Madigan calls for ban on third-party phone bill charges

Third-party charges on consumer phone bills -- which sometimes lead to fraudulent charges or "cramming" -- should be banned, Illinois Attorney General Lisa Madigan on Wednesday said in testimony before the U.S. Senate Commerce Committee in Washington.

Cramming exploits unknowing consumers, whose phone numbers are used to charge hundreds of dollars in bogus services they never asked for or wanted, Madigan said.

"Phone bill cramming is a scheme to use a consumer's phone number like a credit card," Madigan said. "Whether over the phone or on the Internet, consumers are solicited for free trials, coupons or prizes, and they're never clearly told they're purchasing a service, that they'll be billed on their phone bill or that giving out their phone number will amount to giving out their credit card information."

Madigan's call for a ban on third-party billing via phone bills goes further than a rule proposed by the Federal Communications Commission earlier this week. It called for clearer disclosure of third-party charges on phone bills.

Cramming is not a new headache for consumers. It used to often start with telemarketing calls, but waned with the 2003 national do-not-call registry, which reduced the number of phone solicitations to consumers.

But during the past three or four years, consumers have increasingly reported being scammed online. Internet users report simply submitting their phone number, among other information, for online prize drawings, surveys or free recipes. Weeks or months later, consumers find charges on their phone bill for services they did not authorize or use.

Madigan said her office has filed 30 lawsuits on behalf of consumers who found unauthorized charges on their phone bills. They include one against a vendor who billed 9,800 Illinois residents for credit repair services.

"Cramming is a fraud epidemic affecting consumers in every state. We must enact legislation to ban third-party businesses from cramming charges on phone bills."

A ban on either the federal or state level should have a few exceptions, allowing charges for operated-assisted calls, for example, Madigan said.