The charges are often cloaked as seemingly legitimate services on phone bills, but what they’re really doing are fleecing consumers a few bucks at a time.
Scams involving unauthorized third-party charges on phone bills — a criminal practice known as cramming — are becoming more prevalent with the growth of text-to-buy services, forcing regulators to seek a better understanding of the issue.
The Federal Trade Commission has so far consulted with law enforcement officials and called for studies to inform its decision-making.
But the FTC is now turning to the good guys of third-party billing — companies that facilitate donations by text — for guidance on devising a plan to both combat cramming and protect the integrity of text-to-give and text-to-buy services.
A commission roundtable on mobile cramming in Washington will include two representatives from the mobile-giving industry, which most notably came into prominence by arranging drives for victims of Hurricane Sandy.
The industry has a valued stake in protecting the reputation of bona fide third-party billers, mainly the long list of nonprofit organizations that have come to rely on text-initiated donations to raise funds for various causes.
One of the panelists, Give By Cell CEO Dave Asheim, said it’s incumbent upon legitimate third-party billers of all kinds to address the reservations consumers might have trusting the payment method.
Give By Cell, which provides fundraising technology, regularly helps clients develop explanations they can post online to assure potential donors. Some nonprofits get nervous about their audience not understanding how mobile giving works, he said.
“If it’s not a major national organization, most people don’t bring it up,” Asheim said. “If it’s an email that’s going out to 100,000 people, we will help them with the wording.”
Another panelist, Jim Manis, founder and CEO of the Mobile Giving Foundation, said it’s key that third-party billers in the nonprofit and commercial sectors emphasize trust and security to ease the worries of potential donors.
The foundation connects charities with tech companies that facilitate mobile giving, but only after a thorough vetting of the nonprofit. Manis said the industry at large stands to benefit from imposing high security standards.
“There’s value in being able to provide people with a way to help people who are in need,” he said. “This is a good use of technology to aid that purpose.”
Cramming first caught the attention of regulators when scams began to surface several years ago on landline phone bills. The practice has since evolved into a “significant problem” for mobile users “that appears to be on the rise,” the commission wrote in a recent report.
Its growing prevalence likely stems from its subtlety. Cramming charges are often less than $5, making them easy to overlook, and appear as generic-sounding line items — use fee, web hosting and activation are a few.
Giving the mobile-giving industry a seat at the table — alongside consumer advocates and regulators — will help the FTC properly identify the problem and devise a plan to fight it, said Andrew Schlossberg, a mobile technology program specialist with the agency.
Weeding out bad actors to help the legitimate players is part of the government’s strategy, he said.
“We want to protect consumers from cramming while maintaining consumers’ ability to use carrier billing as a mobile payment option and the ability to make mobile donations via cell phones,” Schlossberg said.
Nick Clunn is an award-winning journalist who has worked for several websites and daily newspapers, including The Record in New Jersey. He teaches journalism as an adjunct instructor at Montclair State University. Follow him @NickClunn.Tags: Business,BYOD,Corporate Responsibility,Downtime,Government,Technology