Verizon and Sprint will pay $90 million and $68 million respectively to settle claims that they billed mobile customers for unauthorized third-party services, or “cramming.” These penalties follow recent FCC settlements of $105 million from AT&T and $90 million from T-Mobile.
The Wall Street Journal recently reported that US regulators contend that carriers added or crammed one-time fees of 99 cents to $4.99 for text-messaging services, as well as monthly subscriptions to messages that cost up to $14 per month. According to the FCC, Verizon collected 30 percent of the crammed charges, while Sprint’s cut was 35 percent. Verizon and Sprint will pay $90 million and $68 million, respectively, which includes $120 million in refunds to customers. The remaining balance of $38 million will go to federal and state fines.
As part of these settlements, mobile providers must agree they will “no longer offer commercial third-party PSMS charges… obtain informed consent from customers prior to allowing third-party charges… and clearly and conspicuously identify third-party charges on bills.” This may seem like old news, but the crammers always seem to find a new way to make money at other people’s expense.
While the FCC estimates that cramming has harmed tens of millions of American households, it has probably cost enterprises even more money. Lack of transparency for charges, complexity, monthly volume, and the sheer size of enterprise bills make large organizations more susceptible to fraudulent charges. These announcements highlight the need for enterprises to have systems in place to validate all charges on bills.
Telecom carriers keep promising to improve their systems to reduce billing complexity, but they have a monumental task ahead of them. In the meantime, cramming, fraudulent charges and other billing errors are continuing challenges. This is why enterprises need automated fixed and mobile Telecom Expense Management (TEM) software and personnel trained to secure refunds after detecting errors.