Patrice Greanville, Chief Diarist
THE PHONE CRAMMING SCAM has been going on for decades. The government knows it, the police agencies know it, the media know it (but seldom mention it; this is a rarity) and the politicians know it. And, believe it or not, even many Americans have heard about it, and not an inconsiderable number have been affected by it.
In a real democracy, this is what we might expect:
• The FBI (we’re talking easily documentable Federal crimes here) and prosecuting machinery would have been all over the place putting these filthy bastards out of business and in jail, where they richly deserve to be. If even the NBC crew had little trouble locating some of the actual perps (in Florida, where else?) and tracing the thread all the way up to the BIG UNTOUCHABLES (the Fortune 500 enablers and accomplices who knowingly rip off their customers to the tune of hundreds of millions every year, I’m talking about companies like Verizon, ATT, and so on), it would have been extremely easy for the authorities to straighten out the mess and send a strong message to the would-be crooks across the nation (at all levels), that this kind of nonsense would not be permitted any longer.
• For good measure, state agencies would have also filed suits against the corporate criminals.
• The entire top executive class involved in these cynical defrauding operations would have been arraigned before special bunko tribunals and prosecuted to the fullest extent of the law (according to laws with real teeth which naturally don’t exist in America, the land of unfettered capitalism and plutocratic worship). In addition to jail time, heavy fines would have been assigned, and a prohibition from ever again holding an executive position of any kind. Banned for life, period.
• The companies involved would have been nationalized and made to operate in the public interest, with all profit streams hence accruing to the general tax fund.
• All funds illicitly obtained would have been duly returned, with punitive damages added.
Sounds Draconian? It is. But it’s also just and the right thing to do. What else do you do when gangrene sets in?
Now, let’s contemplate what will probably happen in our sweetheart contemporary America:
• NOTHING or—
• No Congressional inquiry will be opened, and if one is, it will lead nowhere after a few well staged theatrics;
• The media will largely ignore or walk away from the story (including NBC);
• The top executives of the megacorps involved—ATT, Verizon, etc.—won’t even be mentioned in the reports, let alone dragged into the spotlight or before any criminal court, nor affected personally in their careers or pecuniarily;
• The actual third party crooks will set up business again after the media wave dissipates. Americans are well known for their microscopic memories and absence of follow-through;
• The perps, like the daData company featured in this story will probably receive slap-on-the-wrist token sentences, if prosecuted, which is far from certain. After all, we don’t want to open a can of worms that could eventually indict the whole system, from the media to Congress and even the White House for negligence and passive collaboration with these practices, nor cast into doubt the holiness of a free market.
This outcome follows inevitably from the nature of our government, which, while always a very imperfect democracy, is now a full-fledged corpocracy.
Aren’t you happy you live in the best democracy that money can buy? Meanwhile, the only law that we all have to live by remains Caveat Emptor. What a fine republic.
Patrice Greanville is The Greanville Post’s chief editor.
THE NBC REPORT
NBC senior investigative correspondent Lisa Myers reports that many third-party companies are burying hidden charges on phone bills — a practice called “cramming” — and major phone providers are allowing it to happen.
By Bob Sullivan
Mysterious fees and services crammed onto phone bills are a “nationwide epidemic” for U.S. consumers, but a reliable source of revenue for some of America’s biggest telecommunications companies, a year-long congressional investigation has found.
A report to be issued Wednesday by Sen. John Rockefeller, D-W.Va., will say that three firms — Verizon, AT&T, and CenturyLink/Quest — earned $650 million as their cut of cramming charges levied by third-parties since 2006.
Watch a live video stream of the U.S. Senate hearing on cramming now.
Cramming charges — such as unwanted $10-per-month voicemail or Web design services — have been frustrating phone customers for more than 15 years, thanks in part to ill-considered rules designed to enhance competition in local phone markets. Consumers often don’t spot the small monthly fees, but even when they do, getting refunds can be a nightmare: The telephone provider that sends the bills often refuses to issue refunds, instead referring consumers to the third-party firms, which are often unresponsive. The Federal Communications Commission estimates that 15 million to 20 million consumers are crammed every year. Rockefeller’s report says cramming could cost U.S. consumers $2 billion annually.
Congress has been unable (sic) to fix the problem for more than a decade.
“I think it’s embarrassing for the Congress … but they’re big companies. They don’t have to make money that way,” Rockefeller told NBC News in advance of a hearing on cramming Wednesday. “I think it’s reprehensible and … shameful behavior. And don’t tell me they don’t know about it. They have to know about it.”
Cramming complaints have piled into state consumer offices, the Federal Trade Commission and the FCC since at least 1995, but neither Congress nor the phone companies that collect the money have been able to slow the problem or find the companies behind it.
NBC’s Lisa Myers did, however. In an investigative report that aired Wednesday on TODAY, Myers located one company that acts as a clearinghouse for cramming; tracked down dozens of other firms that hide behind the same P.O. boxes; and found that hundreds of firms that have “D” of “F” ratings with the Better Business Bureau. Myers also had no trouble finding consumers hit with outlandish cramming charges on their phone bills: $14.95 for ID theft monitoring; $16 a month for a fax service; $40 a month for voicemail.
“Why are they in business? Probably because they’re scamming and cramming and making money off of innocent people,” Rockefeller said. “I’m shocked. I’m angry. I’m frustrated that nobody’s been able to stop it.”
The heat is getting turned up on cramming recently, however. On Tuesday, the FCC proposed new rules that would require more obvious disclosures by third parties on phone bills.
Illinois Attorney General Lisa Madigan wants to go much farther, however, and is calling for an outright ban on third-party billing on phone bills. “Simply put, these deceptive and sometimes fraudulent solicitations for products that no one wants or agreed to buy have persisted for at least 15 years and show no signs of disappearing,” she said. “It is time to put an end to third-party billing on telephone bills by banning them.”
Under current rules, providers are forced to give third-party firms the chance to market services like toll-free numbers or website hosting using the providers’ equipment and billing services through an arrangement that has its origins in the original breakup of AT&T’s telephone monopoly. But it’s too easy for third parties to attach unwanted items to consumers’ bills — previous investigations have found firms frequently trick consumers into signing up using sweepstakes entries or small checks that also serve as authorization forms. In other cases, the third-party firms simply lie about getting authorization, a scam called “phantom billing.”
While crammers collect billions of dollars, telecom firms get a percentage of each payment for passing along the charge. Rockefeller said that added up to $600 million for the three big firms in the last five years. Rockefeller’s report says Verizon, for example, collects $1 to $2 per charge.
“It’s something the phone companies do know. And they can’t not know it — because — it’s bringing in a lot of money to them,” he said. And it’s bringing them a lot of complaints. The report says more than 500,000 customers have contacted AT&T, CenturyLink/Qwest, and Verizon to complain about cramming in the past five years.
Both Verizon and CenturyLink told NBC News that they do not tolerate cramming, and that they carefully scrutinize outside companies and respond to complaints. Both declined on-camera interviews. AT&T had no comment.
Madigan said the first complaints about cramming showed up in her office in 1996. At the time, products such as prepaid calling cards, voice mail service, credit repair services, cell phone warranties, local singles matching services, Web page design, and toll-free numbers were most frequently crammed, she said. More recently, the scams have evolved to include credit repair, identity theft prevention and monitoring, business advice, online photo storage, roadside assistance, online yellow pages listings, and many other services.
They have a common denominator: Consumers pay for them, sometimes for years, but don’t want them or use them.
“These low usage rates, less than 1 percent, indicate that consumers did not knowingly sign up for them,” she said. “In one case I brought, the vendor had billed over 9,800 Illinois consumers for credit repair services. Although the credit repair services were designed for individuals, the billed consumers include a county coroner’s office, a Steak N Shake restaurant and a public library dial-a-story telephone line.”
The deception has evolved since the arrival of the “Do Not Call” list in 2003, she said, with more consumers tricked into third-party telephone services via online Web pages.
Both Madigan and Rockefeller say that telecommunications industry groups, in response to an initial wave of complaints in the late 1990s, promised to clean up cramming through self-regulation — and failed.
“They originally came up to us and said, ‘Look, we understand this is a problem. We don’t want to treat our consumers this way, so we want do it on a voluntary basis,” Rockefeller said. “Don’t mandate us to do it because…’ Then they made a very good case. Stupidly — we went along with that.”
RED TAPE WRESTLING TIPS
Rockefeller says he plans to introduce legislation that would make cramming explicitly illegal, but that kind of consumer protection is still in the future.
In the meantime, the best way for consumers to protect themselves is to call their local phone company and request that it shut off third-party billing services — many will, for free. Consumers who’ve been crammed and scammed should call their local phone company and insist on a refund; they should also file a complaint with their state attorney general’s office and the FTC. But most important: Scan those phone bills every month for surprise charges and unwanted services. They’re easy to miss.
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