It's no secret that mobile cramming has cost cell phone users lots of money. A Senate Commerce Committee report released yesterday says the unauthorized charges crammed into customer bills have "likely cost consumers hundreds of millions of dollars."

The report further says that industry self-regulation has "left gaps in consumer protection." The carriers promised last November to stop these charges, given that previous attempts at self-regulation failed, but much damage was already done and Commerce Committee Chairman Jay Rockefeller (D-WV) says the risks to consumers are not entirely gone.

The committee staff report, requested by Rockefeller, says, "For several decades, phone companies have allowed third-party vendors to charge consumers on their phone bills for goods and services unrelated to phone service, such as photo storage, voicemail, and faxes. This practice began with landline phone bills and continued on wireless phone bills as consumer use of mobile phones increased. Throughout this period, the industry has assured the public that its self-regulatory system is effective at protecting consumers from fraudulent third-party billing on their phone bills."

The major problem for years was "PSMS," or premium short code messaging system, which uses text messages to place charges on cell phone bills. Individual carriers "reaped hundreds of millions of dollars annually from their role in placing third-party charges on wireless phone bills," taking 30 to 40 percent commissions, the report says. The "services" that consumers were charged for included horoscopes, flirting tips, and celebrity gossip alerts.

This specific type of billing "has now virtually ended among the major carriers," but it took years to get to this point, and there are new billing methods that could end up harming consumers, too, the report said.

While AT&T, T-Mobile, Verizon, and Sprint repeatedly told the Commerce committee in past years that self-regulation and the threat of losing customers would prevent cramming, "documents and other information the Committee obtained and reviewed over the course of its inquiry indicate that—just as with landline cramming—industry has gained substantial profits from third-party wireless billing while providing consumers inadequate protections against deceptive and fraudulent charges on their wireless bills."

One consumer protection that was supposed to prevent cramming is known as "double opt-in," in which "consumers must take two affirmative acts when purchasing goods or services with their mobile phone: one to initiate the purchase and one to confirm the purchase," the report said. Instead, this safeguard was "porous," with cramming operators finding numerous ways to get around it. In one December 2013 case, a Federal Trade Commission complaint targeted "a website that offered to sign up consumers for Justin Bieber concert tickets if consumers provided their phone number, and alleges defendants likely used that phone information to sign up the consumer for services without their knowledge."

“The story isn’t over”

Rockefeller proposed legislation in 2012 and in 2013 with the intent of ending cramming on wireless and wireline phone bills. The bills were not enacted, but pressure from states attorneys general led to a November 2013 agreement in which the major carriers said they would stop PSMS billing. T-Mobile was sued this month by the Federal Trade Commission, which accused the carrier of making hundreds of millions of dollars off the bogus charges, mostly before that agreement went into effect.

The agreement was "long-overdue, but welcome," Rockefeller said this week in a committee meeting.

"But this story isn’t over," Rockefeller said. "The major wireless carriers continue to allow third parties to use methods other than PSMS to place charges on consumers’ wireless bills. Consumers are now using these newer billing methods to purchase digital goods such as game apps, which is a market that has been growing rapidly in recent years. We haven’t yet heard a lot of complaints that these newer billing methods are allowing scammers to place unauthorized charges on phone bills. But given this industry’s dismal track record, we need to watch these practices carefully."

The committee report says the industry hasn't adopted guidelines to prevent abuse of "direct carrier billing," which lets consumers buy digital content and bill the purchases to their cell phone accounts. "With respect to direct carrier billing, to date there are no industry-wide best practices or central monitoring similar to what was in place for PSMS. Instead, oversight of direct carrier billing occurs at the individual carrier level," the report said.

The FTC this week recommended five more steps carriers should take to end unauthorized charges: "Giving consumers the right to block third-party charges; Ensuring that advertising, marketing, and opt-in processes for charges are not deceptive; Getting express, informed consent before charging consumers; Clearly displaying third-party charges on bills; [and] creating an effective process for resolving disputes."

Lawsuits against cramming operations are still ongoing. This week, a federal court in California "issued a temporary restraining order against six companies and six individual defendants" who "deceptively piled more than $100 million in charges on consumers’ mobile phone bills without their permission," the FTC said.

The FTC said the defendants "used deceptive practices, including fake websites with bogus offers of 'freebies' or gift cards, to trick consumers into providing their mobile phone numbers. The defendants then placed monthly subscription fees for a variety of 'services' on consumers’ mobile phone bills without their authorization." The FTC complaint says the unauthorized charges occurred between 2010 and 2013 and affected customers of AT&T, Sprint, T-Mobile, and Verizon Wireless.