A new report shows that wireless companies have brought in hundreds of millions of dollars using a deceptive billing practice known as cramming.
Cramming refers to the practice of placing unauthorized charges on customers’ bills, often hidden deep within the bill, making them difficult to detect. The charges mostly common from premium short message services (PSMS) which sent subscribers texts with content such as celebrity gossip, sports updates or horoscopes. Some of these come from the carriers themselves, although most are charges from third party services but are still placed directly on the bill.
Earlier this month, the Federal Trade Commission filed charges against T-Mobile for engaging in this practice, but the report, issued Wednesday by Sen. Jay Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation, shows that Sprint, Verizon and AT&T have also benefited from cramming. (RELATED: T-Mobile Charged With Deceptive Billing Practices)
According to the report, cramming is a “billion dollar industry” that generally gives wireless carriers a 30 to 40 percent cut of the profits.
“Cramming on wireless phones has been widespread and has caused consumers substantial harm,” Rockefeller said in a statement announcing the report.
However, this is not a new problem, The Verge reports. As early as 2008, state attorneys general have targeted the issue, but despite safeguards and agreements with wireless companies, complaints have continued to pour in.
Although most major carriers have eliminated PSMS, other instances of cramming, such as in-app purchases, remain a problem.