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June 16, 2011
Enforcement Advisory No. 2011-08
Enforcement Bureau Aggressively Pursuing "Crammers";
Consumers Advised to Carefully Review Phone Bills for Unauthorized Charges
Recently, the Federal Communications Commission acted on four major
investigations by the Enforcement Bureau involving "cramming" - that is,
placing unauthorized charges on consumers' phone bills. In these cases,
the Commission proposed very substantial penalties ranging from $1.5
million to $4.2 million per company, having found that each of the
companies involved appears to have charged thousands of consumers for
services that they never wanted, ordered, or used. We are issuing this
enforcement advisory to remind companies that this agency will not
tolerate the abuse of consumers by this unscrupulous practice, and to
emphasize to all who might be involved in such activities that they may
face very severe penalties. We also urge consumers to be vigilant in
protecting themselves by thoroughly reviewing their bills, reporting any
discrepancies promptly, and filing complaints with the FCC.
What is cramming? Cramming is the practice of adding charges to a
customer's phone bill without the customer's authorization. These charges
typically might be as small as $1.99, or as substantial as $19.99 per
month, and are not generally disclosed clearly or conspicuously on the
bill. As a result, the charges can go undetected by the consumer for many
months or even years. The cramming party can be the customer's own carrier
or an unaffiliated third party. The charges can be from carriers for
additional phone services, voice mail and similar services, but they may
also be from non-carriers for unrelated products and services such as chat
lines, diet plans, and cosmetics.
What rules prohibit cramming? Section 201(b) of the Act mandates that
"[a]ll charges, practices, classifications, and regulations for and in
connection with [interstate and foreign] communication service [by wire or
radio], shall be just and reasonable...." The FCC has found companies
liable for including unauthorized charges and fees on consumers' phone
bills as an "unjust and unreasonable" practice under section 201(b).
Applying section 201(b) in the recent cases, the FCC found that the
carriers involved had apparently engaged in constructive fraudulent
activity as part of a plan to place charges on consumers' phone bills for
services that the consumers neither requested nor authorized. The
Commission found the violations to be particularly egregious because of
the number of consumers affected, and because the companies either knew or
reasonably should have known that the consumers did not request,
authorize, or use the services, based on the numerous consumer inquiries
and complaints they received. Some of the companies were apparently
billing thousands of consumers, the vast majority of whom had never heard
of the companies, were unfamiliar with the services they offered, and
never used the services for which they were billed.
In addition, carriers should be mindful of the Commission's
Truth-in-Billing Rules, which require that the billing carrier use clear,
non-misleading, plain language in describing services for which a consumer
is charged. The descriptions of charges must be specific enough so that
customers can assess whether they were billed correctly for services they
requested and received. The carrier also must identify the service
provider associated with each charge and must display on the bill a
toll-free number that a consumer can call to ask about or dispute any
charge on the bill.
What can be done to help combat cramming? Billing carriers often become
aware of unauthorized third-party billing as consumers generally contact
them first to try to resolve the matter. We strongly urge those carriers
to take steps to ensure that they bill only for those companies that
obtain reasonable authorization from consumers before placing charges on
their phone bills.
What can consumers do to protect themselves? Consumers should carefully
review their bills each month, and confirm that any new or unusual charges
are legitimate. If you see an unfamiliar charge, call the company that
charged you, as well as the phone company that issued the bill, to get an
explanation and a bill adjustment if appropriate. We encourage consumers
to report to us any instances of cramming as these complaints allow us to
take appropriate enforcement action. Consumers can file a complaint using
an FCC on-line complaint form at http://www.fcc.gov/complaints. They can
also file a complaint with the FCC's Consumer Center by calling
1-888-CALL-FCC (1-888-225-5322) voice or 1-888-TELL-FCC (1-888-835-5322)
TTY; faxing 1-866-418-0232; or writing to: Federal Communications
Commission, Consumer & Governmental Affairs Bureau, Consumer Inquiries and
Complaints Division, 445 12th Street, SW, Washington, D.C. 20554.
What are the roles of the FCC and the Federal Trade Commission (FTC) in
protecting consumers against cramming? The FCC has jurisdiction under the
Communications Act to police the practices of carriers, and the FTC has
jurisdiction under the Federal Trade Commission Act to address cramming by
non-carriers. The FCC coordinates with the FTC to ensure that all entities
involved in third-party billing only charge for legitimate services that
were authorized by consumers.
What should businesses do to ensure they are in compliance? The FCC
encourages businesses to review section 201(b) of the Act, as well as the
FCC orders cited above as they relate to the placement of charges on phone
bills. Businesses should consult their own legal counsel with any
questions pertaining to their particular operations. We expect this
Advisory will lead to greater compliance with the Act in the charging and
billing for telecommunications services. At the same time, however, we
emphasize that section 201(b) provides important consumer protections and
that we intend to continue to strictly enforce it.
What happens if companies do not comply with the law? Failure to comply
with the Communications Act may subject a company to severe penalties
including, but not limited to, substantial monetary forfeitures.
Need more information? For additional information regarding compliance and
enforcement of Section 201(b) as it applies to cramming, you can contact
Mika Savir at (202) 418-0384 or Erica McMahon (202) 418-0346, of the
Enforcement Bureau. For general information on the FCC's rules, you can
contact the FCC at 1-888-CALL-FCC (1-888-225-5322) or visit our website at
www.fcc.gov. Consumers can also get more information by reviewing our fact
sheet on cramming at http://www.fcc.gov/cgb/consumerfacts/cramming.html.
To request materials in accessible formats for people with disabilities
(Braille, large print, electronic files, audio format), send an e-mail to
firstname.lastname@example.org or call the Consumer & Governmental Affairs Bureau at
202-418-0530 (voice), (202) 418-0432 (TTY). You may also contact the
Enforcement Bureau on its TTY line at (202) 418-1148 for further
information about this Enforcement Advisory, or the FCC on its TTY line at
Issued by: Chief, Enforcement Bureau
See Long Distance Direct, Inc. Apparent Liability for Forfeiture,
Memorandum Opinion and Order, 15 FCC Rcd 3297, 3302, P: 14 (2000). See
also Cheap2Dial Tel., LLC, Notice of Apparent Liability for Forfeiture,
FCC 11-90 (rel. June 16, 2011); Main Street Tel. Co., Notice of Apparent
Liability for Forfeiture, FCC 11-89 (rel. June 16. 2011); Norristown Tel.
Co., LLC, Notice of Apparent Liability for Forfeiture, FCC 11-88 (rel.
June 16, 2011); VoiceNet Tel., LLC, Notice of Apparent Liability for
Forfeiture, FCC 11-91 (rel. June 16, 2011)
FCC ENFORCEMENT ADVISORY
Federal Communications Commission
445 12th St., S.W.
Washington, D.C. 20554
News Media Information 202 / 418-0500