The FTC is thankfully watching the Americans’ backs, as it should be. FTC condemns cramming, the wireless carriers’ method of gaining another important, yet controversial revenue source. The more these services are used and paid for, the more a mobile carrier has to gain. Yet sometimes the in-app purchases are not clearly desired by consumers. This is where the FTC steps in. Recently, the government body pressed charges against T-Mobile for cramming. The operator included dubious costs in up to 50 pages long bills. The exact expenses were difficult to trace. Amazon has been accused of profiting from a somewhat similar practice, making in-app purchases very accessible to children.
Half of Americans are addicted to their smartphones, according to a recent study, so cramming might get more pervasive than ever, without any regulatory action.
FTC condemns cramming and asks carriers for maximum visibility of purchase conditions
Today, the FTC released a report called “Mobile Cramming. An FTC Staff report”. The situation is so widespread among carriers, it seems, that specific and decisive action has to be undertaken. It is a pity, because the practice will have negative effects on the consumers and the industry as well. The FTC report says that “[a]l stakeholders have an interest in combating cramming on the carrier billing platform, as promoting consumer trust is integral to promoting more widespread adoption of mobile payment systems and further innovation.
The report shares six simple recommendations for mobile carriers. “First, mobile carriers should give consumers the option to block all third-party charges on their phone accounts.” It is a simple, welcomed and effective solution. Further, if consumers decide to pay for a certain service, they must be fully aware of the real price and any record regarding the respective operations must be maintained. Because the FTC wants to protect the consumers’ interest, basically they insist that every data needed for the consumer in order to make an informed decision regarding a transaction must be as clear and as visible as possible. Last, but not least important, if customers were not fully informed about the consequences of the transactions, they must be offered an “effective dispute resolution process”. These are the main directives of the Commission. The carriers will now have to implement them in specific ways.
FTC condemns cramming as around 20 million people are affected by it each year, although only one out of 20 realizes the fraud, Washington Post comments. Already $160 million have been returned to consumers after just three legal actions, FTC states. If companies want to avoid further legal problems, they will have to take into consideration the five directives of the FTC regarding cramming.