The Federal Trade Commission wants to crack down on wireless carriers whose customers are being charged bogus fees.
These fees include expensive text SMS services from third parties who often deceptively lure the customer into purchasing a product or service.
The practice is referred to as cramming and the FTC wants to eliminate the problems associated with it. Several wireless customers have complained to the government and to the carriers themselves.
One recent example of cramming is the lawsuit lodged against T-Mobile from the FTC that alleges the company knowingly allowed such transactions to occurr, according to a recent Tech Times article. T-Mobile denied the allegations and has said it offered dispute resolutions and refunds to affected customers. T-Mobile and other carriers typically receive a commission for these purchases that are tacked onto customers' bills.
The FTC even compiled a cramming report, according to a news report online. The report states that wireless carriers are not doing enough to protect customers from these third-party vendors' so-called SMS services. The FTC has launched a campaign to raise awareness about the issue and to crack down on it.
The FTC has set up some guidelines and procedural steps the wireless companies can follow to ensure their customers aren't getting needlessly charged for such services, according to another similar report. The FTC outlined five basic steps to follow. Those steps include the following:
- Give customers the option to block these charges from third-party vendors;
- Ensure the processes for advertising, marketing and opting out of these services is not deceptive to the customer;
- Get consent before applying these charges;
- Clearly display third-party charges on the customer's bill; and
- Create a more effective dispute handling process for the customer.
T-Mobile, meanwhile, is claiming that the charges against the company are unfounded, even sensationalized. Some disgruntled customers may have a different opinion of the matter. The investigation was launched on T-Mobile after customers began filing complaints to the FTC.
A federal study concluded that more than 20 million people are affected by such schemes every year. The FTC alleges that charges have cost consumers millions.
"In six recent enforcement actions," claimed the FTC's 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."
The federal study (PDF) also claimed that out of those 20 million people impacted, only 1 in 20 ever actually realized they were charged. T-Mobile has said that it stopped charging for premium texting services last year already. Its case with the FTC is ongoing.
While T-Mobile wrestles with the FTC, Sprint, Verizon and AT&T will also have to take a close look at their own vendors because the FTC will likely be looking into their activities as well.
