumers should not have to pay for services they neither wanted nor authorized.”

Through internet advertising and telemarketing, vendors are able to bill for their products and services by obtaining the telephone numbers of unsuspecting consumers. For example, consumers accepting free coupons and other free benefits over the internet often do not realize that, when they provide their phone number as part of the acceptance, they may be unknowingly approving the purchase of some other unwanted product or service.

Once vendors of these services have a phone number, they forward any charges to a billing aggregator, which in turn provides the charges to the consumer's local telephone companies for placement on the consumer's monthly bill. The local telephone companies and the aggregators both earn a certain percentage of the total amount of charges billed to consumer telephone bills.

Consumers frequently complain about these products and services, which include voicemail boxes and other non-essential items, but are unaware of whom to contact for resolution and reimbursement. Other consumers are often unaware of the unauthorized vendor charges because of the length and complexity of telephone bills.

From July 2007 to August 2008, Florida telecommunication companies billed approximately 387,000 Florida consumers for third-party charges totaling over $26.9 million.

Cramming is a problem basically created by Congress as part of the Telecommunications Act of 1996.

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