July 13, 2011 -- Got a landline? Then you might want to review your latest bill for mysterious third-party fees.
One day after the Federal Communications Commission voted to get the public's opinion on new rules intended to target these unauthorized hidden charges, the Senate Commerce Committee held a hearing on the $2 billion a year practice known as "cramming."
"It refers to what we call mysterious charges that appear on American phone bills for services that people don't want and don't use and didn't ask for," committee chairman Sen. John Rockefeller, D-W.Va., said today.
The telephone industry had promised to make changes but when the committee reexamined the issue, it found the problem of third-party billing to be worse. It is now considering an outright ban.
"Consumers don't know that their phone bill can be used like a credit card," said Illinois Attorney General Lisa Madigan today. "From the beginning, third-party charges on phone bills have been an open invitation to fraud and deceit. It's been a scam."
Cramming has been going on for at least 10 years and the committee said today that phone companies have been slow to deal with it because they make so much money from it -- major phone companies make $650 million from third party charges.
"Oh yeah, they make money," Rockefeller said today.
Illegal Charges: From $2 to $20 a Month
The illegal charges, which can range from a few dollars to almost $20 a month, can appear under generic descriptions such as minute use fee, activation, member fee or Web hosting. About 15 million to 20 million households are overcharged for their telephone landlines by third-party companies and just 5 percent realize they are victims, the FCC said.
"It is infuriating to me that it is legal for companies to, without authorization, charge our businesses and skew our profit and loss statements and in effect take money out of the hands of hardworking, deserving men and women," said Susan Eppley, whose group of fast food restaurants in Georgia was victimized by crammers.
The FCC's proposed rules include high fines against companies that charge consumers excess fees and requiring landline phone companies to put third-party charges in a separate section of a phone bill.
Walter McCormick, a spokesman for the U.S. Telecom Association, said that third-party billing remained a problem but that "the industry has taken significant steps."
To avoid cramming, the FCC suggested that consumers:
Contact the phone company and opt out of third party billing.
Know your phone bill. Recognize unusual charges that may be buried in the bill.
Be careful when supplying your name, address and phone number for promotions, coupons and sweepstakes.
Read all forms and promotional materials before signing up for telephone or other services.
Don't ignore small charges, which can add up to big amounts.
ABC News' Susanna Kim and The Associated Press contributed to this story.