Analysis: Frequency Of Cellphone 'Cramming' Scam Doubles In Illinois, CUB Concerned Wireless Customers Targeted As Landline Laws Tighten

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Dec 04, 2012, 01:12 ET

CHICAGO, Dec. 4, 2012 /PRNewswire-USNewswire/ -- The number of fraudulent "cramming" fees charged to Illinois cellphone callers has nearly doubled over the last year—surpassing the national trend for a scam that could cost consumers up to $59 million a year in the United States, according to an analysis released Tuesday by the Citizens Utility Board (CUB) and the prominent wireless industry research firm Validas.

The new data raises red flags that scam artists may be targeting Illinois wireless callers as cellphone-related commerce flourishes and landmark state legislation largely eliminates cramming on landline bills, CUB Executive Director David Kolata said.

"The analysis suggests that wireless cramming is a growing problem in Illinois," Kolata said. "As they're driven from landline bills, scam artists may see our cellphones as a new frontier for fraud."

Cramming involves third-party companies that "cram" charges on phone bills for services customers never ordered or received. An Illinois law signed this year bans most third-party charges from landline bills—but the new protections don't extend to wireless customers. The Federal Communications Commission (FCC) is now considering tougher cellphone rules.

CUB has opened a "Stop Cramming Center," at www.CitizensUtilityBoard.org, with tips on preventing the scam, steps consumers can take if they are crammed, and a special link to send messages to federal regulators encouraging tougher rules to combat cell cramming.

The research, using the Houston-based Validas' patented VERA wireless analytics technology, reviewed nearly 5 million lines, including more than 200,000 in Illinois. It compared two years of data, August 2010 through July 2011 versus August 2011 through July 2012. Taking a conservative approach, the analysis identified suspicious fees based on past phone-fraud litigation. Key findings include:

The percentage of third-party charges that appeared to be fraudulent skyrocketed in the last year, from about 26 percent to 51 percent. The national rate increased from about 39 percent to 44 percent.
Cramming charges averaged $3.76 a month in Illinois and $5.10 a month nationally.
Expanding those numbers to all of Illinois' 12.3 million cellphone subscribers, the scam has a potential impact of up to $1.4 million a year. Apply the data to the nation's 321.7 million wireless subscribers, and the scam could cost callers up to $59 million a year.

Crammers hope consumers miss relatively small fraudulent third-party charges among the forest of fees on cellphone bills. They gain access to bills through text messages claiming prize winnings; ringtone downloads and other cellphone extras; and websites offering "free" services or a sweepstakes entry. Customers who respond to these lures—and even those who don't—get hit with vaguely worded charges such as "premium texting," "download charge" and "data" on their next bill.

At a minimum, CUB is pushing for federal regulators to require cellphone companies to allow customers to block third-party charges on bills. CUB also recommends consumers take these steps:

Scan your monthly bill carefully for suspicious charges.
Protect your cellphone number. Register it with the Do Not Call list, at www.DoNotCall.gov.
Beware of online contests or "free" offers that require filling out a form or giving your wireless number.
Ask your carrier if it offers free fraud protections, such as blocks on texts and data.
Beware of questionable texts. The website www.SMSwatchdog.com can help you identify fraudulent messages.

Consumers who spot a suspicious charge should:

Call the cramming company to dispute the charge (see if the company's number is on the bill).
Call the cellphone company. Inform it that you're disputing the charge and you're only paying the undisputed part of your bill. Make sure you agree what that undisputed amount is, and record the time of the call and the full name of the person you talk to.
File a complaint with the office of Illinois Attorney General Lisa Madigan. (Visit www.illinoisattorneygeneral.gov, or call 1-800-386-5438, for Northern Illinois; 1-800-243-0618, for Central Illinois; or 1-800-243-0607, for Southern Illinois.) Keep one copy of the complaint for yourself and send the other to the cramming company.

CUB is Illinois' leading nonprofit utility watchdog organization. Created by the Illinois Legislature, CUB opened its doors in 1984 to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $10 billion by helping to block rate hikes and secure consumer refunds. For more information, call 1-800-669-5556, or visit CUB's award-winning website, www.CitizensUtilityBoard.org.

Validas® is at the forefront of fighting for mobile consumers, cutting their costs by an average of 20 to 40 percent. Founded by wireless industry experts, the Houston-based mobile intelligence firm estimates that "wireless waste"—the money unnecessarily spent on mobile—costs the nation's consumers $52.8 billion a year. The firm's free app, VERA, has been released on savelovegive.com to protect consumers against wireless waste by finding ways to lower their costs—and then allows users to repurpose their saved dollars towards philanthropic causes. For more information, visit www.validas.com.

SOURCE Citizens Utility Board