Tag Archives: FTC

Cramming Costs Verizon and Sprint $158M

verizon-sprintVerizon and Sprint are paying a dear price for the mystery charges to their customer’s phone bills. The two cell carriers will cough up a combined $158 million to settle investigations into the unauthorized charges or cramming. With this announcement the Federal Communications Commission has settled cramming charges with all four major wireless carriers. AT&T settled in October for $105 million, and T-Mobile settled in December for $90 million. Of the $158 million, Verizon will pay $90 million and Sprint $68 million.

Most of the money from the settlement will go to setting up refund programs for customers victimized by the practice. The cramming charges came from premium text messaging services like horoscopes or celebrity gossip sent directly to the customers phone and costing about $9.99 per month. Verizon kept 30 percent of the fees, and Sprint pocketed 35 percent. Victims of the practice often didn’t sign up for the services and carriers wouldn’t always offer refunds. When asked for proof that customers had signed up for the service Sprint and Verizon “were unable to prove that these services were ever requested.”

As part of the settlement neither company is permitted to charge consumers for premium text messages. They must also implement systems to ensure they obtain a customer’s informed consent before allowing third-party charges. Both Verizon and Sprint have already begun ending these charges.

In a bizarre statement emailed to  The Verge.com Verizon stated “Today’s settlement reflects Verizon’s continued focus on putting customers first.” Verizon claims that it “rigorously protected” customers from these authorized charges. Verizon also says that it had a “broad policy” of allowing refunds on premium text message charges.

Sprint was equally in denial by saying “Sprint was an industry leader in enacting rigorous safeguards to protect customers against unauthorized billing by premium SMS merchants,” The statement went on to say  “Sprint always puts its customers’ interests first,” and that it returned “tens of millions of dollars” in refunds long before this investigation began.

Both Verizon’s refund program and Sprint’s refund program are now accepting claims.


Cellphone Wars – It’s On!

The cellphone market is one of the most competitive technology service industries on earth. African-American customers need to be aware and take advantage of the cellphone wars.  You can get paid to switch from one service provider to another. Early cancellation fees be damned. You can get substantially reduced monthly bills, new phones for you and your family and get better deals on data, voice and text packages. You can even go no contract and be totally free of obligations. The war between phone companies is on and the customer is the prize.

sprint-logo-black_11699935Right now Sprint is going after competitor’s customer’s with a vengeance. Their latest move promises to cut new customer’s cellphone bills in half. In a recent press release Sprint CEO Marcelo Claure said “It’s as simple as this: Bring Sprint your Verizon or AT&T bill along with your phone and we’ll cut your rate plan in half. That’s a 50% savings on your rate plan every month.”  And you don’t have to pay early cancellation fees either. Sprint will pay you $350 per line to switch services. The deal does not apply to T-Mobile customers.

Cellphone service providers have brought in customers before with some really cheap introductory rates that expire after a period of time. But Sprint’s offer is permanent making it that much more impressive. This is a valiant effort from Claure who has his work cut out for him as Sprint has lost customers for 11 straight quarters. Claure, a native Bolivian, is also reaching out to the Hispanic market for customers. And why not? Latinos are America’s fastest growing demographic.

t-mobile-logoT-Mobile is in the war for customers too and is offering its Contract Freedom plan that pays as much as $350 per line termination fees for customer to switch to their service.  On the data front T-Mobile is battling with its new Data Stash program. With this new data plan the customer can save the data they have paid for each month for up to a year and use it when they need it. Data Stash is included at no extra charge for every new and existing T-Mobile customer on an eligible Simple Choice plan with extra high-speed data for their smartphone or tablet.  The plan is a good idea for someone but no competition for the Sprint Unlimited Plan that includes unlimited voice, text and data.


Verizon is not looking real aggressive either but they do have a dog in the fight. Verizon’s big selling point is its network. The company claims to have the only 4G network that is 100% LTE that covers more than 95% of Americans. The company is also dangling $150 to switch carriers but for a limited time only. Verizon is also offering unlimited text and talk time but only a sharable data plan with no rollover. The company’s family plan offers four phones and 10G of shareable data for $140. They also offer phones that act as Wi-Fi hotspots at no extra charge but you pay for the data you use.

My advice to anyone who is shopping for a data plan is to ask questions. The first question is; will my data be throttled? That is the practice of slowing down data transfer for people who use a lot of data or data hogs as the companies may call them. Some cell phone companies throttle customers they consider data hogs regardless of the plan they purchase. But if you really want to shop for unlimited cell phone plans there is a website that is built just for that purpose. Visit ConsumerReports.org  for a full unbiased comparison of all the available plans to choose from.

Sprint’s Claure maybe fighting for customers at the right time as T-Mobile was recently slammed by the FTC for billing customer’s cellphone bill for unauthorized services. A practice known as cramming. The charges amounted to hundreds of millions of dollars. This news is sure to cause some defections for the Sprint deal. But T-Mobile reported a net gain of 2.1 million customers in the final quarter of 2014.

As part of the settlement T-Mobile will pay $90 million punishment for “mobile cramming.” That is, if the agreement is approved by a U.S. District Court. If so it would resolve an FTC lawsuit filed in July.

Most of the settlement  money, $67.5 million, will be refunds to consumers fraudulently charged after Jan. 1, 2010. T-Mobile will have to either provide direct payments to the customer or forgive an equal amount on their bills. T-Mobile has agreed, as part of the settlement, to get consumers’ “express informed consent” before placing third-party charges on their bills in the future, the FTC said.

FTC Chairwoman Edith Ramirez said a statement, “Consumers should be able to trust that their mobile phone bills reflect the charges they authorized and nothing more.”

The T-Mobile settlement is just the most recent cell carrier to get hit for cramming. In an industry wide crackdown on wireless carriers for cramming AT&T agreed to pay $105 million to settle cramming charges. As a result of these settlements both companies could owe consumers hundreds of millions of dollars. In December Sprint was also hit with lawsuits filed by the FCC and the Consumer Financial Protection Bureau over allowing similar charges.

AT&T, the second largest carrier in this war,  is fighting for customers, both its own and new ones. In February the company announced new price cuts for family plans and offered additional discounts for new customers. To retain its current customers AT&T is extending a one time $100 credit to customers who renew and on each new line they sign up for. Other weapons deployed by AT&T include its AT&T Next phone upgrade program that lets you pay for your new phone over time.  That is probably a good deal for the gadget hounds who need the latest phone on the market. AT&T also offers a base plan  that provides unlimited text and talk with 10GB of data service. AT&T  also jumped into the roll over data battle by introducing their own data rollover plan.

Everywhere you turn you can find ads for cell carriers describing what they can do and how much better they are than the other guy. And the pre-paid services are in the fight as well.


Cricket pre-paid brand is arming up to aggressively fight for customers. The company offers up to $100 for switching although the offer is slightly deceptive. The fine print limits it to customers of other pre-paid service providers.

Cricket is ready to make quick adjustments to its rate plans to respond to competitive pressures. Cricket President Jennifer Van Buskirk was interviewed by FierceWireless.com and said that the company has opened hundreds of new stores in the three and a half months since offering new price plans, a new tagline and and a new store design. The company has also announced it will start selling its services, smartphones and accessories exclusively in more than 2,800 GameStop stores nationwide starting this past October. There’s just one problem with all that bluster from Cricket Wireless, the company is owned by AT&T. AT&T also offers GO Phone another no contract service provider.

consumer-cellular1Other pre-paid service providers are positioning themselves to attack particular market segments. For example Consumer Cellular is fighting for position in the market for senior cellphone users with an aggressive advertising campaign. Great Call is counter punching in the senior market with its Jitterbug cell phones designed for seniors with services such as health and safety experts with its 5-Star service plan.


Fighting for customers means no one is going to be without a phone including low income and credit challenged customers. The combatants know that every market is worth fighting for.  AT&T owns two prepaid cellphone companies and Sprint owns VirginMobile and BoostMobile prepaid service. Tracfone  is throwing punches of its own and offering to let the new customer bring their own phone saving the expense of buying a new phone. But remember this is a war so AT&T and Verizon lets you bring your own device as well.

You can walk into any Wal-mart store and see the numerous prepaid cell offering from TracFone, Cricket, VirginMobile, MetroPCS, Straight Talk,  NET10 Wireless. But you can also check out Amazon.com and Walgreen’s stores. All these services are fighting for customers because the market has reached a saturation point. Everyone already has a cell phone. These companies have to answer the question; now what?






AT&T Settles Cramming Charges

AT&TAT&T  and the FTC have come to a  settlement agreement over accusations of cell phone cramming.  Federal and state regulators announced Wednesday that AT&T has agreed to pay $105 million for “cramming” unauthorized charges on the monthly bills of its wireless customers.  The African-American Cyber Report reported on this accusation in March of this year when we wrote; “Cell Phone Scams:Are Black People Paying Too Much?

For those of you who do not know what cramming is it is the unauthorized billing of customer accounts for services they are unaware of or did not authorize. AT&T is accused of profiting from unauthorized cramming.

AT&T is charged with keeping as much as 35% of the fraudulent third party fees on its customers phone bills. The charges averaged about  $10.00 per month and came from services for things like trivia, horoscopes and love tips. AT&T is also accused of concealing the charges on bills thus preventing customers from securing full refunds.

A similar lawsuit was filed by the FTC  in July against T-Mobile. In the lawsuit the FTC alleged the carrier earned massive sums from third-party merchants offering bogus services. There have been seven cases related to mobile cramming in the past year, and FCC chairman Tom Wheeler said more were coming.

The settlement is the largest cramming settlement in history.  The federal agencies involved in the settlements include the Federal Communications Commission, the Federal Trade Commission, as well as all 50 states plus the District of Columbia.

“This case underscores the important fact that basic consumer protections — including that consumers should not be billed for charges they did not authorize – are fully applicable in the mobile environment,” FTC chairwoman Edith Ramirez said.

AT&T all but admitted to cramming customer bills in a statement saying that it and a number of wireless carriers had offered the third-party “Premium Short Messaging Services” in the past few years.

“While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services. Today, we reached a broad settlement to resolve claims that some of our wireless customers were billed for charges from third-parties that the customers did not authorize.”

“For too long, consumers have been charged on their phone bills for things they did not buy,” Wheeler said. “It’s estimated that 20 million consumers this year are caught in this kind of trap, costing hundreds of millions of dollars.”

Of the $100 million settlement approximately $80 million is set aside for customer refunds. So if you’re an AT&T cell customer you need to go here to check and see if you have money coming your way.

Breaking It Down

Ok, so AT&T got fined $100 million dollars. But lets ask this question, who inside AT&T knew about this and let it go on for so long?  How was it that all that money was flowing through AT&T and no one asked where it was coming from. They kept as much as 35% of the charges remember? This is a clear example of the criminal justice system not prosecuting corporations. AT&T knew what was happening and did nothing except collect the cash. I guarantee you that some executive got a bonus for bringing in that money. But was anyone charged with criminal fraud? No, and they probably won’t be. And why is that? AT&T had revenue in excess of $128 billion dollars in 2013. Do you think they really felt that $100 million settlement.? The only way to stop this type of crime, white collar crime, is to put people behind bars. How many black men are in prison for stealing $100? I think you get what I’m saying?

Online Tracking of Children Legislation

canstockphoto5147385Senate bill s1700-113, “Safeguards Against Tracking Children Online” is currently being considered in the U.S. Senate. The bill is intended to ban online tracking of children. In the bill the definition of a child is between the ages of 12 and 16 years of age. But the legislation currently being debated is very similar to rules laid out by the FTC in 2013.

The bill is intended to prohibit corporations, marketers and other web entities from collecting personal information for marketing purposes from children and minors using web or mobile applications. The bill also establishes additional privacy protections against collecting personal or geographic location information from children and minors. The 2013 FTC rules also covered web and mobile apps.

According to a 201o Wall Street Journal report  websites that attract children and teens use cookies and other tracking instruments more than sites aimed at adults. The WSJ studied  50 popular U.S. websites for children and teens. It was discovered that these sites installed 4,123 cookies, beacons, and other tracking tools on the simulated child’s computer used for the test.  That is 30% higher than tools used to track adults. 

According to Common Sense Media and the Center for Digital Democracy over 90% of adults surveyed did not believe it was okay for advertisers to collect information about a child’s location from that child’s mobile phone.

Just a year ago the Federal Trade Commission released new and tougher rules designed to limit tracking of children online. The new rules stopped the collection of  personal information for children under 13.  The FTC rules also banned tracking a child’s physical location and the collection of  photos, videos and audio files. Also banned was behavioral advertising aimed at children without parental notice and re-targeting of ads based on the child’s browser history.

After the release of the new rules in 2013 Jeffrey Chester of the Centre for Digital Democracy said, “This is an important victory for privacy rights on the Internet.” The Centre for Digital Democracy spent four years lobbying for the new rules.

“There is no more secret tracking or behavioral tracking,” Chester says.

The 2013 rule changes were applauded by many public health and consumer and digital rights groups. Also endorsing the new rules were the American Academy of Child and Adolescent Psychiatry, the Consumers Union and the Center for Science in the Public Interest.

The current Senate bill was introduced in November of 2013

Breaking It Down

First of all let me say this to black parents; don’t let a computer or tablet babysit your child! What you just read was that companies have been collecting information about your child and, in a round about way, information about you. If a child answers a simple question such as what school they attend a marketer can quickly discern your income and other data. Did you read the part where  some marketers had collected pictures, location and audio recordings of children? We have to protect our children from the onslaught of marketers who will stop at nothing to advertise to children. Why are they advertising to children? Because the earlier in life a child begins to associate with a product the more likely they will become lifelong customers. Because advertising to children creates demand for products. Because advertising to children creates profiles in data bases in some company’s computers. And those profiles tell the marketer where to advertise to that child now, where as they get older and maybe for the rest of their life. Because children are not old enough to understand the connection between online games and entertainment and product affiliation and thus are being manipulated. Advertisers have no mercy and few scruples. For example, have you noticed how many new fruit flavored beers and liquors are being advertised? These people are advertising to teens! Get them associated with some new apple flavored ale early and they will be customers for life. Clothes, cars, fast food, alcohol, technology, whatever it is . The marketers job is to get into your child’s head early.



Federal Trade Commission Can Sue for Data Breaches

ftc-federal_trade-commission-logo-nyreblog-comIn what can be considered a major victory for the government and Internet users a New Jersey Court has ruled the Federal Trade Commission can sue for data breaches. The decision went against Wyndham Worldwide Inc. owner of Wyndham Hotels.

U.S. District Court Judge Esther Salas ruled that the FTC can hold companies responsible for failing to use reasonable security practices. The lawsuit came after Wyndham suffered a data breach resulting in the loss of data for thousands of credit cards and $10.6 million in fraud losses.

Wyndham, trade groups and even the U.S. Chamber of Commerce challenged whether the FTC had the authority to enforce data security standards under the unfair and deceptive practices provisions of the FTC Act. The judge said; yes they do.

The ruling is  considered a landmark by legal experts. It was a test of the FTC’s authority to enforce the data security standards on U.S. companies. The FTC has has used its authority in the past to force settlements from companies that suffered data breaches.

Breaking It Down

We need to see more of this. Like most Americans, black people travel and use hotels and restaurants and we pay with our credit cards. No we are not the only ones affected, but we should be paying attention when we see this sort of activity. Americans have few places to turn to when data is lost. I am glad that the FTC is at least trying. We can’t get Congress to agree on the weather outside and getting a data security law passed is nowhere on the horizon. We should thank the judge for her ruling and the FTC for acting on these data breaches. Hopefully this is not an isolated event.