Phone Bill Scams, Tax Preparer Warnings

March 22, 2012 4:22:55 AM PDT
Attorney General Lisa Madigan has joined with the Federal Trade Commission, Chicago Better Business Bureau and consumer advocates to warn Illinoisans about a scam known as phone bill ''cramming'' that has hit hundreds of thousands of consumers and businesses with bogus charges on their phone bills.

"Phone bill cramming is one of the most pervasive scams today," Attorney General Madigan said. "Scam artists use consumers' phone numbers like credit cards, racking up charges for things they never ordered and don't want, and profiting to the tune of $2 billion each year. Only a statewide ban on third-party charges will put an end to this scheme."

Joining Madigan in Chicago to recognize National Consumer Protection Week were Steven Baker, director of the FTC Midwest Region; Steve Bernas, president and CEO of the BBB of Northern Illinois and Chicago; David Kolata, executive director of Citizens Utility Board; Bob Gallo, AARP Illinois director; and Lynda Delaforgue, co-director of Citizen Action/Illinois.

Phone bill cramming is a scheme that has persisted across Illinoisand the country in which third-party vendors use phone numbers much like a credit card. The vendors add charges to phone bills for bogus products or services, such as identity theft protection, website design or email service, that consumers and businesses never asked for or wanted - and never used.

Estimates indicate that telephone companies place at least 300 million third-party charges on their customers' bill each year. According to a U.S. Senate Commerce Committee report, third-party billing generates at least $2 billion annually.

This year, Madigan is working with state Rep. Kelly Burke and Sen. David Koehler to pass and implement House Bill 5211 that would put an end to cramming. The bill would ban cramming - all billing by a third-party company - but include limited, common sense exceptions for legitimate services.

To date, the Attorney General's Office has filed 30 lawsuits against crammers, representing more than 200,000 Illinois businesses and residences who were victim to these phone billing schemes. Apparently no one is safe from crammers. Take, for example, Madigan's 2009 lawsuit, which showed US Credit Find Inc., a Venice, Calif.-based operation, crammed, among other targets, a Springfield public library's dial-a-story telephone line.

Phone cramming scams originally were perpetrated primarily through telemarketers, especially before the Do Not Call registry was established. More recently, however, the scam has flourished online. Internet users report simply submitting their phone number, among other personal information, for online prize drawings, surveys or free recipes. Weeks or months later, consumers find charges on their phone bills for unauthorized services.

Attorney General Madigan has previously advocated for a nationwide ban on phone bill cramming, testifying last July before the U.S. Senate Commerce Committee and the Federal Communications Commission.

Better Business Bureau says: Better Safe Than Sorry Know Your Tax Preparer

Every year the BBB receives thousands of inquiries about tax preparers, and unfortunately complaints from consumers. Many Americans will get assistance from a professional tax preparer or tax software when filing taxes this year. The Better Business Bureau serving Chicago and northern Illinois (BBB) encourages taxpayers to use caution when selecting tax preparation help.

In the past twelve months, the BBB received 6,948 inquiries regarding Tax Return Preparation services; this is over twice as many inquiries as last year. Commonly, complainants state that the tax preparer made errors in their return which resulted in fines and fees.

"Even though the tax preparer completes the return, it's the taxpayer who is ultimately responsible for the return's accuracy and whether or not it's filed on time," said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. "The fines, fees and hassles can add up if you choose an unreliable tax preparer and that's why it's important to do your research."

The Better Business Bureau offers the following advice to find a trustworthy tax preparer:

Ask around. Get referrals from friends and family on who they use and check the BBB Reliability Report on tax preparation services at
Check on the preparer's history. Check to see if the preparer has a questionable history with the Better Business Bureau at and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.
Look for credentials. Ideally, your tax preparer should either be a certified public accountant, a tax attorney or an enrolled agent. All three can represent you before the IRS in all matters, including an audit. Also, find out if the preparer is affiliated with a professional organization that holds its members to a code of ethics.
Don't fall for the promise of a big refund. Be wary of any tax preparation service that promises larger refunds than the competition, and avoid any tax preparers who base their fee on a percentage of the refund.
Think about accessibility. Many tax preparation services only set up shop for the months leading up to April 15. In case the IRS finds errors, or in case of an audit, you might need to be able to contact your tax preparer throughout the year.
Read the contract carefully. Read tax preparation service contracts closely to ensure you understand issues such as how much it is going to cost for the service, how the cost will be affected if preparation is more complicated and time consuming than expected and whether the tax preparer will represent you in case of an audit.
Read the contract and know what you're paying for. Understand how much the service costs, how the cost will be affected if preparation is more complicated and time consuming than expected, and whether the tax preparer will represent you in case of an audit and how much that will cost.
Remember that it's illegal for tax preparers to encourage you to falsify deductions, exemptions or income in order to pay less tax or obtain tax credits. If they ask you to sign a blank or incomplete form or guarantee that you won't be audited, go elsewhere.

For more advice on finding professionals you can trust, visit