The FTC has taken an increased interest in mobile cramming (the placement of unauthorized third-party charges, such as for ringtones, on consumers’ mobile telephone bills) in the past few months. Despite industry self-regulation through the Mobile Marketing Association’s U.S. Consumer Best Practices Guidelines, which establish industry-wide standards to protect consumers (such as requiring that consumers twice consent to charges), some believe mobile cramming is on the rise.
Most recently, on May 8, the FTC hosted a roundtable on the topic, gathering consumer advocates, government regulators, and industry representatives to explore how mobile cramming occurs and current and possible strategies to reduce the problem. Among the points of disagreement that emerged between the panelists were the scope of mobile cramming and how to measure the problem, as well as the need for government-imposed regulation. The lack of consensus on the former issue is particularly significant because how one thinks the problem is “solved” is determined largely by how one measures and views the scope of the problem.
Various panelists representing consumers and government entities expressed concern about the scope of mobile cramming, including that individuals do not understand that they can be charged for third-party goods and services on their mobile telephone bills and that charges appear on bills without consumer authorization. The Senior Vice President and General Counsel of CTIA, an organization that represents the wireless communications industry, countered the evidence that was cited, stating that he had not seen “a spike or a trend in complaints” to certain agencies which reflects that mobile cramming is a “growing problem,” even with the increased adoption of smartphones.
An Assistant Attorney General at the Office of the Vermont Attorney General expressed concern about using complaints and refund rates to measure the scope of the problem. The General Counsel of CTIA also expressed concern with the use of refund rates to reduce the problem, but for another reason: carriers may be very generous with providing refunds and extending refunds over a period of months, thereby increasing their refund rate. Another panelist criticized the use of refund rates to reduce mobile cramming as premature.
Another interesting, yet expected, topic of disagreement was the need for government-mandated regulation. The mobile business is fast-changing and continually evolving, counseling caution in imposing rigid rules that solve today’s problem but not future unforeseen problems. The General Counsel of the Mobile Marketing Association and the General Counsel of CTIA generally expressed these concerns. Other panelists, though, indicated that government-imposed rules are necessary and that self-regulation has proven insufficient.
While the panelists did not agree on every topic of discussion, one thing was clear. As stated by the General Counsel of CTIA, “Nobody wants unhappy consumers, consumers who have been misled, [or consumers] who haven’t consented to the services that they receive and are charged for.” Agreeing on that proposition is easy; figuring out the means and methods to achieve those things is hard.
The FTC concluded the workshop by announcing that they will write a report on the workshop (as they did for a recent workshop on mobile payments) and continue to monitor developments in the area and to bring enforcement along the lines of the case it recently filed against Wise Media, LLC.