FTC Staff Report, Mobile Cramming: A Federal Trade Commission Staff Report (July 2014) (full-text).
The FTC staff recommends certain best practices for industry participants to protect consumers against unwanted charges while enabling innovation and consumer access to carrier billing payment mechanisms.
- First, mobile carriers should give consumers the option to block all third-party charges on their phone accounts. At activation, carriers should inform consumers that third-party charges may be placed on their mobile accounts and carriers should give consumers the opportunity to block all charges at that time. Carriers should also clearly and prominently inform consumers of options to block charges from third parties while accounts are active, including on the carriers' websites. Additionally, carriers should consider offering consumers the ability to block or allow only specific providers, or to block commercial providers only.
- Second, advertisements for products or services charged to a mobile bill must not be deceptive. Merchants are in the first instance responsible for ensuring that their practices — including any advertising, marketing, and opt-in processes — are not deceptive. Information about price should be disclosed clearly and conspicuously before charging a consumer's mobile account. Further, carriers should implement reasonable procedures to scrutinize risky or suspicious merchants and terminate or take other appropriate steps against companies engaging in unlawful practices. Such scrutiny should also be applied if a carrier becomes aware that a merchant has run an earlier campaign containing deceptive advertising or engaged in unauthorized billing on landline phones.
- Third, it is critical that consumers provide their express, informed consent to charges before they are billed to a mobile account, and that reliable records of such authorizations are maintained. The unreliability of many merchants' claims that they have obtained consumer consent suggests that more centralized control by carriers and intermediaries of the consumer opt-in process and authorization records is needed. Mobile carriers should implement policies, or strengthen existing policies, to investigate and take appropriate action when consumer refund requests, complaints, or other factors indicate that a merchant may be cramming charges without consumers' consent.
- Fourth, all charges for third-party services should be clearly and conspicuously disclosed to consumers in a non-deceptive manner. In particular, on a phone bill, the name of the service and any associated bill heading should relate to the product offered and not suggest an affiliation with the carrier's service. Carriers should consider ways to make third-party charges more conspicuous, such as by providing separate subtotals for carrier and third-party charges wherever total charges are disclosed. Carriers also should consider whether consumers who auto-pay their bills would benefit from receiving a separate notification of third-party charges. Further, consumers with prepaid phone plans who do not typically receive phone bills should receive such a notification from the carrier.
- Fifth, carriers should implement an effective dispute resolution process. Such a process should be clear and consistent and enable consumers to dispute suspicious charges on their mobile accounts and obtain refunds for unauthorized charges. Consumers have reported difficulties and inconsistent experiences with carriers' dispute resolution policies for third-party charges. Further, given the extensive evidence that consumers are often unaware of third-party charges on their phone bills, carriers should grant consumer refund requests for recurring unauthorized charges that the carrier concludes were crammed, including refunds for the same recurring charge in previous months to the extent it is practicable to identify those prior charges. When a carrier terminates a third party's billing activities due to unauthorized charges, the carrier should notify consumer]s who incurred charges from the third party to allow them to request a refund.