The FTC is expanding the war on bogus cellphone charges


(REUTERS/Aly Song)

Not content with suing T-Mobile over its earlier practice of allegedly charging consumers for third-party services they didn't ask for, the Federal Trade Commission is broadening its campaign against "mobile cramming."

In a new report Monday, the FTC said that wireless carriers should give consumers the right to block third-party charges and to make sure customers have given their explicit consent before applying any fees associated with third-party services.

"In six recent enforcement actions," the FTC wrote in its report, "the Commission has alleged that such practices have cost consumers many millions of dollars, and in just three of these actions, defendants have agreed to orders imposing judgments totaling more than $160 million."

Twenty million people are affected by mobile cramming every year, according to a federal study, but only 1 in 20 people ever realize it. Many people get hit with mystery fees after doing something as innocuous as typing in their phone number into a Web form. Those numbers then get served text messages by spammy horoscope providers or other unwanted services — messages that then translate into charges on consumers' bills.

The FTC added Monday that wireless carriers should also state any third-party charges clearly on the consumers' billing statement. T-Mobile has said it stopped charging consumers for "premium SMS" services last year. Its chief executive, John Legere, hinted that he'd resist the FTC's complaint, calling it "sensationalized legal action" in a blog post. But the FTC also added in its new report that carriers have since moved on "to implement other kinds of carrier billing arrangements."

FTC Director of Consumer Protection Jessica Rich told reporters Monday that with the "shift from the landline context to mobile, inevitably, mobile cramming was going to rise."

While the FTC's recommendations don't have the binding force of law, they do provide companies with crucial guidance as to what the FTC may be considering when it decides to sue a company over cramming.

Senate lawmakers led by Commerce Committee chairman Jay Rockefeller (D-W. Va.) will be investigating mobile cramming in a hearing later this week.

Brian Fung covers technology for The Washington Post.
Comments
Show Comments
Most Read Business
Next Story
Hayley Tsukayama · July 28