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The Outrageous Ways Your Phone Company May Be Stealing from You

A growing number of scams are being perpetrated on telephone and Internet customers. Think you can easily identify bogus charges on your bill? Good luck.

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In May 2010, Silv Communications, a Los Angeles based interexchange carrier that routes and processes Internet telephone services for small businesses, was fined $1.4 million for deceptive practices. According to the complaints submitted to the FCC, Silv telemarketers, who claimed to represent AT&T, offered respondents a deal they couldn’t refuse -- they only had to switch to another long-distance provider.

In 2008, the FCC imposed a $5.1 million forfeiture action against Las Vegas-based Horizon Telecom for slamming. Earlier, in 2005, Sprint agreed to a $4 million FCC consent decree to resolve a slamming investigation.

“Sliding” is a form of slamming. It takes place when a phone company uses a customer's request for a change in service to add, change or “slide” the customer to an unauthorized telephone service. For example, a customer may request to change their long-distance service provider. When the customer receives their telephone bill, they discover that their regional toll service was also changed, but without the customer’s permission.

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Ramming, a term coined by Bruce Kushnick, is the biggest and most unknown of these scams. It takes place when an existing phone company customer is put on a package that s/he did not need or want or cannot even use. The customer is usually offered a special price discount that has nothing to do with the actual costs a customer pays. Three examples from New York small businesses who are Verizon customers illustrate how the scam works. (The companies’ phone bills were audited by Teletruth.)

  • A local fruit and vegetable grocer was put on an international calling plan along with unlimited local and long distance calling plan, but made no calls. The overcharging came to $750 annually.
  • A 24-hour grocery store with only one phone line was put on a plan promoted as an “unlimited toll call” package that included caller ID and voice mail. Unfortunately, the grocer did not have a caller ID-capable phone (and didn’t order the package), nor did the grocer know what a “toll call” meant. The store only needed “basic” POTS (i.e., plain old telephone service) and was overcharged $52 a month.
  • A local deli has a two-line service. One line is dedicated to an ATM machine but was bundled with four different transaction packages, including two “Centrex” services with features that were never turned on and couldn’t be used on an ATM line. The second line was an unlimited package for local, long distance and toll calls as well as two packages of calling features. The customer never ordered any of these services and the overcharge was $72 a month -- and this racket went on for six years!

Ramming is not limited to small businesses. Larger companies, non-profits, school boards and municipalities are systematically ripped-off up to $20,000 to $50,000 a year. An audit of a Washington DC telecommunications firm found over $10 million in missing lines and other overcharges.

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Be wary of the too-good-to-be-true gimme, as it usually is a come-on for ramming. One of the more annoying features of a gimme is when the customer orders a service and they learn they were not told the truth about the total costs. On an average advertised plan, the difference can be 20-50 percent more money for the service in addition to a litany of one-time charges that were not discussed in detail or itemized when the customer purchased the plan.

Another annoying feature takes place when the customer purchases something offered as a special promotional offering and doesn’t realize that it expires in 30 days to one year. Most often, such a special comes with unstated price hikes up to 50 percent that kick in when the offer expires. One of the newest scams is shifting customers from traditional “month-to-month” plans to “contracts” that obligate them to one-, two- or three-year agreements; if one “breaks” the contact, one incurs exorbitant penalties.

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