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FCC investigates wireless industry for billing practices, announces proposal to prevent shocking bills

The Federal Communications Commission said Tuesday it is conducting an industry-wide investigation into cell phone billing practices amid complaints by customers of Verizon Wireless and other carriers of unwanted data charges.

The agency’s 10-month-long investigation, which it previously said was focused on Verizon, could subject other carriers to penalties if the FCC finds those firms charged “mystery fees” that violate its “truth and billing” guidelines. The agency didn’t disclose the names of other carriers that are being probed. It also didn't say how many providers the FCC is looking at and at what stages those investigations are at. An AT&T spokeswoman wrote in an e-mail that the company is unaware of an investigation into its practices. A Sprint Nextel spokesman said the company doesn't generally comment on investigative matters at the FCC.

update with quote at 11:23 a.m.: “It's routine for the FCC to look into consumer complaints including those involving billing practices," said FCC spokeswoman Jen Howard.

The investigation comes amid an effort by the FCC to step up its protection of consumers who are increasingly complaining of baffling charges on their cell phone and broadband Internet bills. FCC Chairman Julius Genachowski plans to announce a proposal on Wednesday aimed at preventing "bill shock," or surprises on cell phone bills from overcharges and roaming fees.

“Companies should compete on value, price and service, not customers confusion," Genachowski said in prepared remarks to be delivered at in a speech Wednesday at the Center for American Progress.

Verizon admitted last week that it had charged 15 million subscribers more than $50 million for data services those customers didn’t sign up for. They were erroneously charged because of a software glitch and accidentally launching the Web browser on their phones. Verizon said it would provide refunds to those customers but the FCC said it would continue its investigation. In its fact sheet, the FCC said its investigation into mystery fees by Verizon and "other mobile providers" is part of a broader ambition to update truth and billing guidelines.

Genachowski will outline a proposal that forces carriers to warn users when they are close to reaching voice, text and data limits or about to incur international or other roaming charges. Carriers will be required to alert users through text messages and voice alerts when they are close to those limits. The proposal will be formally introduced at an FCC meeting Thursday and would eventually need a majority of votes from the five-member commission. That means if any rule is approved, it would not take effect until next year, experts say.

The FCC proposal will also ask carriers to weigh in on whether it should force usage caps that automatically cut off services when users reach their limits. Senator Tom Udall (D-N.M.) has introduced a bill that would automatically shut off services when limits are met unless a consumer volunteers to pay additional fees.

The wireless trade group CTIA has argued against the FCC's proposals. It says alerts could lead to confusion. The trade group said carriers have introduced new ways for subscribers to check how many voice minutes and much data they’ve used. In recent weeks, the cell phone industry has ramped up its opposition. Between Sept. 29 and Oct. 1, CTIA vice president of regulatory affairs, Chris Guttman-McCabe, and other executives met with the FCC's consumer affairs bureau chief, Joel Gurin, and staff for Commissioners Mignon Clyburn and Robert McDowell to argue against the "bill shock" plan. In exparte notices, the CTIA offiicials argued that carriers couldn't provide timely roaming charge alerts because real-time roaming data isn't available for carriers.

But consumer advocates say most consumers find usage information hard to obtain from their carriers. They said consumers need carriers to provide a better sense for how much data is consumed by activities such as watching videos, sending emails and surfing the Web.

Joel Kelsey, a policy analyst at Free Press, noted that the European Union already requires alerts for sudden increases in charges and when subscribers near their service limits. As Verizon, AT&T and other carriers move toward pay-as-you consume tiered pricing models over flat-rate plans, the FCC needs to require clear guidelines for carriers to supply information to users, he said.

“This is a just the starting gun for the FCC and there is still a lot that needs to be explained to see how effective this proposal can be,” Kelsey said.

By Cecilia Kang  | October 13, 2010; 12:01 AM ET
Categories:  AT&T, FCC, Sprint Nextel, T-Mobile, Verizon  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Ars Technica says Iran blocked it after malware report
Next: Q&A on corporate cellphone billing problems


"They were erroneously charged because of a software glitch and accidentally launching the Web browser on their phones."

Yeah, that was it, a software glitch, uh huh.

Stuff like this is just the tip of the proverbial iceberg. The carriers will do whatever they can to extract charges and fees.

When my son was 17 he was on my family plan w/ AT&T. My plan was voice only, no texting, no data.

His phone broke, so he went to the AT&T store and purchased a new phone. It was data capable.

The next month when I received my bill, there wasn't any data usage, but a $20/mo data plan had been added to my bill.

I called AT&T to see what was going on. I was told that they assumed I wanted a data plan since my son had bought a data capable phone.

I asked how they came to that assumption, and why they would change my plan w/o informing me, especially since my son did not have permission to change my plan, and was a minor who couldn't enter into a contract with them anyway.

Their response was that they would drop the plan going forward, but they couldn't remove the $20 for the current month.

When I asked to speak to a supervisor, he told me if they dropped the $20 for the current month, they would pursue my son on fraud charges.

Posted by: BEEPEE | October 13, 2010 1:44 AM | Report abuse

They steal.

Probe ended.

Posted by: hogsmile | October 13, 2010 3:58 AM | Report abuse

Theft by deception.

Posted by: hogsmile | October 13, 2010 4:01 AM | Report abuse

The FCC is not capable to probe it's own mandate, let along do it's job.

The regulators just give the regulated what they wanted after putting on a show for the American public. I am Sic of this acting.

Posted by: bkarpus | October 13, 2010 5:03 AM | Report abuse

Solution: No contract, not theft. It's that simple. Anyone dumb enough to sign an2-yr contract with Verizon deserves what they get.

Posted by: fudador | October 13, 2010 5:16 AM | Report abuse

The FCC sells immensely valuable public
spectrum to dirty big businesses and they are shocked by the outcome? Come on.

Posted by: n7uno | October 13, 2010 5:49 AM | Report abuse

The FCC sells immensely valuable public
spectrum to dirty big businesses and they are shocked by the outcome? Come on.

Posted by: n7uno | October 13, 2010 5:51 AM | Report abuse

not much different than the morgtage scam.stupidity and greed.

Posted by: pofinpa | October 13, 2010 6:16 AM | Report abuse

Its not like they don't earn enough on cell phones as it is.

Posted by: grobinette | October 13, 2010 6:18 AM | Report abuse

You wouldn't see this Probe with a Republican Administration in Power. In fact the previous Republican administration killed the probe into Microsoft, Big Tobacco & Enron without 1 conviction, fine or anybody being found guilty.

Still want Republicans in control of things? No company business policies would ever be prosecuted...

Posted by: digtldesk | October 13, 2010 6:39 AM | Report abuse

I have a Virgin Mobile phone with a pay-as-you-go plan. Starting a few months ago, each time I added money to the balance, the provider began adding an e911 charge of 25 cents. Their response to my inquiry was that some states require a charge for maintaining a state 911 cellular fund. My rather bewildering search of my state's legislative records showed that this is the case in the state where I live, but (1) the law has been in effect for several years, not several months, and (2) my further inquiry as to why the charge is made every time money is added was not answered. (In other words, if you spend $100 over a year in 10 increments, the e911 charge comes to $2.50; if the $100 is added all at once, the charge is 25 cents.)
Further, although I would like to switch to a more economical plan, I'm deterred by the carrier's policy of refusing to transfer any balance from the original plan to the new one.

Posted by: taadamsindy | October 13, 2010 6:44 AM | Report abuse

The public allows two year contracts by agreeing to them. Stop it.

Posted by: nanonano1 | October 13, 2010 6:45 AM | Report abuse

A couple of years ago, my wife saw month after month of mystery charges added to her Verizon bill. These incorrect overcharges, worth hundreds and hundreds of dollars, resulted in threats from Verizon that service would be terminated if not paid. With no place to turn, we wound up spending hours negotiating a settlement with Verizon, and at one point, an $1800.00 refund was promised (but reneged on by Verizon). As part of the settlement, she signed a two-year contract and agreed to pay her monthly bill in cash.

In retrospect, we could have hired a lawyer to handle the problem, but it would have cost us more than it was worth. It seemed that Verizon new exactly how far they could go and exactly how much to settle for. Without a doubt, greed and lies rule the wireless world.

Posted by: logicprevails | October 13, 2010 7:40 AM | Report abuse

how about the person that made the call pays for the call, not both...
why should someone receieve a call they did not ask for have to pay for it...
and what about prepaid accounts people get where they buy minutes only to have the minutes used up by calls they did not solicit...

Posted by: DwightCollins | October 13, 2010 7:48 AM | Report abuse

BEEPEE-- the fraud comes from the phone. Just like you can't roll in, get a Blackberry or other smartphone for free or 25% of what the actual cost of the device is, they REQUIRE you to sign up for a data package to GET that price on the phone. There was very likely a similar requirement at the price point your son bought the phone. So, the contract was with the phone price, which affected the contract, one would then question as to whether minors can buy sell phones with such agreements period. For their part, they prob thought they were compromising by not requiring you to pony-up the extra $ for the phone.

What I think is low-rent is that Verizon automatically renews your 2-yr agreement when it expires into ANOTHER 2-yr deal, rather than month to month. Last time I was with AT&T, the contract reverted to a month to month --since you've already paid through the two years for the discount you received on your phone. But, Verizon has been relentless in trying to get my fam to upgrade to smartphones and the REQUIRED $$$ data package. It has to be cheaper to buy a smartphone/internet device and then utilize free WiFi for internet and pay for the lowest voice package available.

Posted by: NovaMike | October 13, 2010 8:11 AM | Report abuse

Verizon is sewer scum. They deliberately omit "subscriptions" from what they block when you ask them to "block everything."
Boycott Verizon and do not pay them any more. No more contracts, which are a way to trap you and monopolize your business.
Hate Verizon. Thugs.
FCC, disallow two-year contracts, nonsense. I can decide what to buy, how much to pay for it, and how long I will patronize a business.
Dump Verizon.

Posted by: FloridaChick | October 13, 2010 8:29 AM | Report abuse

The source of the problem is the carriers' collusion in restricting all handset signals to their overpriced celtower service plans. The regulations must be changed to allow consumers to choose free Wifi as the preferred source of data on all phone handsets. Currently the carriers cripple the handsets' Wifi capabilities and prevent them from accessing Wifi without an overpriced and unwanted celtower data contract. Freedom from celtower signal dependence will free consumers from the telecoms' oligopoly. To achieve this, we must forbid carriers from branding handsets with their own irrelevant carrier name, and forbid the carriers' crippling of software and hardware capabilities like Wifi, bluetooth and notebook tethering. The goal is for every handset to use any software on any celtower. So far, HTC handsets and the Google Android operating system are our only hope for this cross-platform compatibility. Ideally every celtower should be mandatorily accessible to every user, every carrier and every handset. Each cel area would then need only one celtower, and finally the natural efficiency of the celtower system would be achieved. Then the carriers would be restricted to their sole true function: carrying signals from the source to the handset and back, without their current parasitical rent-seeking from the users or producers of the signals. True competition would ensue between carriers, and their current anticompetitive collusion would be broken. Let the Dark Tower of Barad-dur fall at last.

Posted by: Religulosity | October 13, 2010 8:31 AM | Report abuse

I marvel at some of the problems I read about. Why do people stay with Verizon? They are the worst - opting you into selling your info without letting you know they are doing this; not to mention the other horrors. I have had T-Mobile for the last 7 yrs and have found them to be honorable. Especially after experience with AT&T before - took 6 months and threat of notifying our AG in NY and the SEC to get the refund sent to us by FedEx. Needless to say I will never use AT&T.
I now have a Garminfone (free) with unlimited data ($30mo) and love it.

Posted by: knittingnutvi | October 13, 2010 8:38 AM | Report abuse

About effing time.

Posted by: mbrachman | October 13, 2010 8:55 AM | Report abuse

We had the same problems with SPRINT PCS for more than two years. When "Sprint data charges" averaging $20-$50/month first appeared in July 2009 I requested that Sprint block data access to all three of our basic (not Smart/data) phones.

One year later the charges begin re-appearing until I spent more than 30 hours with Sprint telephone and web representatives (often simultaneously) until Sprint realized I wasn't going away.

This is likely an industry practice of adding charges that customers will either overlook (did I really use my 1" screen to surf the web?) or give up after being stonewalled by Spring customer "service".

Posted by: 7720806 | October 13, 2010 9:00 AM | Report abuse

There sure seems to be an awful lot of "computer errors" lately. In a related
issue, another Post story said that banks are foreclosing on homes whose owners have their payments up to date or even finished.
Legal theft?

Posted by: patr1000 | October 13, 2010 9:03 AM | Report abuse

ATT absolutely ought to be investigated. Their billing system for data has no traceability, which is fine for them because that way they can claim to know nothing (that part is true) and insist it is right. And when issues do arise, the information they have the customer service agents provide has been laughably wrong, completely implausible, or seriously bad advice. (For example, the answer to phantom data use on the iPhone is to delete your iTunes account. A huge, destructive time waster to accomplish something that might or might not help, but in any case can be done a lot more easily than that.)

Posted by: pilgrim1629 | October 13, 2010 9:10 AM | Report abuse

Verizon, hmmm... aren't these the same guys who gave all of our phone records to the NSA a few years ago? Is anybody surprised that they engage in other sleazy practices? If so, you are naive. Do not do business with these people.

Posted by: ancient_mariner | October 13, 2010 9:11 AM | Report abuse

@ patr1000 - Don't get it twisted. There is no computer error here. Human greed, corporate greed is the problem here and it is not just Verizon pickin' them pockets.

Posted by: cymp65 | October 13, 2010 9:30 AM | Report abuse

This is the same FCC that sold out consumers when they approved the merger of XM and Sirius sattelitte radio. Why? One of the republican members from Tennessey was happy that XM had agreed to charge a music copyright fees so that money could come back to his state. BTW, this fee was designed not just for music but for ALL packages including news package. So whether they are republicans or democrats they eventually sell out the average American.

Posted by: upnorth85 | October 13, 2010 9:32 AM | Report abuse

Cell phone providers' errors are honest mistakes. The banks' back office failures for tracking who owns mortgages are honest mistakes.

If I fail to pay my bills due to an honest mistake, I get hammered.

So should the cell phone providers.

Posted by: Garak | October 13, 2010 9:34 AM | Report abuse

Greed Rules the Air!

Posted by: JAH3 | October 13, 2010 9:37 AM | Report abuse

"Software glitch???" Baloney. I have had at least 3 of these charges on my account with Verizon Wireless over 2 years. I called Customer Service at Verizon on all three. Each time I was told that it was Verizon's policy to bill the charge even if it was accidental. That does not sound like a glitch to me.

Posted by: mpast | October 13, 2010 9:53 AM | Report abuse

Cell companies, all of them, utilize confusion as part of their general strategies when ever revenue or cost are involved. An example: My son has worked as senior level account manager for one of the major cell companies and their commission formula is so convoluted that a great number of sales people are never paid for their activations. Each month he would have to call to his boss's attention that his paycheck was incorrect, that he was shorted. After a year of having to repeat this process each and every pay period he designed a simple software application that cut through all the confusion. Now he simply sends a copy to his boss every month and to payroll. He told me everyone he knows in sales complains about being shorted and he has no doubt the commission plan is such that it is nearly impossible for the field sales people to know whether or not they're being paid in full what they're entitled to and what they've earned. They tell my son it's not worth the effort to pursue because they have to do it every month...

All of these cell companies operate the same way...much similar to how car salesmen leverage many aspects of an auto purchase to generate commissions (finance charges, prep charges, varying trade-in values, extended warranties, etc).

Cell companies know what they're is in glitch my a$$. And since cell companies are constantly hiring from their competitors, they all understand the strategies and tactics.

Confuse customers so you can abuse them without them knowing what is happening...

Posted by: fredpierce | October 13, 2010 10:27 AM | Report abuse

I stop using a cell phone ten years ago when the customer service representative could not tell me the amount of my printed bill after three WRONG guesses. They don't even know how they bill you.

Posted by: georgethorntonii | October 13, 2010 10:28 AM | Report abuse

Allowing wi-fi-enabled phones to work wi-fi without cell-tower abilities is the most important reform possible. Another reform would be to prevent femtocells, which use your own internet, from charging you as if you were using a tower, even when you are not. AT&T's data usage *DATA# returns information which is not easy to interpret either, since they want to charge by gigs but the figures returned to you are in some other base, not explained. I'm going to have to go to an AT&T store to ask the salesmen what it all means. Total confusion.

Posted by: funfun881 | October 13, 2010 10:36 AM | Report abuse

Some want to boycott Verizon, others AT&T. Well, I have had Sprint, Verizon, and AT&T, and I can tell you that none of them are good. It's another example of the failure of the regulating agencies to do their jobs, and another example that it is easier to buy a Congressman than provide good service.

Posted by: hugmekatie | October 13, 2010 10:40 AM | Report abuse

Funny I was experiencing a software glitch with T-Mobile just yesterday. Trying to remove the duplicate phone numbers from my phone book that always happen when the battery runs down and it wants to sync to what they have stored. When I called I was told that you can't access the system unless you have a PC??? Then I was told there must be a glitch with their software when I asked why it is that I can change my phone service with a MAC but I can access the online phone management system? They are all a bunch of sleaze bags IMHO.

Posted by: edeckel | October 13, 2010 10:53 AM | Report abuse

I don't think that the FCC has the power to regulate cell phone companies. They may have this "Power" on paper, but not in real life. The Cell companies will give them bits and pieces, a little at a time to placate them, but drastic change is something that will not be allowed by them. They make too much money (hundreds of Billions per year each) to suffer regulation by bureaucrats. They have legions of lawyers to 'handle' the situation too.
They are in control, not the FCC.
Don't believe me? Wait and see how this turns out and remember this comment.

Posted by: realneil | October 13, 2010 10:55 AM | Report abuse

What the FCC ought to probe are the outrageous taxes that are tacked onto every cell phone bill. In many jurisdictions, they amount to more than 20% of the total bill.

Posted by: MdLaw | October 13, 2010 10:57 AM | Report abuse

I have at least 4 times in the past few years noticed data charges on my Verizon bill. Since I use my wireless phone solely for voice functions, I call regularly to remind them that they agreed to but a block for any data transmissions on my phone. Each time they gladly respond. Then a few months later I'll receive a text message from...guess who...Verizon! Only Verizon. I don't text and make sure everyone I talk to knows texting is blocked on my line. It's worth it to check out bills each month.

Now, can we talk about the 20% "tip" for "fees and surcharges" above the cost for our plan?????

Posted by: Rivery | October 13, 2010 11:10 AM | Report abuse

We have a Tracfone and Net10 (also by Tracfone). I buy a year's service for $150 and that's all. I have excess minutes left at the end of the year.

Posted by: thormon | October 13, 2010 11:17 AM | Report abuse

One of the "great mysteries" to me is why, when I don't have a connection to the internet on my phone, (Didn't ask for it, don't want, or read, text messages sent to me, don't intentionally connect to the internet and have my phone set to ask me before it connects, which I deny the phone from doing.) I still get charges for data sent/received by my phone?

I don't understand how a phone, that's preset to ask, before connecting to anything other than voice usage, should I get charged for this "service?"

Posted by: helloisanyoneoutthere | October 13, 2010 11:29 AM | Report abuse

Verizon is absolutely the very worst. The fees are too high to start, then they add anything and everything they can. Their customer service is the worst in the industry.

Posted by: citigreg | October 13, 2010 11:32 AM | Report abuse

Nothing will happen. In the U.S. no laws are ever broken or anyone prosecuted in large Corporations, or if your ultra rich.

Posted by: Impeachbush99 | October 13, 2010 11:55 AM | Report abuse

Cell phone corruption is rampant and the Government looks the other way. The nonsense about false charges is only compounded with the bizarre rules concerning access, data, load limits and taxes.

Cell phones provide a gravy train for the corrupt officials that manage and govern. These corrupt practices are designed to confuse and rip off the public.

Profits are soaring and the profit stream is legitimized by convoluted contracts and governmental participation.

Phones are kids' toys and they will bear any price for music and idiot texts. Taxes are governmental toys. Read your bill and wonder why they all join this scheme to get your money.

The FCC and politicians need to be investigated. Let the new politicians respond. You will hear silence! Neither party seems capable or interested in real change!

Posted by: OldTimeThinking | October 13, 2010 12:00 PM | Report abuse

Finally, the FCC is going to begin at least a token effort towards fulfilling their mandatedresponsibilities. They have been in bed with the phone industry since Reagan's GE-inspired 'Get Government off business's back' campaign of undoing the safeguards installed by FDR in the Thirties. Let's watch and see how far they take this, or if they're still subservient to a corrupt industry.

Posted by: JONWINDY | October 13, 2010 1:33 PM | Report abuse

Regulators want to regulate (do their job) and the industry is against it. So what else is new?

Just wait until after the next elections. If the Corporations Party wins a majority in Congress, things will only get worse.

Posted by: bata4689 | October 13, 2010 2:16 PM | Report abuse

“I'm shocked — shocked! — to find that gambling is going on in here!”
—Captain Louis Renault

Posted by: 54Stratocaster | October 13, 2010 3:44 PM | Report abuse

How about reducing some of those $25 per month in government fees I've got on my bill every month? "Cost Recovery Fee??" How about just "Federal Tax" instead so we all know exactly what it is.

Posted by: dnara | October 13, 2010 4:59 PM | Report abuse

You can kiss regulatory oversight goodbye if Republicans are elected. They could care less if you get screwed by some corporation.

Posted by: donquixote3 | October 13, 2010 6:01 PM | Report abuse

This is just American Politic at it worst I mean best, or what ever, The American Public
these day seem not to have a true voice in Washington DC, ANYMORE. That is sad.

Posted by: adamsconsultinginternational | October 13, 2010 6:23 PM | Report abuse

Looks to me like the big names are looking for any excuse not to have to deal honestly with the public..."The wireless trade group CTIA has argued against the FCC's proposals. It says alerts could lead to confusion" Please explain how being told exactly what's happening with your phone re. roaming, data, overages, etc is going to lead to confusion. All it will lead to is the public being on top of their costs and the confusion will be that of the carriers,wondering where all their easy profits disappeared to!
All this leaves you wondering how it is that prepaid providers, such as Net10, can offer no roaming fees, bills, hidden fees, etc while still having to buy their airspace from these big names and can STILL manage to offer unlimited everything for $50-a considerably lower price than the carriers.
I suppose now we just wait to see whether the FCC actually comes through for the general public!

Posted by: wayup | October 14, 2010 7:55 AM | Report abuse

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