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FCC heeds cellphone users' complaints about 'bill shock'

By Cecilia Kang
Washington Post Staff Writer
Friday, October 8, 2010; A15

The Federal Communications Commission wants cellphone customers to know: It can hear you now.

Consumers are complaining in record numbers about their wireless bills, and the FCC has promised to act. Next week, the agency will unveil a proposal to address "bill shock" by requiring that carriers notify users of overcharges and sudden increases in their bills.

But advocacy groups say the FCC has barely begun to address the massive problems generated by increasingly bewildering phone bills.

As cellphones are "bundled" with television and Internet services, and with the exploding number of applications available for smartphones, consumer groups say bills have become multi-page puzzles. They complain of confusing language, third-party charges, mystery fees for data and other services - all amounting to monthly totals that aren't what a user signed up for at point of sale.

The recent announcement that Verizon Wireless wrongly charged 15 million customers for data fees and will shell out $50 million in reimbursements doesn't help public sentiment.

"This is only one case that made the light of day," said Carl Hamann, a resident of Stamford, Mich., who believes he was one of those Verizon customers.

He said he was charged $1.99 for data he never signed up for last January and February. He's been charged for data each month over the past year, even though he's only signed up to place and receive voice calls. Hamann said he put a block on his account so he and his 20-year-old son can't use text and data services. Still, he got billed $73.65 for data in June and $68.25 in July.

All told, he's called Verizon's customer service each month for what he said was more than $300 in erroneous data services.

"This may not be a lot for one customer, but then look at all their customers affected and you do the math," Hamann said.

Verizon said it would not comment on a specific case. It also declined to comment on the FCC's ongoing investigation into its billing practices.

Small "mystery" charges are among the most common errors on cellphone bills, according to Validas, a Texas-based company that audits telecom bills for corporations and individuals.

Edward J. Finegold, Validas's chief analytics officer, said one growing problem involves third parties, such as a text-messaging service or ringtone provider, piggybacking onto someone's phone bill. For example, a user may send a text message to an outside service through an offer in, say, a videogame, expecting a one-time charge. But Finegold said the fine print actually allows the service to automatically trigger a monthly subscription fee.

"None of this is illegal, but most people would expect that if you have a trusted relationship with your carrier, it would have strict standards on third parties who add charges to its bills. But that is not happening," Finegold said.

Once in a while, the billing errors are extremely costly, Finegold said. He said his company discovered that one of its Fortune 500 customers was not getting a $133,000 monthly credit that had been promised by its cellphone provider for signing up additional lines.

The FCC already has rules requiring truth-in-billing practices and prohibiting the practice known as cramming, when companies stuff mystery charges into bills.

But the agency has struggled to keep up with changes in technology and the rising tide of complaints.

In the first quarter of 2010, the FCC received 5,130 inquiries on wireless billing and other issues, an increase of 28 percent from the same period a year earlier. In a survey this year, the FCC found that 30 percent of users said they experienced "bill shock," with sudden increases from data overcharges and other services that they found only when they received their bills.

"Considering more and more people are going to wireless only these days, it's becoming a bigger and bigger problem and people feel like they are banging their heads up against a wall because they also feel like they rarely get their billing problems resolved," said Chris Morran, senior editor at Consumerist.com, a Web site owned by the nonprofit Consumers Union advocacy group.

Trade group CTIA-The Wireless Association has warned against regulation or legislation of billing practices. It opposes proposed "bill shock" legislation, introduced by Sen. Tom Udall (D-N.M.), that would require cellphone carriers to notify customers by e-mail or text message - free of charge - when they have used 80 percent of their monthly limits.

The group said customers have many ways to track their minutes and data usage. And firing back at criticism of their own billing practices, CTIA said in a statement about Udall's bill: "We are concerned that this bill has the potential to cause customer confusion and frustration."

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