Courtesy of Florence Klein, Founder, SilverPlanet.com

We wrote about phone cramming almost a year ago, but it’s as big a problem now as it was then—and it’s growing more complex. Cramming happens when a third party places unauthorized charges on your telephone bill. But the charges aren’t always simple to decipher. The bill might include the name of a payment processing firm you don’t recognize that is actually helping third-party vendors collect money from you.  

It happened to a Duluth, Minnesota, woman who in January found an unexplainable $20 charge on her bill. After making some calls, she found out one of those firms was passing on a charge for a service that “allows you to have private direct contact with celebrities,” she told Minnesota Public Radio. “That’s about the last thing in the world that I would have possibly signed up for.”

The Washington Post pointed out a different scheme that involved a toll-free number Toyota had given regarding its recent recall. A wire service printed the number with one wrong digit. “By then, a crammer had already set up a scam,” the Post wrote. “Consumers who dialed the wrong number were asked by an unidentified voice to hand over their personal information, such as their social security number, and for permission to add a $4.95 charge to their phone bill.” People gave the information, thinking they were talking to Toyota.

Then earlier this month, the Federal Trade Commission (FTC) exposed a highly lucrative cramming operation that billed thousands of consumers and small businesses for services they never agreed to buy—raking in $19 million over five years. An Internet services company called Inc21 and its affiliated companies sold Internet services, including Web site design services, Web site hosting, Internet directory listings, search-engine advertising, and Internet-based faxing, for charges ranging from $12.95 to $39.95 a month.

The FTC alleged that the defendants hired offshore telemarketers to call prospective clients. Sometimes the telemarketers offered a free trial, without explaining that consumers would have to take certain steps to avoid charges. In other cases, the telemarketers said they simply were calling to verify their business contact information. Inc21 used companies called third-party billing aggregators to help them get the charges on the phone bills; those aggregators contracted with the phone companies.

Inc21 used a series of names, including Global YP, NetOpus, Metro YP, JumPage Solutions, GoFaxer.com, and FaxFaster.com.

Crammers, says the Post, are “using sophisticated marketing techniques (and) launching their schemes from overseas to try to escape the purview of U.S. regulators.”

In the first quarter of 2009, the FTC received about 3,000 complaints about cramming. But the number of actual offenses is likely higher because the charges are usually small and can slip by unnoticed. Bottom line, read your phone bill every month, and don’t let any unrecognizable charge go without question.