Report: Bogus charges on phone bills may cost Americans $2 billion

Cramming---the practice of adding bogus charges to consumers' phone bills for services they don't want or use---may be costing Americans $2 billion a year according to a report released yesterday by the U.S. Senate Committee on Commerce, Science and Transportation.

The year-long investigation found that phone companies' practice of charging consumers for unauthorized services is still a major problem, despite the FCC's attempts to stop it and that safeguards to prevent it have largely failed.

Over the past five years, more than 500,000 customers have contacted Qwest, Verizon and AT&T and to complain about cramming, the report said.

Among the examples of cramming the investigation found: An 82-year-old man charged for a "web-hosting personal profile" despite the fact that he did not have internet service, $11,000 worth of unauthorized charges on the phone bills of the United States Naval Station in San Diego, and customers who were told by phone companies that long-deceased relatives had signed them up to receive services when they called to complain about the charges.

"This report is a stark picture of a billing system that is hurting consumers and making profits for phone companies," Commerce Committee Chairman John D. (Jay) Rockefeller IV said of the investigation. "Despite industry promises to end this fraudulent practice years ago, hundreds of third-party billing companies have continued to place unauthorized mystery charges on consumers' phone bills for services they do not want or use."

CBS News first reported on cramming in February 2008, when Sharyl Attkisson investigated cramming charges for ringtones consumers thought were free.

CBS News affiliates in Denver and Pittsburgh have also reported previously about the illegal practice and the FCC's attempts to crack down on it.