DRA Applauds New Rules on Phone Bill Cramming

SAN FRANCISCO, October 28, 2010 – The Division of Ratepayer Advocates (DRA), an independent consumer advocacy division of the California Public Utilities Commission (CPUC), applauds new rules adopted today that seek to protect consumers from receiving unauthorized charges on their telephone bills.

After a lengthy campaign by DRA and other consumer advocacy groups, today the CPUC voted to approve a proposal that institutes rules regarding the practice of cramming (when a company puts charges on a consumer’s phone bill without the customer’s permission). These rules apply to charges from third parties, which are companies other than the billing telephone company whose charges show up on your phone bill. The Decision recognized that California consumers continue to be vexed by unauthorized charges on their telephone bills despite the existence of CPUC rules and carrier safeguards aimed at governing the practice of cramming.

Leading up to today’s vote, DRA presented evidence of recent cramming cases to show the failure of the wireless industry’s voluntary guidelines and their own best practices to deter cramming. DRA believes the new rules represent a reasonable compromise that takes into account the carriers’ costs of regulation as well as the needs of consumers to be protected against crammers and the CPUC’s enforcement obligations.

Now carriers are required to give customers the option to block third-party charges from being added to their telephone bills. Many families need cell phones for their children in case of emergencies and to keep in contact with one another, but they do not want to be surprised by additional charges made by their children.

While the new rules represent a huge step forward in empowering customers to fight unauthorized third-party charges, DRA is disappointed that the Decision does not contain requirements for carriers to report cramming executed by the carriers themselves. The Decision reasons that the CPUC has existing authority over carriers to receive this data if necessary. DRA presented evidence demonstrating why the CPUC needs to collect this data on a regular basis – this type of cramming is a problem for consumers. For example, Verizon Wireless placed unauthorized charges of approximately $1.99 on the telephone bills of millions of subscribers to its data service. Even more troubling is that Verizon Wireless was aware of this problem for two years before taking corrective action.