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Cramming used to be something college students did before a big test. Now, it's a form of fraud that could be costing you hundreds of dollars a year.
Did I get your attention?
With this process, companies tack on small, unsupported fees to a credit card bill in the hopes that a customer won't notice. Once they do this to thousands of customers, they rack up a hefty chunk of change that goes right into the pockets of the evil masterminds in charge. Before you carelessly pay your next credit card bill, you may want to take a closer look at the costs. Let's explore the art of cramming a little closer to determine if you should be concerned.
How Cramming Works
Cramming occurs when a credit card company, telephone provider, or something else along those lines puts unauthorized charges on a bill. With credit cards, these are usually only $10 or $20, so cardholders assume they are legit fees. The charges will either be listed as a special fee, or they will come from an obscure company name. Either way, they will add it to your bill even though you didn't make a charge.
The History of Cramming
Credit cards aren't the first venues for crammers. Back in the 80's and 90's, operators working for AT&T and other phone companies would use their powers to put tiny fees on customer bills. The Federal Trade Commission issued a report in 1999 that highlighted the severity of the problem, outlining ways the government has been identifying and eliminating cramming from phone services. It seems that the crammers were in need of something more.
Since that time, the Federal Communications Commission has created the Truth-in-Billing Rules, which require phone providers to clearly explain what each of the fees on their bills represent. Any vague naming practices are subject to punishment by federal law. These types of enforcements are somewhat in place with credit card companies, but they are not quite as strict as phone laws…yet.
More recently, the FTC has also been dealing with the problem of internet cramming, often the result of signing up for club memberships or contests online. The false charges are the same, with the only difference being how the transactions are put into place. Other issues are occurring with the military as soldiers are being charged under a legitimate company name, Army and Air Force Exchange Service.
The FTC estimates that over $24 million has been crammed from credit cards alone over the years, not to mention the millions that have gone to phone companies and other bill providers. The severity of this problem is real and ongoing. You might as well adjust for it now.
How to Keep Your Money Safe
Here are some tips to help you avoid cramming problems in the future:
- Monitor your credit card statements closely. You have to understand every charge on there and question those you're confused by.
- Don't make a payment until you complete your review. This isn't an excuse to pay your bills late. It just means that you need to question matters before you blindly pay for something.
- Keep a list of your charges as you make them. Then when you go to review your bill, you will have a way to back up anything that may otherwise seem out of place. If you can't do this, hold onto your receipts as they provide the same information.
- Report any false charges right away. The sooner the company knows about it, the sooner they can correct the issue.
If you have seen some unauthorized charges on your bills in the past, talk to the company about them and get an explanation. Some companies will acknowledge the mistake and issue a refund. Others will provide vague answers that match the vague charges. If they can't provide an explanation for you, contact the FTC and report the fraud. Your case will be put through the system, and hopefully you will get compensated for the hassle.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.