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Regulators target phone bill scams

Published Sep. 26, 2005

Some businesses are "cramming," padding phone bills with unauthorized charges.

In the war against telephone scams, state regulators recently cracked down on slamming. Now they are out to snuff out cramming.

The state Public Service Commission today is expected to endorse rules making it tougher for third-party businesses to pad telephone bills with unauthorized charges.

Known as cramming, the practice involves a company submitting charges _ typically $2.99 to $4.99 a month _ through local phone companies without the knowledge or consent of consumers.

Thousands of Floridians fall victim to cramming when they sign up for contests or make charitable donations and fail to read the fine print. As a result, they can end up being charged on their telephone bill for services often identified as voice mail, calling cards and pagers.

At today's PSC hearing, commissioners are expected to approve rules that allow consumers to call their local telephone companies and specify what companies may charge them on their monthly telephone bills. If so, the local phone company no longer would allow unauthorized businesses to add any charges on the monthly bill.

For example, where local phone companies permit, a customer could indicate that only charges related to local, long-distance telephone and Internet access appear on the monthly bill.

But the restrictions do not take effect without the consumer contacting his or her local phone company, Bloom said.

The PSC in late 1998 toughened the rules against slamming _ the unauthorized switching of a consumer's long-distance telephone service. The PSC said it received 20 slamming complaints last November, down from 137 cases a month in the fall of 1998.

"First, slamming emerged; then cramming popped on the scene," PSC spokesman Kevin Bloom said. "They are the dark side of telecommunications deregulation."

When consumers had no choice in telephone service, they did not have to worry about such scams, he said. With deregulation, they need to pay more attention to their bills and who provides them with telecom services.

Cramming escalated in the past three years after federal changes in 1996 opened up phone markets to competition.

The state PSC started tracking complaints of cramming in February 1998. The volume of complaints peaked at 302 in August 1998 and has since declined as consumers and local telephone companies became more aware of the scam. In December, the PSC received 31 complaints of cramming.

The PSC has since held several public hearings on cramming. In one case, a consumer told the PSC he had been charged $29.99 on his monthly phone bill. It was a fee for "creating a Web site" even though he did not own a computer.

One company, Coral Communications in Boca Raton, had offered Floridians a sweepstakes whose small print included language allowing the company to charge consumers on their phone bills. After the PSC intervened, the company was fined $15,000 and agreed to cease doing business in the state.