By Jennifer LeClaire / CIO Today. Updated November 22, 2013.
Three wireless behemoths -- AT&T, T-Mobile and Sprint -- have at long last agreed to stop charging smartphone users everywhere for so-called premium text messages, also known as PSMS. Attorneys general from 45 states are calling it a major breakthrough in the battle against mobile cramming.
Forty-five states, led by Vermont, with Delaware, Florida, Maryland, Oregon, Texas and Washington, have been engaged in discussions aimed at stopping the practice of mobile cramming, an industry term for unauthorized third-party charges that appear on mobile telephone bills. This is good news, considering that PSMS accounts for the majority of third-party charges on cell phones and for the overwhelming majority of cramming complaints.
Stopping Scam Artists
“This is a victory for cell phone users in Vermont and across the nation. While PSMS has some benefits, like charitable giving, it is also a major contributor to the current mobile cramming problem,” said Vermont Attorney General William Sorrell.
“We are pleased that AT&T, Sprint and T-Mobile have decided to stop the flow of money from the pockets of ordinary people to the bank accounts of scam artists," he said. "We’re hopeful the other carriers will soon follow their lead. There is still much work to be done. My office will continue to work with other states for industry reforms and to recover money for consumers victimized by cramming.”
Sorrell also urged all mobile phone consumers to review their monthly bills to make sure all charges are legitimate. He said consumers who believe their mobile phone bills contain improper or unauthorized charges should call their carriers and ask for refunds.
A Maturing Industry
What’s the big deal, really? According to Sorrell’s research, cramming on cell phones and landlines costs Americans about $2 billion per year. In May, Sorrell released a survey showing that 60 percent of third-party charges placed on the mobile phone bills of Vermonters were unauthorized, or “crammed.”
AT&T, Sprint, and T-Mobile are the second, third and fourth largest providers of mobile telephone services nationwide. Two carriers have confirmed they will continue to allow charitable donations to be billed via PSMS. But what about Verizon Wireless? Verizon is also shutting down PSMS.
“While we don’t agree with all of the attorney general’s allegations, we respect his efforts in this area,” said Verizon general counsel William Petersen. “Verizon had previously decided to exit the premium messaging business because of these changes as well as recent allegations that third parties have engaged in improper conduct in providing premium messaging services to our customers. We are in the process of winding down our premium messaging business.”
We turned to telecom industry analyst Jeff Kagan to get his thoughts on what the attorneys general call a breakthrough. He told us, quite simply, this is the way business operates.
“Businesses charge for services until the marketplace decides it wants another arrangement. That's what happened here,” Kagan said. “The purpose of business is to make a profit. The purpose for the consumers is to pay as little as possible. They come from two different directions. This is a sign of maturing of the industry.”