Thursday, March 11, 1999

For Immediate Release	CONTACT:	Cleo Manuel, ext. 114
3/11/99		Holly Anderson, ext. 116
		(202) 835-3323

FOR IMMEDIATE RELEASE

Dialing for Your Dollars:
NCL Supports FTC Action and Urges Beefed-up Protection from Telephone-billed Fraud

WASHINGTON, D.C. (MARCH 11, 1999) The Federal Trade Commission's "Pay-Per-Call Rule" must be revamped to stem the tide of telephone-billed fraud, according to comments filed on March 10 by the National Consumers League. Con artists have exploited loopholes and gaps in the Rule to make fraudulent charges for calls to information and entertainment services. In its comments, NCL also noted the rise of unauthorized charges voice mail, paging, calling cards, and other services, a practice known as "cramming." The FTC has proposed to make major changes to the Rule to address these problems.
"We're seeing terrible abuses of the telephone billing system," said Susan Grant, Director of NCL's National Fraud Information Center, a hotline for consumers to get advice about telephone solicitations and report suspected telemarketing fraud. Cramming was the #1 complaint to the NFIC last year and disputes about pay-per-call charges ranked #8.

NCL provided the FTC with several examples of consumers' complaints, including:

• A California man who responded to a message on his pager to call an 888 number. He got a recording, was put on hold for four minutes, and later received a bill for $45;
  
• A Massachusetts woman received a bill for 900 calls she never made and that should have been impossible to make because there was a 900 number block on her phone;
  
• A Michigan man received bills totaling $386 for 800 number pay-per-call services he never called. The company told him he would have to pay $5 per minute to dispute the charges.
  
• A North Carolina man was charged $20 per month on his phone bill for Internet services he never requested. He doesn't even have a computer.
  
• An Illinois man was charged for three 19-minute collect calls from Florida by an adult entertainment provider, but no one in the house had accepted the calls.
  
• A North Carolina woman's 13 year-old daughter called an 800 number advertised for a music hotline, but the call was switched to an international number, resulting in a $1,200 phone bill.

NCL also agrees with the FTC's proposal to bar pay-per-call services from being offered through international or other numbers that result in toll-charges. Because the cost of toll calls depends on the consumer's long-distance plan and is not set by the pay-per-call service provider, as the charges for 900 number and 800 number pay-per-call services are, it's impossible to advertise what the services will cost. And it's not feasible or fair for consumers to have to block toll-calls from being made from their phones.

To curb the cramming problem the FTC is proposing that the Rule should cover any telephone-billed purchase (other than for regular local or long-distance service) and that vendors must get "express authorization" from consumers in order to place charges on their bills. For recurring charges, a written agreement and PIN would be required.

Ms. Grant noted that, "One hundred years ago when the League was formed, no one could have imagined the services that are available today by telephone, the many different ways that consumers can pay for them, and the technology that makes it all possible. Now we've got to catch up with technology to protect consumers from abuses of the telephone billing system."
NCL's comments to the FTC can be found on its www.nclnet.org and www.fraud.org web sites.

Relevant charts:
Yearly totals of cramming and pay-per-call complaints, 1992-1998
Breakdown of cramming reports
Breakdown of pay-per-call complaints

For more information, write the National Consumers League at 1701 K Street, N. W., Suite 1200, Washington, DC 20006; 202-835-3323.

The National Consumers League, founded in 1899, is America's pioneer consumer organization. NCL's three-pronged approach of research, education and advocacy has made it an effective representative and source of information for consumers and workers. NCL is a private, nonprofit organization representing the consumer on marketplace and workplace issues.

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