FTC Issues ‘Practical Steps’ to Reduce Mobile Cramming
Mobile carriers and mobile billers should ensure consumers have the right to block third-party charges, are aware of the charges and have an effective means to dispute them, the FTC said in a set of best practices to reduce mobile cramming issued Monday (http://1.usa.gov/1oBTSLs). In a conference call with reporters, FTC Consumer Protection Bureau Director Jessica Rich called the guidelines “practical steps” companies could take to curb mobile cramming, an issue that has caused consumers to lose hundreds of millions of dollars in unauthorized charges, she said. The report “discusses all of the different players and market participants in the carrier billing industry,” said Duane Pozza, an attorney in the FTC Division of Financial Practices. “It goes beyond mobile phone carriers."
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Over the FTC’s six mobile cramming cases in the past two years, courts have awarded upwards of $160 million in judgments, Rich said. That’s only “a fraction of the overall harm,” she said. “As mobile payments continue to be on the rise, we continue to expect more and more cramming to occur unless companies take preventive measures.” Some industry representatives, including CTIA, have argued major wireless carriers are already appropriately addressing the problem, citing a November agreement between the carriers and state attorneys general (AGs) to end premium SMS billing programs (http://bit.ly/1rTm0ec). A CTIA spokeswoman said Monday the organization was still reviewing the report and declined to comment.
The report closely follows the launch of an FTC lawsuit against T-Mobile, alleging the company had profited for years from mobile cramming schemes (CD July 2 p5). It was the FTC’s first mobile cramming action against a wireless carrier -- previous actions had targeted third parties -- and an assertive step into a space more traditionally left to the FCC and state AGs (CD July 7 p5). The FCC and state AGs are continuing their work on mobile cramming, Rich said. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., has also been working on his own report on the issue since last year, recently issuing a subpoena to a mobile billing aggregator for information (http://1.usa.gov/1pmKyKH). Rockefeller didn’t comment Monday on the FTC report.
Consumers have a right to readable bills and should have easier control over the services they receive, the report said. The FTC made five recommendations to achieve this. First, consumers should be given an option “at activation” to block all third-party charges altogether. After that moment, “carriers should consider offering consumers the ability to block or allow only specific providers, or to block commercial providers only,” the FTC said. Second, mobile carriers should monitor third-party merchants to ensure their opt-in processes are understandable. Third, merchants should keep “reliable records” of obtained consumer consent, and mobile carriers should implement policies “to investigate and take appropriate action” when refund requests or complaints show a pattern indicating “a merchant may be cramming charges,” the FTC said. Fourth, mobile bills should be easy to decipher, the FTC said. Third-party charges are often filed under ambiguous headers like “usage charges,” Rich said Monday. Fifth, mobile carriers should institute an “effective dispute resolution process,” the FTC said.
This final recommendation relates to a central part of the FTC’s suit against T-Mobile. The commission alleged T-Mobile ignored consumer requests for refunds on crammed charges, referring them to the third party, or agreeing to block the charges before continuing to charge the customer. The best practices outlined in the report “will likely underlie the remedies we get in that case” if the FTC prevails in court against T-Mobile, Rich said. T-Mobile didn’t respond to a request for comment Monday.