US Carriers Veto Premium SMS

SprintAll four major US carriers – AT&T Mobility, Sprint, T-Mobile and Verizon, are to stop charging their customers for most types of – are to stop billing their customers for most forms of commercial Premium SMS messages, having accepted that PSMS has become a major target for fraudsters. PSMS accounts for the majority of third-party charges on cell phones and for the overwhelming majority of “cramming” complaints, where consumer are charged for unauthorized third-party services.

Three of the four carriers made the move after a campaign led by Vermont Attorney General, Bill Sorrell and also involving regulators in 44 other states, who have been looking into the issue of unauthorized third-party services. Verizon was not involved in the campaign, but fell in line with the other three carriers. Some of the carriers have said they will continue to allow charitable donations to be billed via PSMS.

“This is a victory for cell phone users in Vermont and across the nation,” said Attorney General Sorrell. “While PSMS has some benefits, like charitable giving, it is also a major contributor to the current mobile cramming problem. We are pleased that AT&T, Sprint and T-Mobile have decided to stop the flow of money from the pockets of ordinary people to the bank accounts of scam artists. We’re hopeful the other carriers will soon follow their lead.”

The practice of cramming on mobile phones and landlines is estimated to cost Americans $2bn per year. In May, Attorney General Sorrell released a survey showing that 60 per cent of third-party charges placed on the mobile phone bills of Vermont residents were unauthorized, or “crammed.”

Andrew Bud, global chair of trade body, MEF, said the move would put an end to “the deplorable business of mobile cramming” in that market. “It is also an example of how a useful model of mobile commerce can forfeit its place in the market,” said Bud. “This development vividly demonstrates the fundamental importance of consumer trust and confidence to the mobile content and commerce industry. Lessons must be learned and applied, in particular to the growing issue of consumer data privacy.”

Cramming is by no means restricted to the US, but other countries, including the UK, Brazil and Indonesia, have managed to eliminate the practice, without closing off PSMS as a payment option. In the US, however, cramming has continued to be a serious problem, destroying consumer trust and confidence.