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Regulators combat unauthorized phone bill fees

By Jasmin Melvin

WASHINGTON (Reuters) - Telephone companies would have to make third-party charges on landline phone bills clear and distinct to help people detect unauthorized fees under rules proposed on Tuesday by communications regulators.

The Federal Communications Commission unanimously proposed rules to against so-called mystery fees and "cramming," the illegal placement of extra charges on phone bills.

Cramming may affect up to 20 million Americans, the FCC estimates, with only one person in 20 realizing that they are being charged for unwanted services.

"We're sending a clear message: if you charge consumers for something they didn't request, you'll be discovered and you'll be punished," FCC Chairman Julius Genachowski said.

The FCC's proposal would require landline phone companies to tell people about any blocking services they offer and denote charges from third parties in a separate section of the bill from the telephone company's charges.

The rules also would require the FCC's contact information to appear on all landline and wireless phone companies' bills and websites with a notice that customers can file complaints with the agency.

Cramming generally adds anywhere from $1.99 to $19.99 a month to a phone bill. The charges can originate from the phone companies or from third parties for services such as horoscopes, yoga lessons and diet plans.

Cramming also is an emerging concern for wireless carriers, and the FCC's proposal seeks comment on whether the rules should apply to wireless companies too.

Genachowski said that the proposal minimizes the compliance burdens on carriers.

The FCC has also asked whether phone companies like AT&T Inc , Verizon Communications and Qwest Communications should be subject to further requirements such as making them provide and ensure the accuracy of contact information of third-party vendors and a ban on extra charges for blocking services.

The FCC Enforcement Bureau as part of its work against unauthorized charges, found that Main Street Telephone, VoiceNet Telephone LLC, Cheap2Digital Telephone LLC and Norristown Telephone LLC appear to have overcharged consumers about $8 million, and last month proposed $11.7 million in penalties against the four companies.

Verizon Wireless , the top U.S. mobile service, agreed to a $25 million settlement last October on top of refunding consumers more than $50 million for charging mystery fees after a 10-month FCC investigation.

States, the Federal Trade Commission and lawmakers have also targeted cramming and are looking to crack down on unauthorized fees. The Senate Commerce Committee will hold a hearing on Wednesday on its yearlong investigation into cramming and its impact on consumers.

(Reporting by Jasmin Melvin. Editing by Robert MacMillan)

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