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FTC Makes Recommendations to Prevent Cramming

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A recent press release from the Federal Trade Commission identifies “cramming” as a significant threat to American consumers and announces the release of an FTC report addressing the issue. The FTC defines cramming as “the unlawful practice of placing unauthorized third-party charges on mobile phone accounts.” Often applications and downloads do not clearly present their fees and charges, and those costs find their way to cell phone bills at the end of the month. With so many Americans currently connected with smartphones, the FTC believes that the necessity of higher consumer protections has never been more important.

Mobile Cramming: An FTC Staff Report presents five recommendations for industry participants to protect consumers from cramming, without hindering innovation or convenience: consumers should have the option to block all third-party charges; consumers should provide their express consent to charges before they are billed; advertisements should not be deceptive; all charges should be clearly disclosed in a non-deceptive manner; and carriers should implement an effective dispute resolution process.

The recommendations are mostly common sense. Carriers and third-party services should not deceive consumers, and consumers should provide clear consent to charges. The report does not present sweeping changes in terms of repercussions or consequences, but the FTC is currently working to increase protections for consumers. “The FTC will continue to monitor the issue of cramming on mobile phone accounts,” the report concludes, “and will evaluate whether other potential solutions – including legislative measures and additional regulatory changes – are necessary to ensure consumers are protected from unwanted and unauthorized charges.”

The report demonstrates the difficulty that regulation and legislation have in keeping up with technological changes and innovations. In the absence of clear rules and regulations, opportunistic companies can take advantage of not-so-cautious consumers. As the speed of technological change and innovation have never been higher, the challenges facing regulatory bodies have never been greater.

Read the original blog entry...

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Bob Gourley writes on enterprise IT. He is a founder of Crucial Point and publisher of CTOvision.com

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