Coakley urges fed regulators to curb phone cramming, says billing practice is rife with “fraudulent behavior’’

Massachusetts Attorney General Martha Coakley condemned the practice of “phone cramming–billing arrangements between some telephone companies and third-party billing vendors–calling it “a billion-dollar industry that is rife with fraudulent behavior.’’

Her comments were included in a legal brief filed with the Federal Communications Commission, which is soliciting input on the practice. “Cramming’’ occurs when customer finds fees for services slipped into the jumble of numbers on their monthly phone bills. The FCC says those fees come from third-party vendors that often bill customers for services such as upgraded voice mail, text messaging or Web design via their phone bill.

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Consumers, however, say the charges are for products or services they have never wanted or willingly ordered. The problem has become so widespread that the FCC, which regulates phone companies, is considering regulatory action.

Earlier this year, the agency conducted a survey that found 15 to 20 million American households a year potentially have these “mystery fees’’ on their monthly landline bills. The agency said the fees can be as low as $1.99 a month and remain undetected by consumers for years because they are difficult to distinguish from telephone company charges.

In her filing Coakley said a solution to cramming is long overdue. In a strongly-worded brief, she said voluntary measures by members of industry over the last decade have “failed abysmally to protect consumers.’’

“Delay in regulatory intervention benefits fraudulent actors and harms consumers,’’ it said. “Halfway measures, such as improved consumer education, industry monitoring of complaints, and better bill formats, although useful, are insufficient to overcome the substantial economic incentives that telephone companies and third-party vendors reap to engage in cramming.’’

The FCC has asked whether landline telephone companies should be required to offer subscribers the option to block third-party charges, be required to notify customers if they do not offer a blocking service or be prohibited from assessing a fee for blocking. The FCC has also asked whether such third-party charges on telephone bills should be banned altogether.

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Comments to the FCC can be searched here and the agency is accepting replies to those comments until Nov. 21. Agency officials said there is no date scheduled for its decision.

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