30 Minutes Bay Area

On The Hook For Cellphone Fraud

(CBS 5) The number one consumer complaint in California is cell phones. From service, to billing, to customer relations, a lot of folks are not happy with their wireless provider.

Wendy Nguyen is one of those upset customers. She was a victim of phone fraud.

She lost her phone the night before a big trip. She thought the phone was in her apartment, but before her plane even left the ground, her phone had made $99.33 worth of calls. That was just the beginning.

Over the next two weeks, while Wendy was in Vietnam, her phone was hard at work in San Francisco.

"When I got back, I searched all week at work and at home for my cell phone," Wendy says.

By the time she finally reported the phone missing, the damage was done. Her bill had gone from $50 a month to a tab of $26,472.54.

"I felt overwhelmed," Wendy says. "I was just really scared."

An estimated 3 million cellphones will be lost or stolen this year. Many will wind up in the hands of criminals. The police told Wendy that there was little they could do. Stolen phones are a low priority.

"There was a co-worker next to me who said 'calm down, surely if you call Cingular they'll recognize that this is not your fault. And this cellphone had been stolen,'" recalls Wendy.

Wendy's contract with Cingular specified that she was responsible for all calls made before she reported her phone missing.

"I guess I wasn't expecting the treatment I got from Cingular," Wendy says. Realizing I was a victim of a crime, and they were in no way supportive of that…and the supervisor told me, 'well, maybe you can file for bankruptcy.'"

Steve Larson is the Executive Director of the California Public Utilities Commission. They have the power to protect people from water and electric companies.

"We have very, very little to say about cellphones," says Larson, who points to the FCC as the regulating force for the industry. "It's not heavily regulated, no. But that's the purpose. The purpose was to stimulate competition and not heavily regulate it."

In an effort to promote growth, the U.S. Congress de-regulated the wireless industry in 1996. It has worked well, for the most part. It is now an industry bringing in more than $100 billion annually. But deregulation also allowed cellphone companies to set their terms and conditions of service.

Bill Nusbaum fights for consumer rights as Lead Attorney for the Utility Reform Network. When it comes to cell phones, he says the law favors the companies.

"You're on the hook. That's part of the contract," Nusbaum says. "If the contract says you're gonna pay for calls, that's what you're gonna do. You're gonna pay for the calls."

Wendy says she has spent hours on her cellphone trying to dispute the charges over the last six months.

"(I would) Call the Cingular person. That person would transfer me to the Cingular supervisor, who'd transfer me to the AT&T wireless person, who would then transfer me to their supervisor, who would then transfer me to the accounts receivable department, and back and forth," Wendy says.

She started getting calls from a collection agency. Her credit was threatened, and her bill was ballooning with additional late fees and interest charges on the original balance.

Wendy believes that all of this could have been avoided if cell phone companies had a system to flag suspicious activity, the way credit card companies do.

"For someone who typically spends under 50 dollars, why they would suddenly get a $26,000 bill?" asks Wendy.

"It's greed unfortunately," says Nusbaum, who thinks the problem is fixable. "They can put a piece of software in that says if there's particular unusual activity, notify a customer. I don't think it's hard, I don't think it's expensive."

After months of frustration, Wendy called CBS 5 News. Shortly after we contacted Cingular, the company notified Wendy that all charges would be dropped. Spokeswoman Lauren Garner says Cingular now has a new system to alert customers of suspicious calls. The program was put in place after Wendy's case.

"Cingular is always working to improve and enhance our fraud syastems, and our anti-theft systems," Garner says. "We started working with Wendy the day she called us about her situation. And it does take time in a situation like this, beacause it is so unusual."

We asked Garner how Cingular could claim to be working with Wendy, while at the same time sending her to collecions, and asking her to file for bankruptcy.

"We regret any inconvenience our customers have," Garner replied. "In this situation we were working with Wendy from the day she called us."

Wendy says she that Cingular repeatedly told her that there was nothing she could do.

"The cellphone companies are just battering, bullying us into paying these charges," Wendy says.

After it all, Wendy is still a Cingular customer.

"If I quit my contract I would have to pay a $250 fee," Wendy says. "I have to continue to be a Cingular customer...I'm pretty much counting the days!"

Cingular is not the only wireless company with this policy. Next year, congress plans to debate new regulations for the wireless industry. Consumer advocates are already urging people to use those cellphones to call their representatives.

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