How to Avoid Getting 'Crammed'

The next time you get your phone bill, check the total amount due. If it’s a little higher than usual, you may have fallen prey to an identity theft scam known as “cramming,” in which unauthorized fees are charged to a customer’s land line or cell phone account. The crammer gets away with it because the fees are usually too small to notice.

Photo: Paul Alvord for CNBC.com

Those small charges can add up: Cramming costs Americans as much as $2 million a year, according to the U.S. Senate Committee on Commerce, Science and Transportation.

Crammers ply their trade through third-party billing. Carriers, including AT&T

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[T  Loading...      ()   ] and Verizon Communications

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[V  Loading...      ()   ], allow users to charge third-party services to their phone bills, and they receive more than $1 billion a year to do so by third-party providers.

Scammers steal a telephone customer’s personal information, and then tell the carrier that they’ve provided a billable service to the victim. After giving the carrier the victim’s information, the charge is authorized. While the service may be nonexistent, the fraudulent charges are very real.

It’s not just individuals who need to be wary. Businesses are also popular targets for crammers, because their monthly bills are so complicated and the average office is too hectic an environment for every bill to receive close scrutiny.

“With today’s economy, where employees are often doing the job of two or more people, bills are not audited as closely as they may have been in the past,” according to Michael Bremmer, CEO of Telecomquotes.com. He notes that crammers often add fraudulent charges to a single business under multiple names and in varying amounts, thereby obscuring their identities and making it harder for auditors to detect.

Businesses and individuals alike can take actions to protect themselves from cramming. Susan Grant, director of consumer protection for the watchdog group Consumer Federation of America, recommends avoiding free trial offers, whose buy-now-pay-later structure is not always disclosed.

“The way that these offers are structured is that after the trial period is over, the charges begin,” she says. Grant also recommends that consumers simply take the time to closely examine their bills every month in order to detect third-party charges that they don’t recognize.

Of course, the most effective way to guard against cramming is to make sure it doesn’t happen in the first place. Customers can instruct their carriers to block all third-party charges on both cell phone and land line accounts, but even those who have found unauthorized charges on their bills can still take action.

“Contact both the third party company — as they provide their customer-service number on the invoice — and the local phone company which allowed the charges to be applied,” says Steve Reifel, president of business consulting firm Cost Containment Solutions. “Issue a formal complaint with the carrier, as they will remove from the invoice and block that company from issuing any further charges.”

Telephone customers who want to go further than their own carriers can also contact their elected representatives and tell them to pass legislation to end the practice of third-party billing. Contact information for all 540 members of the 112th Congress can be found at the "Contact Elected Officials" page of the USA.gov website.