June 21, 2011 — -- You could be paying unauthorized fees on your telephone bill - sometimes for months or years - and not even be aware of it.
Joe Ticich in West Virginia was one of the few who detected unauthorized charges on his phone bill. He noticed a charge of $15.22 from "Main Street Telephone" on his Verizon landline bill in 2009.
He contacted Verizon and was told to contact Main Street to clear the charge. When he called Main Street, they questioned whether he had authorized the charges.
"You see money like that out of your statement and it adds up," Ticich said. "People are trying to make a living in legitimate ways and then you run into situations like that."
He demanded Main Street cancel this fee on his phone bill, but he was charged again the next month.
After complaining again, Ticich received a credit on his bill and the service fee did not reappear.
"I was frustrated because I had to make multiple phone calls and they weren't apologetic – nothing," he said.
Steve Augustino, a telecom attorney with Kelley Drye & Warren representing Main Street Telephone, said Ticich likely contacted the company too close to his next billing date.
"At some times the process of getting this onto a bill takes two billing cycles," Augustino said.
Augustino said Main Street Telephone has "an extensive verification process to assure the customers knowingly sign up for the services."
About 15 to 20 million households are overcharged for their telephone landlines by third party companies and only 5 percent realize they are victims, according to the Federal Communications Commission.
But the FCC is about to propose high fines against companies that charge consumers excess fees, or "cramming" on their telephone bills. The majority of cases, 82 percent, take place on landline phone services, according to the FCC. About 16 percent of cases are on wireless phone bills, while 2 percent are on "other" bills, such as voice over Internet Protocol, or voIP.
One FCC investigation found only 22 of 18,571 consumers surveyed used the third-party dial-around long distance service for which they were billed, which was roughly a 0.1 percent usage rate.
In North Carolina, one woman was told she had authorized extra long-distance charges for her landline through a website, even though she does not own a computer.
In St. Louis, another woman eventually realized she was charged for 25 months for long-distance service she never used nor requested.
On Monday, Chairman Julius Genachowski said the FCC proposed high fines for companies that have taken millions of dollars from consumers through these unauthorized fees. The FCC is also taking steps to educate consumers against companies charging hidden fees.
"These are important next steps to protect consumers from hidden fees that can cost them money, take valuable time to resolve, and undermine the public's confidence in our communications system," the chairman said.
The cramming terms sometimes used on telephone bills include: service fee, service charge, other fees, voicemail, mail server, calling plan, or membership.
Last week, the FCC proposed penalties of $11.7 million against four companies in Pennsylvania that may have billed tens of thousands of consumers in cramming charges.
The FCC charged Main Street Telephone ($4.2 million); VoiceNet Telephone, LLC ($3 million); Cheap2Dial Telephone, LLC ($3 million); and Norristown Telephone, LLC ($1.5 million).
Augustino said Main Street Telephone "fully intends" to respond to the order, which is a prelimary step and not a final finding.
"They know they need rules, and we want to work with them to develop rules," Augustino said of the FCC's proposed penalty against Main Street Telephone. "Until then they're trying to hold us to an impossible standard they have not imposed."
Voice Net issued a statement in the company's defense after the FCC announced its penalties, saying that the FCC's guidelines were voluntary.
"Voice Net has not engaged in any fraudulent activity, and has not violated any laws," according to the company statement. "Quite the contrary, Voice Net, since its inception, has adhered to the FCC's voluntary anti-cramming guidelines and consistently followed industry best practices. The FCC currently has no rules with respect to 'cramming' -- only voluntary guidelines."
Cheap2Dial issued a similar statement.
"We encourage the commission to adopt formal rules in this area, as this would give clarity to consumers as well as companies like Cheap2Dial that make compliance a top priority. In the meantime, we will continue to cooperate fully with the commission's investigation," according to Cheap2Dial.
Norristown Telephone could not be immediately reached for comment.
In October, Verizon Wireless, the largest cell phone carrier in the U.S., was fined $25 million by the FCC, the commission's largest and agreed to refund $52.8 million to customers who had received unauthorized data charges.
Verizon said those charges were inadvertent and not an example of "cramming."
"Verizon continually seeks ways to minimize incidences of cramming because cramming harms Verizon's business," Bill Kula, Verizon spokesman, said. "We do not want to lose customers because they have been crammed by third parties."Kula said Verizon Wireless does not engage in the same type of third-party billing arrangements for its landline customers.
Both cellphone and landline consumers may overlook these fees, which can range from $1.99 to $19.99 a month, on their telephone bills. To help consumers, the FCC offers tips to prevent and spot cramming charges.
First, the FCC recommends reading all forms and even promotional materials, including the fine print, before signing up for telephone or other services. And be just as mindful when you receive an offer by phone.
Second, review your telephone bill every month, just as closely as you monitor your monthly credit card or bank statements.
Tips to Prevent and Spot Cramming on Your Telephone Bill
Third, ask yourself if you recognize the companies, services, charges and rates on your bill.
Fourth, do not ignore small charges, which can add up to big amounts. Crammers try to go undetected by submitting $1.99 or $2.99 charges to tens of thousands of consumers, according to the FCC.
If you are the victim of cramming, ask the company for an explanation and ask for an adjustment. But if that does not work, file a complaint with the FCC for free at www.fcc.gov/complaints or call 1-888-CALL-FCC (1-888-225-5322) voice or 1-888-TELL-FCC (1-888-835-5322) TTY.