Small businesses hit by cramming scam

The Associated Press

WASHINGTON -- The Federal Trade Commission is alerting small businesses to a scam that promises them a free trial Web site but delivers unauthorized charges to their phone bills.

Thousands of small business owners have lost millions of dollars in the past two years after responding to a phone call from firms offering to design a Web site for them during a free 30-day trial period, the FTC said. According to the commission, business owners were charged for the service even though they hadn't agreed to purchase it at the end of the trial period or had canceled their order. Many never received notice telling them their 30 days were in effect and were shocked when charges from the firms appeared on their phone bills. "It took me a long time to figure out what it was," said Colleen Cord, owner of Security Mortgage and Investment Corporation in Bowie, Md., who received a phone bill with charges from a Web site provider. Cord said one of her employees was called about a promotion for setting up a Web site and agreed to the free trial period but later canceled. Weeks later, Cord saw the charges on her phone bill for the service. When she pressed the firm for evidence that it had in fact created a Web site for her business, she got no response. The commission says this is just the latest variation of firms fraudulently "cramming" unauthorized charges onto phone bills. In its third annual report to Congress on fraud, released Thursday, the FTC says cramming has become the fifth largest source of consumer complaints in the last 18 months. Since October 1997, the FTC has received 10,000 complaints about cramming. The commission warns that telephone billing has become open to abuse, since a number of service providers can now put their charges on the phone statement. The FTC also warned small businesses to review all phone bills carefully as soon as they arrive, document all purchases and buy services from companies they have worked with before. "Only a few years ago, most consumers would not have considered the possibility that they might be charged for anything beyond the transmission of telephone calls on their telephone bills," the report said. "Now, the injury caused by cramming has been a rude wake-up call for consumers, and may undermine confidence in the integrity of the billing system."

Copyright 1999
Provided by ProQuest Information and Learning Company. All rights Reserved.