WASHINGTON, D.C.—U.S. Senator John Thune (R-South Dakota), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, delivered the following prepared remarks at today’s, “Cramming on Wireless Phone Bills: A Review of Consumer Protection Practices and Gaps” hearing:

I would like to thank Chairman Rockefeller for holding this hearing to discuss unauthorized charges on mobile phone bills and the findings of his wireless cramming investigation. I commend the chairman and his staff for shining a light on these abuses. I understand that Senator Blumenthal has graciously offered to serve in his place as chair. 

Mobile payments are a growing way for consumers to pay for goods and services. Third-party billing is one way that consumers can take advantage of new technologies and customer conveniences. There are legitimate uses for this manner of billing. For instance, consumers can provide money to charity, support a political cause, or download the newest song or app, and bill the purchase directly to their mobile telephone bill.

Yet, despite industry efforts to implement protections and state and federal regulations in place to prevent cramming, unscrupulous actors have been able to game the system to take advantage of third-party phone billing. 

Of course, cramming is not a new phenomenon. 

In the late 1990s, Congress devoted a lot of time and attention to the issue of cramming on landline phone bills. This committee held a hearing on that issue again in 2011, highlighting the chairman’s investigation into cramming on landline phone bills and demonstrating the persistence of the problem. 

Some states have enacted laws to limit third-party billing in an effort to prevent cramming on landline phones. And most of the major phone carriers have ended most types of third-party billing on landline phone bills. More recently, however, concerns have been raised about fraud on wireless phone bills – the topic of today’s hearing and the chairman’s more recent investigation. 

There are three key parties involved in placing third party charges on consumers’ wireless phone bills: the third-party content provider, the billing aggregator, and the phone carrier. From what I have seen, there are some content providers and even some aggregators that appear to be bad actors, but all of the parties involved could do more to protect consumers from cramming. 

While cramming has been identified as a problem, it has been challenging to accurately measure how many consumers have been affected by cramming. I appreciate that the wireless carriers and their association, CTIA, have taken a number of actions to prevent cramming of third-party charges on wireless phone bills. Significantly, this past November, the carriers decided to end most so-called “premium” SMS programs, which billed customers for text messages related to topics like daily horoscopes and sports alerts. In addition, at least one carrier has recently decided to end browser-based direct carrier billing. These steps show the carriers treat this issue seriously, but we’ll be asking whether they should do more.   

At the same time, it’s important to underscore the extraordinary innovation and economic dynamism in the wireless communications space. The owners of the approximately 188 million smartphones in this country spend more time with their mobile devices each day than they do going online with a laptop or PC. While we must strive to protect consumers from fraud, we must also make sure that we do so in a way that does not stifle innovation. I look forward to hearing from CTIA, who is here today representing the wireless carriers, to discuss how the industry is working to address these issues. 

I also look forward to hearing from FTC Commissioner McSweeny, who is here for the first time since her confirmation, Mr. LeBlanc of the FCC, and Attorney General Sorrell. The FTC, FCC, and state attorneys general play a key role in fighting cramming with their law enforcement efforts and by educating consumers about carrier billing. I also would like to thank the South Dakota Public Utilities Commissioners and the South Dakota Attorney General, Marty Jackley, for their work in this area to better protect consumers.

One recent government survey found that the Midwest is the most wireless connected region of the country, with 44 percent of Midwesterners living in cellphone-only homes. This underscores the importance to my constituents of addressing wireless cramming. 

This hearing presents a good opportunity to recognize the good that everyone at the witness table is already doing to combat cramming. Industry, Congress, federal agencies, and state attorneys general all need to continue to work together on this issue to ensure that consumers are informed and protected against bad actors.

Thank you to our witnesses for appearing today. I look forward to your testimony.