David Fry

AT&T Cingular's recent upgrade of their online billing system makes it easier to read and understand their bills.  Poking through my bill today I immediately saw suspicious charges that had gone unnoticed for four months.

My wife has been recieving text messages with pointless facts, like how the blue whale is the biggest mammal in the world. She was annoyed by the unwanted interruption to her busy day, but I took a few minutes and unsubscribed her -- or so I thought.  What we didn't know was that the company, M-Qube Inc. was charging us $9.99 a month on our cell phone bill. This wasn't just SMS spam, it was a "premium subscription" that randomly appeared.

So I called AT&T this morning and they removed the charges right away - four months worth, and credited back the nearly $40 we had paid. Clearly AT&T knows this is a problem, because they were so willing to reverse the charges without question.

Its not surprising that unscrupulous companies will subscribe people without their consent to these kinds of services.  Looking up the company online I found multiple sites with hundreds of complaints against m-Qube for charges between $9.99 and $19.99 appearing on the phone bills of unsuspecting subscribers.  

What did surprise me is that M-Qube Inc. is a subsidiary of VeriSign. As it turns out, M-Qube may not be the end of the line -- just one of the benificiaries of the scam. So who is running this fraud?

First, a little background. Each SMS provider needs to apply for a common short code - a five-digit phone number that is easier to remember. In the case of M-Qube it is 40544. These codes act as shortcuts for a mobile number and allow phone users to subscribe by texting a phrase to that code. The application process for a short code is time-consuming and requires them to agree not to engage in these kind of practices.  

M-Qube apparently shares their short codes, creating campaigns for multiple customers on the same short code, and despite their agreements, does not use the proper dilligence to keep their customers from scamming cell phone users. So while M-Qube, as the owner of the short-code is ultimately responsible -- we probably won't know what company is using the shared code 40544#11712, which appeared on my wife's bill.

Ultimately the cell phone service providers get caught in the middle.  While a lot of customers won't notice the charges, in part because of the complexity and sheer length of the bills, when customers do complain, the provider nearly always reverses the charges. But the providers still have a vested interest in looking the other way most of the time, since they share in the subscription charges and get to charge for higher volume of text messages. So they are in no big hurry to insist on cancellation of the short codes for bad actors in the SMS industry.

But the providers may want to reevalute their tacit acceptance of these practices. First, customers hold their cell phone provider responsible any time their cell phone bill is higher than expected. No matter how quickly the charges are reversed, this situation contributes to an erosion of customer loyalty in an industry that works very hard to keep their customers.

Secondly, they need to examine the true cost of reversing these charges at every stage of the process. I have no doubt that the 10 minutes I spent on the phone today with AT&T, multiplied many times over, must cost them a fortune.  AT&T Cingular is finally answering their customer service lines in a reasonable time, and using U.S. based call centers, which indicates a much greater investment in human operators.  These customer service representatives are further burdened by the irresponsible action of companies like M-Qube.

And finally, the providers will find that little by little they are killing the goose that lays the golden eggs. Today I took the only means availalble to stop this situation from reoccurring, by having AT&T install parental controls on all my lines to prevent online purchases.  Not that we would generally pay for ringtones or apps for our phones, but that option is now disabled.  So our cell phone carrier is guaranteed not to get a dime in phone-based purchases from any of our lines.

More on this Subject:

• Read 886 complaints (and counting) against M-Qube Inc..
• Read Business Week's profile on M-Qube, Inc..
• Read the Common Short Code Terms of Service.
• Read the Mobile Marketing Association's Code of Conduct.