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A Times Editorial

Picking pockets via phone bills

It took a congressional investigation to find out that people in Florida and around the nation are being defrauded of billions of dollars a year through unauthorized charges on their phone bills. Scams this big shouldn't be up to Congress to ferret out. Long ago, they should have drawn the aggressive and persistent attention of federal and state law enforcement and public utility regulators.

The yearlong investigation by a U.S. Senate committee has unearthed a national scandal. The nation's biggest phone companies, including Verizon and AT&T, have tolerated cramming, in which their customers are charged for services they never ordered or wanted. Despite some past attempts to address the practice, including steps by the phone companies themselves, cramming is a multibillion-dollar enterprise.

One of the chief culprits is reportedly daData Inc., a Palm Harbor company. Investigators with the Senate Committee on Commerce, Science and Transportation allege daData has generated millions in monthly charges to customers who never ordered its vendor services. The company has also racked up 159 complaints at the Better Business Bureau of Pinellas County over the last three years.

The committee's investigation reports that daData and the many vendors associated with it enrolled more than 800,000 telephone customers over the past two years and generated more than $50 million in revenue. Documentation unearthed by the committee showed that hundreds of thousands of daData "customers" called to cancel, saying they had never agreed to the charges or services.

Florida Attorney General Pam Bondi's office has an open investigation into daData. In 2007 Bondi's predecessor, Bill McCollum, settled a civil suit against Email Discount Network after it improperly charged more than 250,000 customers a monthly fee for shopping coupons and discounts. But it doesn't seem that the state has taken much action since, even as Floridians continue to fall victim to cramming every year.

According to the committee, approximately 300 million third-party charges are put on telephone bills annually totalling more than $2 billion, yet a large percentage are to customers who say the charges were unauthorized. Customers who do spot cramming can find it difficult to remove the charges from their bills and even tougher to figure out how to bring a complaint that will be acted on.

Clearly, the Federal Communications Commission has fallen down on the job. For many years it has been apparent that third-party billing is an avenue for massive fraud and that telephone companies addicted to the revenue were not doing enough to stamp it out. But the FCC stood mostly on the sidelines. Federal and state law enforcement has also failed to act. Civil suits against cramming operations are not good enough. Criminal charges are called for. Putting people in prison is the only way to end these easy-money schemes in which people's phone bills become an easy way to pick their pockets.

Picking pockets via phone bills 07/17/11 [Last modified: Sunday, July 17, 2011 4:30am]
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