It has been a busy year for “cramming.” Cramming is the practice of billing telephony subscribers for unauthorized charges, which typically ranges from $9.95 to $24.95 a month. In Billings, Montana, a family is accused of adding $70 million of fraudulent charges onto phone bills nationwide. Yes, you read that correctly – 70 million dollars. More recently, the Federal Trade Commission (FTC) just started refunding nearly $5.4 million to victims of a 2010 phone cramming scam, although this is just a fraction of what was taken from consumers. Given the size and impact of these crimes, the FTC and others are taking a hard look at cramming.
Earlier this year, the FTC hosted a Mobile Cramming Roundtable in an attempt to further explore this issue which the FTC believes is a “growing problem” and “poised to become a major consumer fraud issue.” Although cramming accounts for a small percentage of the estimated $40 billion in telecommunications fraud committed each year, it has a big impact on consumers. Consumer Reports estimated that landline and mobile cramming could be costing American consumers as much as $2 billion per year.
There are a few lessons to be learned here:
1) We need to always be on the look out for fraud;
2) We can’t expect subscribers to be the ones always watching; and
3) When the fraud is discovered, it can take years to refund the charges to those impacted.
Many customers will unwittingly pay the extra money because they don’t scrutinize every bill, item by item. Criminals who commit telecommunications fraud count on this happening—usually by billing in very small increments.
In the Montana case, the perpetrators’ undoing may have been their greed; their average customer charge was just large enough amount to attract attention. Many types of telecommunications fraud, such as by-pass fraud and PBX hacking, are much more difficult to detect because they’re high-transaction, low-cost crimes – crimes committed often for small amounts.
So what can communications service providers do to protect their customers and their own brand image from crimes like cramming? Here are some steps to take:
- Educate customers on fraud and what they can do to prevent it. In the Wisconsin case, for example, the customers were initially targeted through a phishing scam to collect their personal information.
- Work with trusted billing aggregators.
- Consolidate your data so that your business has a unified view of customers across all departments including billing, customer service and fraud detection.
- Analyze customer and billing data regularly to find anomalies, such as low service usage or irregular billing patterns that might indicate a fraudulent service charge.
To learn more about how you can protect against telecommunications fraud, talk to Neustar. Our Communications Analytics Services can help communications service providers ferret out fraud before it becomes front-page news.