AT&T under fire for enabling phone bill "cramming" - Action News 5 - Memphis, Tennessee

AT&T under fire for enabling phone bill "cramming"

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MEMPHIS (WMC-TV) - A Tennessee state senator wants an attorney general investigation of AT&T's "third-party" contracts.  

Sen. Doug Jackson, (D) Dickson, told Action News 5 the contracts enable scam artists to "cram" consumers.

"Cramming is when services have been 'crammed' -- or added -- to your telephone bill that you have not authorized, you don't use and you don't want," said Sara Kyle, chairman of the Tennessee Regulatory Authority (

AT&T contracts with "third-party" service providers in order to allow its customers who want those services to have them charged directly to their AT&T bills.  Spokesperson Cathy Lewandowski said the contracts are designed to provide AT&T customers the convenience of one bill for several services.

But in May, an Action News 5 investigation revealed an unidentified East Tennessee individual "hacked" into a Collierville woman's AT&T bill through a third party billing service.

Diane Lofink discovered for two months, her 93-year-old mother Ruth's AT&T bill had accrued a $15 monthly fee plus taxes from Residential EMAIL, a Henderson, NV, based Internet service that is one of AT&T's third-party partners.

"My mother doesn't know anything about computers," said Lofink, who manages her mother's affairs.  "She doesn't own one, and she wouldn't even know how to turn one on if she were presented with one."

Kyle said Ruth (we will not use her last name) was vulnerable because her full name and phone number were listed, both in the phone book and online.  The hacker, who has yet to be identified, took advantage of AT&T's third-party billing contract with Residential EMAIL to apply for the service in Ruth's name.

"For them to be able to use as a portal of their scam the bill from a company like AT&T is beyond belief," said Sen. Jackson.  "It's about the money, not consumer convenience. AT&T is using their credibility to perpetuate a scam."

After learning about Action News 5's investigation -- and after several complaints from other constituents alleging similar problems with their AT&T bills -- Jackson said he requested a meeting with Tennessee Attorney General Bob Cooper to discuss regulating or prohibiting AT&T's agreements with third-party billers. 

Cooper's spokesperson Sharon Curtis-Flair confirmed the two met to discuss the senator's concerns.

"While this Office is not able to confirm whether it is investigating a particular entity, we are concerned about the allegations and urge Tennesseans to carefully check their phone bill to ensure that they are only charged for items they have approved," said Cooper in an e-mail.

"These companies are - by contract - obligated to submit only true and valid charges," said Lewandowski.

But an Action News 5 review of the application made in Ruth's name to Residential EMAIL reveals several lapses in the company's verification process:  a 1987 birth date, no maiden name (despite the company's requirement of one), a birthplace that is nowhere near where she was born and a computer IP address, despite the fact that Ruth has never owned a computer.

"Everything they had was absolutely wrong and totally out of the ballpark," said Lofink.

Residential EMAIL has a F-rating with the Better Business Bureau.  The bureau has logged 31 complaints against the company in three years -- 19 for billing and collection problems.

Its general counsel, Daniel J. Barsky, did not answer Action News 5's e-mail request for an explanation. 

But in a letter Barsky sent to a third-party billing clearing house, Barsky says, "...we too are victims of these unscrupulous fraudulent sign-ups and spend a substantial amount of resources combating such sign-ups, handling customer complaints and processing cancellations and refunds."

In a follow-up, Lewandowski issued this statement by e-mail:

"While we do not discuss specific vendor relationships, AT&T provides specific and detailed guidelines to third-party providers regarding their interaction with AT&T customers and AT&T's contracts require those companies to submit only valid charges. AT&T continues to take positive and aggressive steps against any alleged cramming.  For companies and their customers, telephone bills provide a convenient way to arrange payment for a variety of services. 

AT&T encourages customers to carefully review their bill each month and follow these important tips:

  • If a customer believes he or she has been charged incorrectly, the customer should contact the third party listed on the AT&T statement.
  • AT&T encourages its customers to call the numbers listed with third-party charges on their bill. If customers are not satisfied with the actions taken by third-party service providers, the customers can then call AT&T customer service.
  • AT&T also encourages its customers to visit for additional tips on account security topics including cramming."

To their credit, both AT&T and Residential EMAIL worked together to fully credit Ruth's phone bill and eliminate the service.

Lofink has since done what everyone should do -- she pays the additional $5 a month fee to have her mother's name and AT&T phone number unlisted. 

She's also arranged a free third-party billing block on her mother's land-line and on her own land-line so that a third party cannot charge their phone bills without their password-protected authorization.

Kyle said there are other ways your phone bill can be crammed:

* You receive a notice that you've won a prize.  To collect, you must endorse the enclosed check.  If you endorse the check, you are signing a contract to add services to your phone bill.  Read the print on the back of the check.

* A telemarketer calls and tricks you into giving positive or "yes" responses to a series of questions.  The telemarketer is recording the call.  Strange services start showing up on your bill.  When you call to complain, the telemarketer produces your recorded "yes" responses as proof of your consent to the charges.

* You click on an Internet pop-up that's made to look like a command from your computer to restart or to activate anti-spyware software.  It's actually a trick to obtain your online consent to cram your phone bill.

If you are crammed, first call your phone company, then the company whose service has appeared on your bill.  If they do not drop the charges, contact your state agency that regulates telecommunications:

Tennessee:  The Tennessee Regulatory Authority (

Mississippi:  The Mississippi Public Service Commission (

Arkansas:  The Arkansas Public Service Commission (

Copyright 2009 WMC-TV. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.






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