Back in the 1990's, more than one third of the written complaints submitted to the U.S. Federal Communications Commission involved “slamming” -- the practice of switching a telephone customer’s long-distance service provider to another carrier without the customer’s permission. But in the past ten years, state laws and telecom companies have helped curb slamming by ensuring the customer does a series of verifications before changing long-distance service.  However, business leaders need to be aware of two new forms of telecom scams on the rise -- "cramming" and "modem hijacking."

“Cramming” is when a telephone company places unauthorized, deceptive and often expensive charges on a business customer’s telephone bill. The FCC warns that such charges often appear on the bill under such headings as “service fee,” “other fees,” “mail server,” “calling plan” or “membership.” They are often added to monthly bills without an explanation of the services provided.

Small businesses often targets

In August, 2006, Illinois Attorney General Lisa Madigan filed a lawsuit against two California companies and their owners alleging that, working together, they have bilked 17 small businesses across the country for thousands of dollars via “cramming.” Madigan’s complaint alleges that the companies, MSMB2B Inc and Zip Wide Web Inc., offered free trials of their services through telemarketing solicitations to small businesses, when in reality, if the customer didn't call and cancel within 30 days, they incurred charges of $49.95 per month. The charges appeared on the business’ phone bill as “Monthly Internet Service Fee” or “Internet Service Provider Monthly Fee” or "ISP Service Monthly Fee.” Small business consumers have filed complaints that they were charged despite refusing to receive any service and in some instances, denied getting actual solicitations from the telemarketers.

“While a private resident would certainly notice a $49.95 charge on their phone bill, small businesses often have phone bills that consist of many pages and total in the hundreds or thousands of dollars,” Madigan says in a prepared statement. “Companies like the defendants take advantage of the fact that small business owners are not likely to notice a small increase in their already large phone bill and may go several months before calling attention to a charge for a service they did not request.”

Modem hijacking

“Modem hijacking” – a variation on cramming – occurs when software, typically delivered via a pop-up ad, is downloaded onto a business computer over the Internet, and uses dialing software to reroute the computer modem to dial long-distance numbers. The fees are often exorbitant. Some scams operate while your PC is Web surfing, while others dial long distance charges while your PC is using its screen saver.

New York State lawmakers unveiled a bill recently targeting modem hijacking that would allow telephone companies and the state attorney general to bring lawsuits against modem hijackers and their accomplices. "This is a new kind of thievery and it takes new kinds of law to deal with them," says Assemblyman Richard Brodsky, one of the bill's sponsors.

What do you do if you've been slammed, crammed, or hijacked, and how do you prevent them from happening to your company?

The U.S. Federal Trade Commission's Consumer Affairs Division offers these suggestions to help protect small businesses from Web service scams and other unordered services:

  • Know your rights. If you receive bills for services you did not order, do not pay. The law allows you to treat unordered services as a gift.
  • Review your phone bills as soon as they arrive. Be on the lookout for charges for services you have not ordered or authorized. If you find an error on your bill, follow the instructions on your statement. Assign purchasing to designated staff and document all your purchases.
  • Train your staff in how to respond to telemarketers. Advise employees who are not authorized to order services to say, "I am not authorized to place orders."
  • Buy from people you know and trust. Authorized employees should be skeptical of "cold" or unsolicited calls and feel comfortable saying "no" to high pressure sales tactics.

To avoid having your modem hijacked, the FTC advises:

  • Turn off your computer and modem when not in use.
  • Raise the volume level of your modem so that you are aware of a redial.
  • Be aware when visiting sites of questionable content. A number of sites download surreptitiously onto consumers’ hard drives.
  • Consider using blocking software to keep children from questionable sites (e.g., adult content, gambling).
  • Close pop-up windows by selecting the, "X," button in the upper right-hand corner, rather than any other embedded icons.
  • Keep your operating system current with patches and updates.
  • Ensure that Internet dial-up access numbers are on your local telephone plan and delete unknown access numbers.
  • Be wary of any unusual icons on your PC.
  • Consider installing anti-virus software and update regularly.
  • Thoroughly examine your telephone bills and contact your carrier about suspicious charges; they may already have precautions in place to help avoid unauthorized calls.