YOU Might Already be a Victim of a Cramming Scam

The New York Times had this article in the “Money” section yesterday about mobile text messaging scams. It’s likely you won’t pay attention to this scam until YOU are a victim, but you might already be one so read on.

Sick with the flu one weekend this past January I’d gone to bed early on a Sunday night only to be awakened by two back-to-back text messages arriving on my iPhone at about 2am. Having been in the internet/web industry since its beginning in the mid-1990s, I instantly recognized the potential for charges from this scammer so I sat up, grabbed my iPad, and started poking around to see if either the message identifier (the “318-50” in the screengrab below) or the toll-free 866-861-1606 number was an active scam.

I was stunned to learn it is a scam and even ignoring the message meant my account would be charged $9.99 PER MONTH! 

Based upon the sheer volume of complaints I found during my searching online shows that this scam is rampant, apparently is seeing little-to-no preemptive action on the part of the wireless carriers, and many, many mobile users are being charged monthly fees. This fraud is commonly known as cramming.

I am writing this post for the express purpose of bringing this issue to your attention. If *I* can get scammed (and I am VERY cautious, careful and savvy about online scams and still don’t know how my number was discovered) I can only guess how pervasive this is and that it appears the carriers are likely complicit in perpetuating these cramming scams since they apparently receive 30% of all subscription fees collected..

What is this scam and what can you do? 

THE SCAM

This is a mobile SMS (text message) scam which automatically subscribes the user to a monthly plan, in my case a $9.99 one as you can see from the screenshot to your left. What’s curious is that many people on several complaint forums I discovered recommended replying “STOP” to cancel since that would be an explicit opt-out. In my case I didn’t respond (never do to spam) and instead called AT&T Customer Service. The charges were applied anyway which, I now know, is a common cramming practice. AT&T removed the charge and I explicitly requested they place a “subscription or purchase block” under my account for all phones on my family plan. This part of the adventure burned up 45 minutes of my time (and yes, between 2am-3am).

Wide awake now I embarked on a short investigation for another 30 minutes and came across these links to other people who have been victims of cramming from this same provider and have had similar charges:

• 800 Notes, a website for 800# scamming, had these reports
• SMS Watchdog, a website for text scamming, had these reports
• Text Complaints had these reports
• Plus all of these other ones…

…and so on and so on.

One alleged scammer in Arizona has been called out and the AZ Central paper wrote this article about the company, JAWA. They pointed out that Verizon alone froze $19 million in charges…so I can only imagine the millions JAWA and the aggregators have already raked in, let alone all the other cramming scammers out there:

Lawsuits filed by Verizon Wireless and the Texas attorney general allege that cellphone-applications developer Jawa used shell corporations, false business addresses, websites that did not comply with industry standards and diversionary software to deceive customers to buy its services.

Beyond the lawsuit, Verizon Wireless has taken other business actions. It instructed four companies, known as aggregators, to freeze $19 million in charges for messaging services already provided by Jawa and for which customers already have been billed.

Aggregators, known as mobile-transaction hubs, enable wireless messages to be delivered to a customer and compile and transmit charges to the customer’s carrier.

As it turns out, Verizon kept 30% of the fees collected and passed the other 70% to the aggregators (see this article). Other articles I’ve read say the same thing about all carriers: they keep 30% of the fees. If those fees number in the tens of millions of dollars, one can see why the carriers have zero incentive to be on their customer’s side and proactively terminate these sleazy relationships.

In my cursory search I was unable to learn if there has yet been a resolution to the Eye Level Holdings, LLC. suit by the State of Texas and Verizon. AT&T and Sprint are also investigating them so there might be a resolution that, if JAWA/Eye Level Holdings, LLC is guilty of cramming, puts these guys behind bars and confiscates their assets.

A staffer of Minnesota’s Attorney General, Lori Swanson, has also let me know that the AG’s office has launched an investigation and I’m keeping tabs on their progress. Here is a post I did about their followup on another site I run called Minnov8.

WHAT YOU SHOULD DO
But as we all know for every scumbag caught there are usually others:

1. Check your mobile phone bill for charges you didn’t authorize
2. Place a “subscription” or “purchase” block on your account so, even if a crammer gets your mobile number, they cannot include you in their scam by simply sending you a text message
3. If you have been a victim, do the two above and then immediately email or write to your State Attorney General (list here) and then file a complaint with the Federal Communications Commission here.