What Does It Take For Mobile Operators To Care About SMS Cramming Scams?

from the scams-pay? dept

Mon, Mar 28th 2011 3:52pm — Mike Masnick

The various mobile operators have been making tons of revenue off of premium "short code" SMS programs. These are ways to add charges for various things directly to your phone bill. For example, they've become popular with various charities, so you can support them simply by texting a message to a particular short code. Of course, in many cases, the mobile operators charge you or take a cut for allowing this. And, of course, as with anything like this, it's been left open to scammers... and those scammers have moved in. Just as we saw with phone service cramming, where charges would be added to your landline phone bill, there's been a growing set of operations cramming premium SMS offerings.

Broadband Reports highlights the saga of JAWA, a Scottsdale, Arizona-based company that's at the center of allegations of cramming. The company and a bunch of shells allegedly send text messages to people that say:

"Text back STOP if you don't want to subscribe."

Most people, of course, don't text back because they think it's a scam. What they don't realize is that even if it's a scam, it's the not replying that lets the telcos start adding fees to your bill. The big question here: why does any mobile operator allow charges to be put on your phone bill for inaction?

The blog AZDisruptors (normally about Arizona startups) has been calling attention to the company, including putting together this video explaining how the cramming works, how JAWA's CEO Jason Hope is apparently building the largest house in the US (complete with a 3-story night club), and how AT&T pretends (falsely) that it can't do anything about it: Oh yeah, Broadband Reports also notes that Hope's former blog, which was all about the Lamborghinis and other luxury cars he was acquiring, has suddenly changed to point to a page about his philanthropic work.

The thing is, JAWA has been doing its thing for quite some time. After Texas regulators began investigating, Verizon Wireless finally realized it needed to do something and sued. Amusingly, JAWA's defense to the lawsuit appears to be that it employs lots of people and is good for Scottsdale. However, it also points out that it's made Verizon Wireless tons of money, and even complains that Verizon Wireless seems to be withholding money owed.

While it's nice that Verizon Wireless has filed suit, it appears this only happened after Texas regulators began investigating, and after they made money from JAWA for a period of nearly four years. AT&T now claims that it's investigating too, but only after AZDisruptors demonstrated company representatives blatantly lying to him about whether or not they make any money from this and whether or not they can stop it.

The big question in all of this really should be why the mobile operators allowed this to happen at all. Why would they ever allow charges to be added to an account as a result of inaction, rather than through direct acceptance?

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Filed Under: cramming, mobile operators, scams
Companies: at&t, jawa, verizon wireless

43 Comments

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Christopher (profile), 28 Mar 2011 @ 4:03pm

Obvious illegal crap is super obvious. I swear..... how did this company think that they were going to get away with this? Numerous courts have said that anything involves charges to your accounts has to be opt-IN, not opt-out!
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Anonymous Coward, 28 Mar 2011 @ 4:04pm

There have been all sorts of scams, especially with third party billing. The telcos have no want to restrict nor reduce these scams. They are happy to send you the bill regardless of if you owe it or not.

Part of the reason AT&T has been looking at the caps is that they are losing money from the landlines. In a nutshell, people are leave the high and expensive land lines and going mobile. In order to maintain their profit margins caps are one of the ways to rob from Peter, since Paul is starting to feel the pinch.

If you still have landline I suggest you put a hold on it for any billing from the phone, especially by third party. Otherwise you are open to all sorts of scams in this type scheme.
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Anonymous Coward, 28 Mar 2011 @ 4:35pm

Re:
except this example is about text message cramming of services, and then I am going to pull out a landline example myself.

They do not want to stop getting paid.
Let us look at the example of Caller ID for landlines.
This was an amazing feature, and the telcos charge way more than it costs them to provide. It was a great service, until the telemarketers said your hurting our business and then we will have fewer lines with you.
Then the telcos created a system that allows the telemarketers to make Caller ID worthless.
Caller ID for just number is like $8 a month, and another silly amount to provide the name as well. Lots of people who have landlines still have Caller ID, they do not consider that it is mostly pointless in an age of spoofing and "unknown numbers". Seriously how can a number be unknown? Did they hack the trunk lines to make calls or are they paying you a premium to make sure I can't figure out its another scammer on the line?

The carriers have no interest in stopping cramming. The money goes to them first. If it is a fly by night company they will not bother trying to fight for the money owed once they get caught. They roll up a new name, sign a new agreement and lather rinse repeat. The carrier then gives anyone scammed a "credit" on their bill, not an actual refund of money. Their bottom line is still plump with cash as they have to dole out a tiny bit more in service that costs them pennies.

I never had a texting plan on my phone, my ancient Razr. I had friends texting me and costing me money, and the carrier was more than willing to just let outside people add to my bill for providing a service I never asked for nor wanted. It took several calls but finally they put a block on texts and web access on the phone. This was after trying to upsell me a new texting plan on top of a new phone plan that would void my rollover minutes and leave me paying even more... all to not get charged for a service I never wanted to begin with.
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Anonymous Coward, 28 Mar 2011 @ 4:55pm

What Does It Take For Mobile Operators To Care About SMS Cramming Scams?
I give up... is the answer secondary liability for the actions of their affiliates?
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Anonymous Coward, 28 Mar 2011 @ 5:03pm

So how do I start one of these cramming companies, sounds like easy money.
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abc gum, 28 Mar 2011 @ 5:22pm

"The big question in all of this really should be why the mobile operators allowed this to happen at all."

And another question is, why does anyone pay it at all?
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Bt Garner (profile), 28 Mar 2011 @ 5:37pm

Re:
It would be ridiculously easy.

Start off by running a scraper program on telephone trunk lines. You can then find out which numbers are cell phones, and which are not (generally if a single number in the XYZ-ABC-0000 range is a cell, all 10,000 will be).

Once you have this, start using the email to SMS gateways provided by the services to send messages like the above. Be sure to record what you send, and any responses you get (or don't get).

Use this to send bills to AT&T, Verizon, Sprint (et al). for the numbers listed. Be sure to give details about the service [sic] you are providing, and proof that they opted in.

You're set! Until the feds crack down on you.
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Big Al, 28 Mar 2011 @ 5:40pm

Can someone tell me how this works? In Australia, I am not billed for receiving texts, only sending them, so if I ignore the obvious scam text, then I have no charges to worry about (unless I actually send a text back, which could cost me a premium of up to $5 per message). Is the US different in this respect?
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Anonymous Coward, 28 Mar 2011 @ 5:52pm

Some of the carrier plans are very different in the US. They will charge you receiving an SMS whether you wanted it or not. You have to call and dispute the charge or they will add it to your bill.

They hit you coming and going for SMS texting.

Myself I have a fixed plan. Flat rate, no extras, no contract. It's an old Razor that was given to me. I'm cool with that. Beyond basic texting and an occasion phone call, I have nothing else I want to do on a phone.

I don't want the net, I don't want to play music on it, I don't want to play games on it. All those functions can be done on the computer.

Since my carrier has been bought out, I am considering dropping their service. The new carrier seems to want to charge $4 to accept payment.
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CSMcDonald (profile), 28 Mar 2011 @ 5:53pm

JAWA has already threatened to sue AZDisruptors
sent an absolutely absurd C&D accusing Hamid of criminal activity, defamation, etc. They even got the blog shut down briefly by the hosting company.

Classy.

http://www.azdisruptors.com/blog/2011/3/28/my-apology-offer-to-jawa-jason-hop e.html
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Squirrel Brains (profile), 28 Mar 2011 @ 5:58pm

Industrious Young Lawyer Needed
The only way to get a company like AT&T to care is to hit them where it hurts. We need one of those young, unemployed lawyers to get creative and come up with a way to sue AT&T under some theory of law. In fact, there are a lot of young, unemployed lawyers. If they put their heads together, I am sure they'll be able to come up with something. To get the ball rolling, they can use Kickstarter to fund the lawsuit. This could potentially make a few new careers.
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Anonymous Coward, 28 Mar 2011 @ 6:18pm

Re:
Here they are being allowed to send you a message and unless you tell them no, they add the bill for their "service" to your phone with the blessing of the carrier.

The carriers could put a system into place to stop it from working this way but it is much to lucrative for them to allow 3rd parties to rip off their customers and the carrier takes a cut from the money they collect on each bill. So they have a vested interest in not changing the system to protect the user, but to keep pulling in fees from people unwilling to respond to a scammy looking text message.
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Killercool (profile), 28 Mar 2011 @ 6:52pm

Similar angle...
I was hit with one of these asking for $10.00US per month. Their hook was they sent the notice message, and then seconds later the "first premium message." In other words, my silence of ~5-8 seconds was counted as a confirmation. Lucky for me, my carrier was feeling generous and removed the charge (for that single, impossible to stop message) as a "one-time courtesy."
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Capitalist Lion Tamer (profile), 28 Mar 2011 @ 7:11pm

Re: Similar angle...
Only a business that loves billing opacity would consider "courtesy" to be something you put into practice "one time."
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Anonymous Coward, 28 Mar 2011 @ 7:55pm

Re: What Does It Take For Mobile Operators To Care About SMS Cramming Scams?
No the solution is to apply the section 230, as long as cellphone carriers remove the billing from the accounts in a timely manner they should be in the clear or a 3 strike if they are found to authorize unwanted billing a third time they should have their license revoked and their executives brought to justice for wirefraud, swindling, deceptive conduct of business and etc.
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Anonymous Coward, 28 Mar 2011 @ 7:58pm

Re: What Does It Take For Mobile Operators To Care About SMS Cramming Scams?
Maybe we should apply the DMCA to all matter of things like music, if a customers think they are robbed of income they earned they should notify the artist and have him remove his music from the that store so the customer doesn't risk having his earnings at risk by accidentally buying that music ever again.
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Anonymous Coward, 28 Mar 2011 @ 8:03pm

Re: What Does It Take For Mobile Operators To Care About SMS Cramming Scams?
Lets make a better DMCA if customers complain about some artist the store have to remove all that artists product from the store in a timely manner or face liability in a lawsuit until the issue is resolve between the parties.

Yay!
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Anonymous Coward, 28 Mar 2011 @ 8:37pm

How is this not fraud?
This guy should be in prison.. period.

This is fraud
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Anonymous Coward, 28 Mar 2011 @ 9:54pm

Why?
For the same reason there will never be a techdirt without ads - *greed*.
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Robert Shaver, 28 Mar 2011 @ 10:02pm

No! The big question is ...
The big question is why anyone would let this pass on their bill?

One bill like that to me and that service is history. Why would anybody stand still for this on their bill? Did anyone call their lawyer or the DA or the PUC or the FCC or their congress person. (Oh that last one is a waste of time for sure, I suppose.)

What do you think they would do if they lots 1% of their cell phone service and the droppers told them it was the unwanted charges? I have no sympathy for folks who use any of these services. Even without enabling these scams they are bad businesses. Why do your patronize them? Are you really that addicted to using them? So addicted that you let them screw you over?

Isn't the scam-enabling and the dropped calls and the bad customer service and the (NOT) unlimited data plans and the astronomical charge per character for SMS and contract lock-ins and the early termination fees enough to make you STOP USING THESE COMPANIES!

You have the power to stop them dead in their tracks ... stop using them. Don't look to the government for help. Help yourself. Help each other.

FULL DISCLOSURE: I have a cell-phone for road emergencies only. It cost me $12 and I spend about $100 per year on minutes. I have never sent a text message from a phone.

Oh, and I caught the power company overcharging me by way under estimating my bill one month then charging me a premium the next month for using "too much power". They called it a software bug but the person on the phone was familiar with the problem. She apologized and quickly fixed it, but I wonder how many people don't catch it each month? I think it was a software feature, not a bug. I sent a letter to the PUC with all the details but they never did anything.

It's your money. If you let them take it they'll always come back for more. You have to demand good value. If no one gives it then go without.
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Anonymous Coward, 29 Mar 2011 @ 12:52am

Re: Why?
Ads? What ads?
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Anonymous Coward, 29 Mar 2011 @ 12:52am

Re: Why?
Ads? What ads?
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Anonymous Coward, 29 Mar 2011 @ 12:53am

Re: Re: Why?
Sorry, hit the reload instead of the back button :)
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Christopher (profile), 29 Mar 2011 @ 2:49am

Re: Re:
Actually, you could set up the company in a false name, close it down after six months.... you are set for life with the amount of money you could get in one month, let alone six.
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The Devil's Coachman (profile), 29 Mar 2011 @ 7:30am

Sounds like their CEO needs a beat down, big time!
If I ever get hit by this kind of scam, and I can find their CEO, he will be the most sorry creature that ever trod dirt. Believe me, I could do the time afterward standing on my head and laughing. Just the memory of his whimpering and pleading would be enough to keep me happy for a few years.
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FormerAC (profile), 29 Mar 2011 @ 8:48am

Why?
The big question in all of this really should be why the mobile operators allowed this to happen at all.

Greed. Any questions?
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reticulator (profile), 29 Mar 2011 @ 9:51am

it's all about futures - cell phone as payment systems
The cell carriers NEED the "3rd-party billing" process to be fast and loose, with no setup required, no authorization by the customer, no customer contact at all. It's all about defining "due diligence" for a new business practice - they want the bar set low. They are salivating over the prospect of skimming merchant fees and transaction charges from payment systems that use cell phones to replace credit and debit cards, and those systems will never be widely used if customers are allowed to sign up and perform authorizations on a per-merchant or per-transaction basis. NOTHING will EVER get the carriers to make 3rd-party billing complicated.
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Anonymous Coward, 29 Mar 2011 @ 12:53pm

Re:
Is the US different in this respect?

In a word, yes. But don't worry, the US gov't is hard at work, getting your gov't to fall in line and change your laws to match US laws. Soon, you can get screwed just like you were in the US without ever even having to go there!
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Anonymous Coward, 29 Mar 2011 @ 12:59pm

Re: No! The big question is ...
One bill like that to me and that service is history.

Yeah? Well, lucky you. A lot of people can't afford to give up phone service.
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Gordon (profile), 29 Mar 2011 @ 7:15pm

Re: Re: Why?
Was just thinking the same thing.

ABP works nicely.
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Tex (profile), 29 Mar 2011 @ 7:25pm

Another SLAPP Lawsuit
Here's another SLAPP lawsuit: http://texsquixtarblog.blogspot.com/2010/08/amway-lawsuit-update-dont-mess-with.html
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The Devil's Coachman (profile), 31 Mar 2011 @ 7:03am

Re: Similar angle...
I'd find a new carrier, pronto!
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The Devil's Coachman (profile), 6 Apr 2011 @ 5:21am

More douchebaggery from Jason Hope
Just read yesterday that the Biggest Douche Bag In The Universe, Jason Hope, filed an anti-trust lawsuit against Verizon, because Verizon was trying to stop the illegal and fraudulent activities of Chief Douche Bag Jason Hope and his Junior Douche Bag Minions. Here's hoping that not only does his suit get thrown out, and him being forced to pay court costs, but that he also gets machine-gunned right out of the seat of his Lamborghini immediately afterward, preferably in his company parking spot. Then, a public restroom could be built right on his grave site, flushing directly into his coffin. But then, I may be too kind!
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sms spy, 11 Jun 2011 @ 5:06am

Thanks for sharing - greatly appreciated
Thanks for sharing - greatly appreciated. I want to add that this is why we need strong regulation in this case the FCC and this is alse why we should fight to protect net neutrality, because without it you'll see consumer videos like this vanish without a trace under dissent / terrorism laws.
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federal trade commission, 19 Dec 2011 @ 2:59am

federal trade commission
Interesting one,i saw your article in google, very interesting to read.I have seen this blog,its really nice to read and has more informative information.
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namtah, 12 Jan 2012 @ 9:14am

Re: Why?
Really? Greed? Who should techdirt enslave to provide this content, servers, and programmers that provide this content for all of us to enjoy? You? What you refer to as greed, is simply self-interest and a willingness to provide a product or service that folks like us desire. The ads are simply a means to that end. - Now as far as what att and verizon are doing with this cramming crap may be greed, but is better described as a very poor business practice. att and verizon obviously have a lot of influence with the politicians that refuse to pass a law to prevent 3rd party billing. But, that's not completely the fault of att and verizon. They are simply operating within the law. The fact that we have politicians and a perverted form of free enterprise is the fault of us, the people of this great country. Thanks for giving me the chance to enlighten you. Have an awesome day!
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Intercepting text messages, 25 Mar 2012 @ 4:32am

Sms Cramming
More networks are taking up to dealing with these crammers
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Carrier Petition, 4 Jul 2012 @ 10:05am

Carrier Wire Fraud PSMS charges on cell phone bills
Cell Phone Carriers continue to extort hundreds of millions of dollars every day in Wire Fraud PSMS charges which are applied to Carrier Customers� monthly cell phone bills disguised as �Third-Party Billing�. To date Regulators and Federal Authorities have done little to investigate and prosecute these White Collar Criminal Felons. Want to know why? Follow the Money.
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You must request your carrier block �Third-Party Billing� on all of your cell phones today.
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HELP US HELP YOU * FIGHT BACK * SUPPORT THIS PETITION * THANK YOU
[ link to this | view in thread ]
Carrier Petition, 11 Jul 2012 @ 2:24pm

Carrier Wire Fraud PSMS charges on cell phone bills
Cell Phone Carriers continue to extort hundreds of millions of dollars every day in Wire Fraud
PSMS charges which are applied to Carrier Customers� monthly cell phone bills disguised as
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[ link to this | view in thread ]
Carrier Petition, 6 Aug 2012 @ 8:08pm

PROTECT YOURSELF FROM CARRIER CELL PSMS/CSC & DATA FRAUD SCAMS TODAY.
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[ link to this | view in thread ]
Anonymous Coward, 19 Sep 2012 @ 9:46am

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http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03498.html
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Insist Carriers block �Third-Party Billing� on your cell phones immediately.
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[ link to this | view in thread ]
carrier petition, 4 Oct 2012 @ 12:41pm

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Cell Phone Carriers continue to extort hundreds of millions of dollars monthly from their own customers by applying fraudulent and miss leading charges to Carrier Customers monthly cell phone bills. Over the past several years these Felons have extorted hundreds of billions.
WHAT YOU MUST DO TODAY TO PROTECT YOUR FAMILIES.
� Insist Your Carrier block �Third-Party Billing� on your cell phones immediately.
� Insist Your Carrier block �Cellular Data� on your cell phones immediately.
� Insist Your Carrier provide audits of all �Third-Party Billings� on your cell phones immediately.
� Inform Your Carrier of their fiduciary responsibilities to comply accurately with your requests.
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� Fight Back. Complain to Cell Phone Carriers, Authorities, Everyone. COMPLAIN OFTEN.
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� Who we are: http://www.disnetinc.com/CarrAbout.htm
Thank you, �Cell Phone Carrier Petition� Representative. Have a great day.
[ link to this | view in thread ]
jefff, 7 May 2014 @ 3:12pm

Re:
They did get away with it. The question isn't can we get away with it, the question is how much of the money can we keep? The answer is they kept almost all of it!
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