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FTC to mobile carriers: If you could stop text scammers being jerks that'd be just great

Here's a hint: let customers dispute slippery premium fees

Internet Security Threat Report 2014

The US Federal Trade Commission (FTC) has urged mobile carriers to crack down on scams that lure people into receiving expensive texts.

The commission has published a "cramming" report [PDF] that states that American networks are failing to protect subscribers from unfair or deceptive premium service charges, levied by sleazy companies.

The FTC has in recent months begun an enforcement campaign to crack down on "cramming," a type of billing fraud in which a third party uses the lure of free services or one-time charges to trick people into signing up and paying for recurring monthly fees, a portion of which is given to the carrier.

According to the commission, many carriers are not guarding users from bogus charges nor providing adequate tools for reporting and disputing monthly premium service charges on bills.

The FTC has drawn up a list of best practices for tackle cramming charges.

"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," the FTC suggests.

"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."

Other proposed measures include better informing users of premium charges on their bills and providing detailed descriptions of subscriptions. Furthermore, carriers are asked to improve their dispute resolution processes so customers can resolve premium billing complaints.

The report also addresses some of the tactics third-party services use to trick users into signing up for premium services, such as hiding billing details in the background of web pages or tucking charge information into the bottom of long messages.

The aim, said the FTC, is to address what it sees as a deficiency in many US carriers in regards to detecting and resolving the unwanted charges users are subjected to by unsavory third-party vendors.

"Industry efforts have fallen short on both fronts. For example, carriers are not taking sufficient action against merchants with high refund rates," the FTC wrote.

"Further, the voluntary standards developed by industry have largely focused on text-message based Premium SMS services and have not specifically addressed other types of carrier billing including app- or mobile web-based billing using [direct carrier billing] arrangements."

Though the report concludes with recommendations from the FTC staff, carriers who don't take adequate measures to crack down on cramming could soon find themselves in the agency's crosshairs. T-Mobile US found itself on the sharp end of a lawsuit alleging the carrier took hundreds of millions of dollars in revenues from cramming charges. ®

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