When was the last time you looked at your cell phone bill to make sure everything was in check? No, not just glanced at the balance due before paying it but really looked at it? When was the last time you analyzed each line item, traced the charge back to your request for the service and verified that you were being charged the right amount? If you're shaking your head, thinking that level of attention to detail is crazy, then it's possible that you haven't heard of the deceptive practice of cell phone charging called cramming.

What is Cell Phone Cramming?
When your cell phone bill has a charge that was not authorized by you, is more expensive than the company said it would be when you agreed to the service, or includes extra charges that are the result of misleading or deceiving you, it's called cramming. Cell phone cramming is often a successful way to bill unsuspecting people out of money, because few consumers bother to analyze their statements and double check that they are being charged the correct amount for services they may have agreed to months ago.

What Makes Cell Phone Cramming Dangerous?
Cramming isn't a new scam either. For more than a decade, cramming has occurred on regular landline phone bills. Cell phones offer an entirely new opportunity to cram. With special text message services sending out horoscopes, the purchase of ring tones and the proliferation of apps, cell phone bills have the ability to be much more complex than landline bills are. This creates many more opportunities for cram charges.
According to the Federal Communications Commission (FCC), as many as 20 million cell phone customers are crammed annually. Only one victim out of 20 ever discovers that he or she has been crammed. A lot of money is being stolen by crammers, making this an extremely serious problem. In fact, cell phone cramming is estimated to cost consumers a total of $2 billion each year.

Getting a Handle on the Cram
In order to ensure they aren't giving their money away to crammers, consumers are advised to review their cell phone bill every month. The FCC recommends that every charge, including $1 to $3 charges, be reviewed for accuracy since crammers often stick with small numbers they feel will go unnoticed or unchallenged. Verifying the service provider of the charge is the first step in testing the accuracy of your bill, but you should go on to confirm that the amount you're being charged from an authorized vendor is the amount that you expected.

To make the process easier, consumers should keep a list of the services they've authorized and the amount they expect to be charged for that service. When you cancel an ongoing service, write down the date that you canceled it and your confirmation number or the name of the individual you spoke with to cancel it. Note the last date that you should be charged for the service. If you're charged again after that date, you can call with this information and possibly have your bill adjusted.

When It's Necessary to Take the Next Step
If you find that you've been crammed recently, look at past statements to see if you were crammed then as well. Call the company providing the service, explain the situation and ask for a credit. The FCC advises that you consider filing a complaint with both it and the Federal Trade Commission (FTC) if the company will not remove the charge. It also suggests that consumers notify their State Public Service Commission.

The Bottom Line
Your cell phone bill is just like every other purchase you make each month. If you were charged for extra items at the grocery store that didn't make it home with you, you'd complain and expect your money back. Your cell phone bill is no different. Make sure that you're monitoring your charges each month, and don't be afraid to ask questions if your bills look incorrect.

Photo Courtesy of alumroot

Related Articles
  1. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
  4. Economics

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  5. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  6. Stock Analysis

    Is the Apple Watch a Real Threat to Fitbit?

    Examine the potential for marketplace competition between Fitbit and the Apple Watch in the rapidly growing consumer wearables industry.
  7. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
  8. Stock Analysis

    3 Stocks to Protect Your Portfolio from Inflation

    Discover three stocks to protect portfolios against inflation. The best companies to protect against inflation are those with pricing power.
  9. Budgeting

    The 5 Most Expensive States for Child Care

    To get a better sense of how child care costs can fluctuate, here's a look at the costs of child care across the country.
  10. Home & Auto

    Looking To Invest In Home Improvements?

    Some home improvement projects could cost you more to complete than they’ll pay out in equity. So, here we show you the worst projects to avoid.
RELATED TERMS
  1. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  2. Duty Free

    Goods that international travelers can purchase without paying ...
  3. Mail Or Telephone Order Merchandise ...

    A regulation that controls businesses that sell products over ...
  4. Bottom-Dollar Scam

    Fraudulent claims by swindlers or con artists who prey on job ...
  5. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
  6. Debt Consolidation

    The act of combining several loans or liabilities into one loan. ...
RELATED FAQS
  1. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  2. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  3. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  4. What role does the OEM (original equipment manufacturer) play in the finished product?

    Original equipment manufacturers (OEMs) do not typically play much of direct role in determining the finished product. However, ... Read Full Answer >>
  5. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  6. Is the retail sector also affected by seasonal factors?

    Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!