On The Money: Cramming

Fraudulent Practice Harms Taxpayers

SACRAMENTO (CBS13) — Fraudulent phone bills are costing taxpayers thousands of dollars each month, in a scheme known as cramming. The targets in this case are government agencies.

Every month, Sacramento County taxpayers are charged for phone service they did authorize.

“About 125 of the charges are on our individual lines,” explained David Villanueva. The interim Chief Information Officer for Sacramento County told CBS 13, “So far a high percentage of them, close to all of them are erroneous charges.”

Phony charges on government phone lines for voice mail, Web hosting and other services Sacramento County already pays for – and it’s costing taxpayers plenty of money.

“We’ve seen charges on average of about $1,000 a month – on average about $12,000 a year,” Villanueva told CBS 13.

That’s why Sacramento County is actively disputing the charges that come from private vendors – in a practice known as cramming. Unauthorized phone charges are costing taxpayers hundreds of thousands of dollars nationwide, according to a new government report.

The U.S. Postal Service racked up $2,900 in phony charges, amounting to $110,000 dollars in cramming. The money was later reimbursed after the Post Office fought the unauthorized charges.

The U.S. Navy was hit with $11,000 in crammed charges in just three months time. The Navy fought back but says it’s still getting up to $600 worth of crammed charges per month.

And Los Angeles County found fraudulent charges for 10 different third-party vendors, before finally getting a $5,100 credit from the phone company. Senator Barbara Boxer told CBS 13, the fraud has got to stop.

“It looks like about 25% of the third party billings through the phone company are for cramming – or as I say, scamming,” Boxer said in a satellite interview from Washington, D.C.

Sacramento County has been fighting the charges, by challenging the 3rd party vendors – but that takes time and resources.

“We can’t afford to have our cities and counties having to spend hours and hours on the telephone fixing these false charges that they have to pay,” Boxer told CBS 13.

“We need to find every dollar,” said Sacramento County’s David Villanueva.

The phone companies say they provide instant credit to any customer who reports unauthorized charges. The carriers will also suspend service to companies involved in cramming. Yet despite all that, cramming remains a persistent problem for government agencies and consumers.

Send us your story ideas via e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at http://twitter.com/#!/mikeluery.

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