Phone carriers to warn about extra fees

Cellphone users will receive free alerts before they trigger extra charges under an agreement announced Monday by the Federal Communications Commission and the major wireless carriers.

The wireless industry adopted the voluntary guidelines at the urging of the FCC, which complained that too many customers suffer from “bill shock” when they discover surprise charges on their monthly phone bills. 

The FCC had drafted rules to require the industry to implement a notification system, but FCC Chairman Julius Genachowski said that in light of the industry’s commitment, his agency would put its regulations on hold.

He said he would take a “trust but verify approach” to ensure that companies abide by the new guidelines.

{mosads}”These alerts will give consumers the information they need to save money on their monthly wireless bills,” Genachowski said. “Consistent with the FCC’s ongoing efforts, these actions harness technology to empower consumers, and ensure consumers get a fair shake, not bill shock.” 

Beginning in October 2012, the participating carriers will be required to provide customers with notifications in two of four areas: data, voice, text and international roaming. The carriers must provide all four alerts by April 2013.  

AT&T, Verizon, Sprint and T-Mobile, the four national carriers, all agreed to the guidelines. 

According to the FCC, one in six customers has received unexpected charges on his or her wireless bill. Of those users, 23 percent faced unexpected fees of $100 or more.

“Far too many Americans know what it’s like to open up their cell-phone bill and be shocked by hundreds or even thousands of dollars in unexpected fees and charges,” President Obama said in a statement. “So I appreciate the mobile phone companies’ willingness to work with my Administration and join us in our overall and ongoing efforts to protect American consumers by making sure financial transactions are fair, honest and transparent.”

Consumers Union, the advocacy arm of Consumer Reports, urged the industry to quickly implement its guidelines.  

“We’re encouraged that the industry is offering to provide free alerts to help customers avoid ‘bill shock,’ and we urge them to do it as quickly as possible,” said Parul Desai, policy counsel for Consumers Union. “Some companies are already providing free alerts, while others are charging extra fees for them, and we think it’s possible — and consumers deserve — to immediately receive free alerts to avoid overage charges.”

When pressed on why the wireless industry doesn’t require the alerts sooner, Steve Largent, the president of CTIA-the Wireless Association, said implementing the system is not easy or simple. But he said he expects many companies will begin sending the alerts ahead of the deadlines.

Free Press, a media reform group, panned the voluntary guidelines and urged the FCC to implement tough regulations to combat bill shock.

“Wireless phone companies have become expert[s] at reaching into their customers’ pockets to extract more than the regular monthly charges subscribers thought they were signing up for,” Free Press political adviser Joel Kelsey said in a statement.

He said that because carriers lock customers into long-term contracts, the companies have no incentive to ensure customers don’t receive unexpected charges.

“This is precisely why the FCC should establish rules, and not just adopt industry platitudes, that will protect consumers from excessive bills,” he said.