Dialing for Your Dollars:
National Consumers League Calling For More Protection From Telephone Bill Fraud

The Federal Trade Commission's (FTC) "Pay-Per-Call Rule" must be revamped to stem the tide of telephone bill fraud, according to comments filed on March 10 by the National Consumers League (NCL). Con artists have exploited loopholes and gaps in the FTC rule to make fraudulent charges for calls to information and entertainment services, according to NCL.

In its comments, NCL also noted the rise of unauthorized charges for voice mail, paging, calling cards, and other services, a practice known as "cramming." The FTC has proposed to make major changes to the pay-per-call rule to address these problems.

"We're seeing terrible abuses of the telephone billing system," said Susan Grant, director of NCL's National Fraud Information Center (NFIC), a hotline for consumers to get advice about telephone solicitations and report suspected telemarketing fraud. Cramming was the number one complaint to the NFIC last year and disputes about pay-per-call charges ranked #8.

NCL provided the FTC with several examples of consumers' complaints, including:

• A California man who responded to a message on his pager to call an 888 number. He got a recording, was put on hold for four minutes, and later received a bill for $45.
• A Massachusetts woman received a bill for 900-number calls she never made and that should have been impossible to make because there was a 900-number block on her phone.
• A Michigan man received bills totaling $386 for 800-number pay-per-call services he never called. The company told him he would have to pay $5 per minute to dispute the charges.
• A North Carolina man was charged $20 per month on his phone bill for Internet services he never requested – he doesn't even have a computer.
• An Illinois man was charged for three 19-minute collect calls from Florida by an adult entertainment provider, but no one in the house had accepted the calls.
• A North Carolina woman's 13-year-old daughter called an 800-number advertised for a music hotline, but the call was switched to an international number, resulting in a $1,200 phone bill.

The FTC pay-per-call rule currently says that consumers must agree in advance to be charged on their phone bills for pay-per-call services provided through 800 or other toll-free numbers, but it doesn't require the agreement to be in writing. That makes it difficult for consumers who are lured into calling 800-number pay-per-call services to prove that they never agreed to pay. NCL supports the FTC's proposal to require a written agreement to be sent to the consumer, along with a Personal Identification Number (PIN) to access the service, and suggested ways to make that provision stronger.

NCL also agrees with the FTC's proposal to bar pay-per-call services from being offered through international or other numbers that result in toll charges. Because the cost of toll calls depends on the consumer's long-distance plan and is not set by the pay-per-call service provider, as the charges for 900-number and 800-number pay-per-call services are, it's impossible to advertise what the services will cost. And it's not feasible or fair for consumers to have to block toll calls from being made from their phones.

To curb the cramming problem the FTC is proposing that the pay-per-call rule should cover any telephone-billed purchase (other than for regular local or long-distance service) and that vendors must get "express authorization" from consumers in order to place charges on their bills. For recurring charges, a written agreement and PIN would be required.

Ms. Grant noted that, "One hundred years ago when the League was formed, no one could have imagined the services that are available today by telephone, the many different ways."

NCL's comments to the FTC can be found on its Web sites at www.nclnet.org and www.fraud.org. For more information, write NCL at 1701 K Street, N.W., Suite 1200, Washington, DC 20006 or call (202) 835-3323. NCL is a private, nonprofit organization representing the consumer on marketplace and work place issues.

Source: National Consumers League