A key Senate chairman says Congress needs to pass legislation to protect customers from unauthorized third-party charges on their phone bills because the telephone industry has failed to prevent the practice.
Sen. Jay Rockefeller, D-West Virginia, said a one-year study by the Commerce, Science and Transportation Committee shows about $2 billion a year in "mystery fees" show up on the landline phone bills of Americans, a problem known as cramming.
In a Wednesday hearing, Rockefeller asked an industry representative why major companies like AT&T haven't stopped unauthorized third-party charges from going onto their customers' phone bills.
"It's illegal, it's wrong, it's scamming," Rockefeller said. "Why haven't you cleaned up your act?"
"The industry has taken significant steps," replied Walter McCormick, president and CEO of the U.S. Telecom Association. "Even the report that you issued today indicates that there has improvement, but it remains a very, very significant, very pervasive problem."
Phone companies such as AT&T, Verizon and Qwest do not have a process to determine if the charges were authorized by their customers.
The third-party billing system was a result of the AT&T divestiture when the FCC required companies to bill and collect for companies that provided long-distance or specialized services, McCormick said. It's no longer legally required, but many people like the single invoice system, he said.
The Commerce Committee's report says phone companies receive a small fee -- often just a dollar or two -- for allowing charges from third-party vendors to appear on their bills. But due to the large number of customers the charges eventually add up.
AT&T, Verizon and Qwest made $650 million during the past five years, according to the report.
Read more - http://www.cnn.com/2011/US/07/13/phone.charges/index.html?hpt=hp_t2
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