FCC Fines Companies for Cramming

The Federal Communications Commission (FCC) proposed a total of $11.7 million in penalties against four companies that appear to have unlawfully billed tens of thousands of consumers for unauthorized charges –- a practice known as “cramming.”

The proposed penalties were issued against Main Street Telephone ($4,200,000); VoiceNet Telephone, LLC ($3,000,000); Cheap2Dial Telephone, LLC ($3,000,000); and Norristown Telephone, LLC ($1,500,000). The FCC issued Notices of Apparent Liability to each of the four companies for apparently charging thousands of customers for “dial-around” long distance service that they had not ordered. The Enforcement Bureau’s investigation revealed that only a tiny fraction of the affected consumers (about one-tenth of one percent) actually used the services for which they were charged. Nevertheless, the apparently unlawful billing continued for months and sometimes years. “Cramming” occurs when a company places charges on a consumer’s phone bill without authorization. These mystery fees typically range from $1.99 to as much as $19.99 per month. They are often buried in multi-page phone bills and have misleading labels that make it difficult for a consumer to detect them. The FCC has found that cramming is an “unjust and unreasonable” practice that violates section 201(b) of the Communications Act.

FCC Enforcement Bureau Chief Michele Ellison stated: “Cramming attacks consumers in the pocketbook, where it really hurts. The Enforcement Bureau takes today’s actions to protect thousands of consumers who appear to have been hoodwinked into paying for services they never wanted, ordered, or used.”

The FCC also released an Enforcement Advisory on cramming, emphasizing that all charges placed on phone bills must be authorized by the customer, and warning that the FCC will take aggressive enforcement action in this area.