A recent U.S. Senate investigation has found that unauthorized phone charges might be costing American businesses and individuals up to $2 billion per year, and Springfield-based O’Reilly Automotive Inc. is among the companies speaking out.
The business practice among telecommunications firms known as “cramming” allows third-party companies to provide and charge for services not requested by customers, according to the Federal Trade Commission.
U.S. Sen. Claire McCaskill, D-Mo., a member of the committee investigating the issue, recently questioned Walter McCormick, president and CEO of the U.S. Telecom Association, on Capital Hill about the practice. McCormick testified that AT&T alone made an estimated $50 million a year from charges made by third-party companies.
“(Phone companies) are clearly making a boatload of money off of this,” McCaskill said in the July 13 hearing.
Jeanene Asher, director of communications for Springfield-based O’Reilly Automotive Inc., said the company, which has more than 3,600 stores in 39 states, was approached by a member of McCaskill’s staff to offer its perspective on the billing practices. Asher said O’Reilly currently has three full-time employees whose jobs are devoted solely to rooting out unauthorized phone charges. She estimated that those employees have spent roughly 26,000 hours during the last 10 years on this issue at an additional overhead exposure of about $400,000.
She said she believes the company has lost at least $200,000 on cramming charges alone. When O’Reilly purchased CSK Auto Inc. in 2008, she estimated it lost more than $300,000 to unnecessary phone charges during the last 10 years.
She said CSK did not have staff devoted to reviewing its phone bills and described its cramming problem as “out of control.”
“Cramming is just one of the many erroneous charges that we deal with every day with phone bills,” Asher said, adding that cramming represented roughly 25 percent of the phone charges it fights. “Over time, I have had to keep a staff here just for that purpose – to audit phone bills and watch out for charges that I know are not correct.”
She said her staff monitors all of O’Reilly’s local and long-distance bills for each store looking for billings at incorrect rates or charges to correct service issues for a problem on the provider’s end.
One of the bills that Asher provided to the Committee on Commerce, Science and Transportation as an example was for $186.85 from Los Angeles-based long-distance provider Silv Communications Inc.
Mike Davis, director of communications for Silv Communications, said the company already does what it can to prevent unauthorized people from accepting new services in accordance with federal regulations.
Under normal practices, Davis said Silv pays a telemarketing company to call potential customers, and if a new service is desired, the call is transferred to an independent company that will record the conversation and verify that the customer is authorized to accept charges.
“It’s like when you go to buy a new car and the salesman will have you initial the parts of the financial contract,” Davis said. “The regulatory agencies have said (customers) have to say that they are authorized and they have to say that they are of legal age. These are ‘yes’ and ‘no’ questions.”
In O’Reilly’s case, Davis believes the marketing company was contacting a specific location and someone at that location may have thought they were authorized to make changes to the phone service.
“I can’t assume that you don’t want business or that you’re not authorized to do something if you tell me that you are and you want the service,” Davis said.
He said O’Reilly Automotive’s account was closed once Silv Communications became aware that the person who approved the service was not in a position to do so.
Asher said O’Reilly supplies a list of people who are authorized to make changes to its phone service providers. Cramming issues arise when third parties making the sales calls don’t determine who can make billing decisions at the businesses they call.
“That’s the part I don’t understand,” Asher said.
Asher said she’s heard a number of these recorded conversations before and believes many sound legitimate, while others don’t. From her perspective, all O’Reilly can do is remain unrelenting in its pursuit of bogus charges.
Kelly Polonus, a spokeswoman for Great Southern Bank, said its issues with cramming were uncommon for the bank with 76 locations in five states.
“On very rare occasions, like when we get a brand new phone line, there would be a charge on there for some extra features and we would call the provider and have them take those off. We just diligently watch our bill like consumers should, but we really haven’t had a big issue with it,” Polonus said.
Katie Nagus, senior public relations manager for AT&T Missouri, issued this statement: “AT&T takes cramming complaints seriously, and we work to protect and expeditiously help customers who believe they have been billed for unauthorized third-party charges. We have adopted several anti-cramming measures, including offering customer tips and tools online on how to prevent unwanted charges, issuing credits to all customers with cramming complaints, and offering third-party bill blocking.”[[In-content Ad]]