Cramming of Unauthorized Service Charges, Membership Fees, Subscriptions or Payments on Bank Accounts, Credit Cards or Telephone Bills Fraud
Cramming, the number one telemarketing scam of 1998, refers to putting unauthorized or nonexistent telecommunication or service charges on your credit card, bank account or phone bill.
Con artists have found the telephone billing and collection system to be a fertile area to defraud consumers. Taking advantage of changes in the telecommunications industry that began years ago with the break up of AT&T, these cons arrange to put charges on consumers' phone bills for services that were never ordered, authorized, received or used.
Sometimes a one-time charge for entertainment services will be crammed onto your phone bill. Other times it may be a recurring monthly charge. Cramming of recurring charges falls into two general categories: club memberships, such as psychic clubs, personal clubs, or travel clubs; and telecommunications products or service programs, such as voice mail, paging, and calling cards.
The charges may just appear on your phone bill as a charge for either a regular long distance or a collect telephone call. People who receive these bills have no way of knowing that the charges are actually for a sex line or psychic line and not long distance or collect calls so they pay without ever realizing.
Automated Phone Number Capture
Anyone capable of capturing a consumer's telephone number can cause charges for a product or service to be included on that person's phone bill. Using Automatic Number Identification (ANI), a system similar to "caller ID," they can capture the phone number from which a call to the party originates. Thus, the only thing needed by scam artists that have ANI is a method of inducing you to call them.
You don't even need to divulge credit card or other account numbers in order to be billed. Similarly, phone numbers can be obtained, without high-tech equipment, through purported sweepstakes that require a phone number on an entry form, or even through simply drawing numbers at random from the telephone directory.
It is not possible for the owner of the telephone line to block telephone number capture through ANI on calls that they themselves or others place from their phones, and it is not possible to prevent others from access to their phone number. The person placing a call or otherwise providing a telephone number may not even be you.
Shortly after the introduction of 900 numbers, this technology was used by unscrupulous operators to deceive and defraud consumers. Once the call was placed, they were billed for the alleged service or information and the unwitting victim often had no means to contest the charge. In many cases, they never even received the promised information or service.
Here are some common ways crooks get your phone number and cram charges onto your bill. You may never get the service —just the bills.
800 Number Calls. You call an 800 number advertised as a free date line, psychic line or other adult entertainment service. A recording prompts you to give your name and to say "I want the service," or some similar phrase, to get the advertised free service. You may have no opportunity to speak with an operator or ask questions, but you are automatically enrolled in a club or service program. The phone number from which you call is captured and billed. You often never get the "free" service you called for, or the service you're billed for.
Sometimes a recorded voice directs you to press one or more specific keys on your phone to be transferred to an adult entertainment or chat line. If you do, you are connected to the service of your choice but the charge for the service then appears on your bill as an international long-distance call.
Contest Entry Forms. You fill out a contest entry form, thinking you're entering to win a prize. In fact, some unscrupulous promoter is using the contest to get your phone number, enroll you for a calling card or some similar service, and bill you on your phone bill. The disclosure on the entry form, which is very difficult to comprehend and in very fine print, says that by completing the form you agree to pay $4.95 a month for the company's services.
Direct Mail Sweepstakes. You receive a sweepstakes promotion in the mail that tells you to dial an 800 number to enter or claim your prize. When you call, a recording follows an automated script to enroll you in a club or service program. The phone number from which you call is captured and billed. Once again, the disclosure on the sweepstakes mailer is very difficult to comprehend; is in very fine print, or is a "negative option" billing, so unless you respond to refuse, they sign you up.
"Instant" Calling Cards. Someone may use your phone to call an 800 number for an adult entertainment service, and be offered an "instant calling card." The "calling card" isn't an actual card, but is rather an access process linked to the phone number from which the call was placed, whether or not they are made from your phone.
Dating Service Calls. You call an 800 number advertised as a way to meet local people for free. You're told your date will call you back, or you're asked to enter a code to be "teleconferenced" with your date. What you're not told is that you'll be charged a hefty fee for your conversation with your date.
International Calls. Some ads for adult entertainment services tell you to call a number starting with 011, 500, or another unfamiliar area code. The ads don't explain that these numbers are for expensive international calls, and that the entertainment provider is making money every minute you stay on the line.
"Free Minutes" Deals. You may see ads promising "free time" for a date line, psychic line, or other adult entertainment service. When you call, you're put on hold but told that you won't be charged for this time. Sometimes, the "hold time" is deducted from your free minutes. In fact, you may be billed for some of your hold time as well as your talk time.
Hurry Up and Call
You get an e-mail, fax or even a call on your pager which says to call this number immediately, there's been an accident or sickness in your family, or outstanding bills you owe are past due, but it turns out to be just a mix-up when you call.
While connected you get a lengthy recorded message or person pretending not to understand what the call is about so as to keep you on the phone longer. You are actually being billed for the call at anywhere from $6.99 - $25 per minute. It pays to ask the operator for the location of any strange number prior to calling.
Cell Phone Spamming Becomes Indirect Cramming
Cell phone users in Tokyo are regularly bombarded with hundreds of unwanted e-mail messages as well as the newest mobile come-on: the one-giri spam scam.
One-giri is Japanese shorthand for computers that dial numbers randomly, ring once and hang up. The callers - usually dating services that phone thousands of numbers randomly - are themselves not charged because no one picks up but the incoming call leaves a phone number on the receiver's handset.
Curious to see who called, unsuspecting Japanese redial and get an offer such as "press 1 if you want to meet a friend, press 2 if ..." which they generally rush to refuse, lest they run up extra charges.
NTT DoCoMo, which runs the market leading i-mode service, processes 950 million cell-phone data messages a day, yet a staggering 85% of them are sent to nonexistent addresses, most by computers that randomly generate numbers and send messages searching for active accounts.
The company, which will spend $8.7 million this year to block unwanted bulk mail from entering its servers, says one-fifth of the 30,000 complaints it received in October were about annoying e-mails.
In addition to suffering bad public relations, the carriers are seeing their network computers overload and the slowing of transmission times as shady programmers continue to develop algorithms sophisticated enough to bypass server walls and create lists of valid addresses that can be resold.
While Japanese cell-phone providers are urging users to change their addresses frequently and to refuse to return calls from unknown numbers, people are still spammed on a regular basis at their own expense.
This digital epidemic will soon spread beyond Japan's shores as DoCoMo is preparing to introduce its i-mode network in Europe.
All the Wrong Places
Looking for companionship you decide to try a service advertised in the newspaper as a "free matching" service with "local singles". You are urged to call a toll-free number. When connected they ask you where you are calling from and what sort of person you want to meet. They tell you that they will have a "local single" return the call, then hang up.
Shortly thereafter, you begin receiving return calls, often many, over the course of several days from the services' employees posing as "local singles." They do not disclose in the first call, or during any of the return calls, that there is to be an amount charged, contrary to the advertising claim that the service is "free".
Nevertheless, when you later receive your phone bill, you are shocked to find exorbitant charges —described as collect or direct calls from a number in Florida, England or some other distant locale —billed to your telephone number at the rate of about $4 per minute. In a number of instances, the bills have reflected two calls allegedly occurring during overlapping periods of time to the same number.
Many people were charged hundreds of dollars on their phone bills for one company's audio entertainment service delivered through return calls. In many cases no initial call to the service was ever made and even those who did call are generally shocked and surprised to find these unexpected and substantial charges on their telephone bills.
They may even provide a toll-free 800 number on your phone bill, ostensibly for you to call with complaints or questions. However, when you call this number you find it difficult to reach a representative.
You may reach only a recorded message telling you that if you need to speak to a representative you will have to try back later because all operators are busy. Or you may be put on hold for long periods of time. In fact, you could easily spend several hours over a period of several days simply trying to reach a person who can answer questions about the charges on your phone bill.
When you finally succeed in reaching them, they tell you that you are legally responsible for the charges, regardless of who, if anyone, ordered and received the service in question.
In many instances, they initially refuse to credit your account, even though you have neither ordered nor authorized an order for their services. In some cases, they will issue a credit to you only after the intervention of your phone company or government authority.
Ordering You Around
You receive an e-mail informing you that your order has been received and processed and your credit card will be billed for charges ranging from $250 to $899. The trouble is, you haven't ordered anything. The e-mail advises you that if you have questions about your "order" or want to speak to a representative you should call a telephone number in area code 767. You don't realize that the area code is for Dominica, West Indies, because no country code is required to make the call.
You call expecting to speak to a representative about the erroneous "order" but are connected to an adult entertainment audiotext service with sexual content. Later, you receive telephone charges for the international, long-distance call.
Callers to one number are led to believe they are talking to a live person, but in fact it is a clever recording that responds to the caller's voice. Among other things, an irate-sounding man with a British accent warns, "Your check will come round or we'll come round to get it." The recording seems designed to keep callers on the line as long as possible, and is reportedly billed at $25 per minute.
Others reported that this "man" with a British accent kept telling them to hold on while he picked up other phone calls and supposedly yelled at his staff. He continued to yell at the callers as well, saying "send the money," and yelled into other ringing phones as long as the callers remained on the line.
"This scam used low-down tactics and high-tech tools to rob consumers in their own homes," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection.
They contacted people using bulk e-mail —commonly known as spam —using inactive return addresses which prevented you from refuting the orders by e-mail.
Note: A viewer has indicated that this particular scam event is actually an urban myth that never really occurred, except in the mind of the initial storyteller. Should anyone wish to dispute this claim please write so that it is not unintentionally perpetuated.
