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February 12, 2016

In ‘Mobile Cramming’ Report, FTC Puts the Onus on Wireless Companies

Mobile telecom carriers should make third-party charges conspicuous on bills and not be deceptive, says the Federal Trade Commission in a new staff report that recommends best practices for industry to reduce “mobile cramming,” or the practice of placing unauthorized third-party charges on cellphone bills.

From the report, which was released Monday: “In particular, on a phone bill, the name of the service and any associated bill heading should relate to the product offered and not suggest an affiliation with the carrier’s service. Carriers should consider ways to make third-party charges more conspicuous, such as by providing separate subtotals for carrier and third-party charges wherever total charges are disclosed.”

In its recent lawsuit against T-Mobile, in which the agency accused the company of cramming, the FTC contended that bills didn’t make recurring third-party charges clear.

The report’s other recommendations, parts of which also apply to merchants and billing intermediaries:

  • Carriers should give consumers a way to block third-party charges in their entirety.
  • Merchants are responsible for making sure they’re not engaging in deceptive practices, like in advertising, and carriers should also have ways to “scrutinize risky or suspicious merchants” and deal with companies conducting illegal activities.
  • It is “critical” that consumers give their “express, informed consent” before being billed for charges and that “reliable records of such authorizations are maintained.”
  • Carriers should have an effective dispute resolution system in place.

The recommendations come just a couple days before a Senate Commerce Committee is slated to hold a hearing on the issue.

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