Carriers Tackle ‘Cramming’
GTE and other phone companies have begun voluntarily enacting policies to combat rogue operators who bill consumers for unauthorized services. But it remains to be seen if such actions are effective in stopping “cramming” and if they go far enough to prevent regulation.
Last week, GTE announced that it plans to phase in a range of initiatives over the next seven months. California’s second-largest phone company says its policies are broader than measures enacted by the nation’s other local phone giants and Pacific Bell, the state’s largest local phone provider.
Policies enacted by all providers came in response to complaints about cramming, or the stuffing of charges for services such as paging, voicemail and Internet access deep in consumers’ bills, where they often go unnoticed.
Since the deregulation of the telecommunications industry in 1996, cramming has become the nation’s No. 1 consumer fraud.
Most local phone companies will remove disputed charges from a phone bill if the customer can prove he or she didn’t order the service. But providing this proof, and getting the charge removed, is difficult.
Earlier this year, the Federal Communications Commission stepped in to urge carriers to devise a list of “best practices” to deal with the growing problem. Over the summer, company representatives said they would adopt portions of this list.
“FCC Chairman William Kennard called the local exchange carriers together and his message was clear. He said, ‘You either fix this problem or the government will,’ ” said Christine Van Skyhock, senior marketing manager for GTE Network Services. “We took this seriously and as a result the anti-cramming guidelines were born.”
Stamford, Conn.-based GTE said it is changing its bills to clarify terms used to describe services and add contact information for service providers. GTE also plans to stop billing for noncommunications services such as club fees or membership fees in sports chat lines.
Starting in January, GTE will require written or oral proof that customers authorized services that appear on their bills. In April, the company will allow its customers to request that they be billed only for their local and long-distance phone service.
Pacific Bell, BellSouth and Bell Atlantic also won’t bill for noncommunications-related charges. Bell Atlantic will allow its customers to block all charges, except for their local and long-distance fees, starting early next year. And BellSouth will require service providers to show proof that customers authorized the service.
Ameritech is changing its bills to include a summary page at the front that lists service providers’ names and contact information. The company also requires its service providers to keep proof that customers ordered services.
These changes join systems in place at several Baby Bells that allow them to better gauge complaints about service providers and to suspend companies when they receive too many complaints.
Consumer groups and local phone providers are hoping the beefed-up policies will help head off state and federal regulation. But their efforts may not have been fast enough.
In California, lawmakers and utility regulators have taken action designed to clamp down on rogue operators.
Gov. Pete Wilson signed into law last month two bills designed to stem cramming. One measure, sponsored by Assemblywoman Valerie Brown (D-Sonoma), prohibits a company from misrepresenting itself as a phone company when soliciting consumers’ business.
The law, which goes into effect Jan. 1, provides the California Public Utilities Commission with a method for collecting cramming complaints from carriers and their billing houses. The law also gives the PUC the authority to take legal action against companies that didn’t previously fall under its regulatory umbrella, said Gretchen Dumas, a PUC attorney.
“Often telephone companies say they will take a charge off the bill and then we wouldn’t hear about that” problem, Dumas said. “We need the phone companies to tell us about these things.”
A second state measure, sponsored by Sen. Steve Peace (D-El Cajon), requires charges for noncommunications services to be billed separately from telecom services. The law also requires that a concise description of the service appear on the bill, along with information on how to contact the service provider and instructions on how to resolve a dispute.
On the federal level, a FCC division has drafted a “truth in billing” initiative that addresses the relationship between carriers and their customers.
The division is gathering comments on this proposed order and plans to submit it to the full commission later this year. The commission will review recent policy changes made by local phone companies when it discusses the proposal, but doesn’t plan to quash it because of these changes, said Dorothy Attwood, chief of the enforcement division for the FCC’s common carrier bureau.
Although the FCC is not tracking cramming legislation at the state level, it has invited state representatives to Washington to talk about the matter Oct. 23, Attwood said.
In the House, three bills dealing with cramming were introduced this session by Rep. John Dingell (D-Mich.), Rep. Bob Menendez (D-N.J.) and Rep. Edward Markey (D-Mass.). All three were still in committee at the end of the session.
In the meantime, consumers may find that withholding payment is the most effective deterrent to rogue operators.
“The biggest penalty that makes the most sense is that the customer doesn’t have to pay for the service,” said Jeffrey Kagan, president of Marietta, Ga.-based Kagan Telecom Associates.
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Times staff writer Jennifer Oldham can be reached via e-mail at [email protected].
