The California Public Utilities Commission has issued a new rule that gives consumers better protections against unauthorized charges on their phone bills – also known as “cramming.” This is an important step forward, as more consumers are buying products and services with their mobile phones from third parties and receiving the charges on their phone bills.

Under the new rule, phone companies in California have to give you notice and a chance to opt out of allowing third parties (like a ringtone download store or a charitable organization) to put charges on your phone bill. Even if you do allow third parties to put charges on your phone bill, you are not responsible for unauthorized charges, which are defined as “[a]ny charge placed upon a Subscriber’s telephone bill for a service or goods that the Subscriber did not agree to purchase, including any charges that resulted from false, misleading, or deceptive representations.” If you dispute a charge, it’s assumed that you did not authorize it – the phone company has to prove otherwise before they can hold you responsible for the disputed charge. While an investigation is pending, you don’t have to pay the charge. If you’ve already paid it, they have to either verify the charge or give you your money back within 30 days.

The rule does have a downside, though, because it defines “Subscriber” to include the person who holds to phone account or another person who is in “lawful possession” of the phone and has been authorized to make charges with the phone. This means it’s unclear what would happen if, for example, you lent your phone to a family member to make certain charges and your family member racked up extra charges that you didn’t want on your phone bill.

To read the new rule, click here.

Meanwhile, it’s important to remember that mobile payments come with certain risks. The level of legal protections you have against fraud or unauthorized charges varies depending on the payment method you link to the phone.

To read our tips for consumers who make mobile payments, click here.

Have you ever tried to dispute a charge on your mobile phone bill from a third party? Submit your comments below.