Workshop on Pay-Per-Call Rulemaking
Federal Trade Commission
June 19 and 20, 1997
Thursday, June 19th
- 8:30 a.m. Registration
- 9:00 a.m. Welcome; announcements
Eileen Harrington, Associate Director for Marketing Practices, Federal Trade Commission
- 9:15 a.m. Opening remarks
The Honorable Bart Gordon, Member of Congress (D. - Tenn)
- 9:30 a.m. Brief introductions by participants
- 10:00 a.m. - 12:30 p.m.
BILLING AND COLLECTION: INDUSTRY PERSPECTIVE
- Audiotext industry commenters expressed concern over the level of allegedly inappropriate chargebacks in their industry and over the delays in providing them with notice of billing disputes. Several commenters provided proposals for new billing notices that they hoped would clarify consumers' rights and responsibilities.
[short break around 11:00 a.m.]
- What factors explain the high chargeback rate in the 900 number industry? What accounts for the fact that some 900 number services result in higher chargeback rates than other services? What measures could be taken (by providers, carriers, FTC) to reduce the level of chargebacks?
- Who bears the cost of chargebacks for international audiotext calls? Are Information Providers (IPs) who utilize international audiotext services affected in any way by consumers' refusal to pay for such services? What problems do such chargebacks create for LECs or long distance carriers? What problems do consumers encounter in attempting to get credits for international audiotext charges?
- What procedures do the LECs follow in deciding whether to credit a consumer's phone bill for a disputed audiotext call? Are the procedures for 900 number charges different from those for international audiotext charges? What procedures do IPs follow in deciding whether and when to pursue secondary collection for these LEC-credited calls?
- What factors impede LECs in providing timely notice of billing disputes to IPs? Should the Rule define "promptly notify" as it relates to the billing entities' obligation under section 308.7 of the rule?
- Several commenters suggested language changes to the notice the rule requires to consumers regarding their rights and responsibilities in connection with billing disputes over audiotext services. What impact would these suggestions have on the level of chargebacks? What impact would they have on the level of secondary collection activities? What costs and benefits to consumers? To industry? [Proposed billing notice language will be distributed]
- 12:30 - 1:30 p.m. Lunch Break
- 1:30 - 3:15 p.m.
BILLING AND COLLECTION: CONSUMER PERSPECTIVE
- Consumer agencies report an increase in complaints alleging unauthorized calls, calls by minors, and "phantom billing" (i.e., calls where the consumer alleges that no one was at home or at the business at the time the call was made).
[short break around 2:30]
- What can be done (by IPs, carriers, or the FTC) to reduce the incidence of unauthorized calls to 900 numbers? Unauthorized calls to other audiotext services? What additional measures, if any, could be taken to ensure that individuals under the age of 18 do not contract for these services? Are the preambles at all effective in reducing the incidence of unauthorized calls by minors?
- What measures are currently taken to ensure that billing to a particular telephone line accurately reflects calls made by the subscriber of that telephone line? How can "phantom" billing occur? Would new limitations or guidelines on the use of ANI billing decrease complaints alleging "phantom" billing? What additional measures, if any, could be taken to ensure that billing is accurate?
- Are IPs adequately complying with the requirement to conduct a "reasonable investigation" of an alleged billing error, as spelled out in Section 308.7 of the Rule ? What procedures are currently followed to investigate the validity of the claim? What additional procedures, if any, could be taken? Should the rule specify the requirements of a "reasonable investigation?"
- Are secondary collection activities by IPs undermining the billing and collection dispute resolution procedures set forth in the Rule? Are these secondary collection activities taking place before the dispute has been adequately investigated by the IP? By the LEC? Should the Rule incorporate provisions of the Fair Debt Collection Act in order to protect consumers from abusive debt collection practices?
- 3:15 p.m. Break
- 3:30 - 4:45 p.m.
BILLING AND COLLECTION: POSSIBLE SOLUTIONS
- What can be done to fairly resolve disputes between an IP who insists that a particular pay-per-call charge was legitimate, and a consumer who insists that such a charge was not legitimately made? Would it be possible for industry to set up and fund alternative dispute resolution mechanisms for dealing with such disputes?
- What limitations exist on constructing an industry-wide database of "problem" callers? Are there ways to overcome these limitations? Who would determine which callers would be placed in the database? Who would resolve disputes arising from placement on such a database? What, if any, restrictions on use of the database information should there be? What prevents LECs from sharing 900 number blocking information with IPs or billing entities?
- Should the definition of "billing error" be expanded to include additional types of billing disputes?
- 4:45 p.m. Public participation
Friday, June 20th
- 9:00 a.m. Announcements
- 9:15 a.m. - 10:45 a.m.
DEFINITION OF "PAY-PER-CALL"
- The comments almost universally supported expansion of the definition of "pay-per-call" to all dialing patterns which can be used to provide audiotext services. However, commenters disagreed on how to best define "pay-per-call" in order to capture these other dialing patterns.
- How can a definition of "pay-per-call" be crafted which accurately identifies, pursuant to the 1996 Act, those audio information or audio entertainment services which are "susceptible to the unfair and deceptive practices that are prohibited" by the current 900 Number Rule?
- Is the financial benefit to the information provider the primary identifying characteristic of a "pay-per-call" service? Alternatively, is a relatively high per-minute price the correct hallmark of a "pay-per-call" service?
- If financial benefit to an information provider is the correct identifier of a "pay-per-call" service, should all calls where an IP receives remuneration from a LEC or carrier be captured by the definition? Should there be a threshold percentage of the per-minute charge (e.g., 5%), or a cap on the per-minute amount received by the IP, below which calls would be excluded from such a definition, so that "TSAA" type arrangements would not be brought within the scope of the rule as suggested by AT&T? How would such a threshold work?
- What would be the consequences of restricting all pay-per-call services to specific dialing patterns? What would be the consequences of expanding the definition of pay-per-call to include international audiotext services without any corresponding modifications to the rule to exempt such services from requirements to provide free preambles, cost disclosures, and billing notice and billing dispute procedures?
- 10:45 a.m.- 11:00 a.m. Break
- 11:00 a.m. - 12:30 p.m.
COST DISCLOSURES AND OTHER CONSUMER PROTECTIONS FOR NON-900# DIALING PATTERNS
- Commenters generally agreed that the cost and other disclosures required by the 900# Rule had benefited both consumers and the industry. Although industry costs have increased, those costs are outweighed by an increase in the volume of calls and in profitability as consumer confidence increased in the use of 900#s. Consumer complaints about 900#s have decreased dramatically, whereas complaints about audiotext services using non-900# dialing patterns have increased.
- What should an advertisement for an international pay-per-call service be required to disclose? Should the Rule require preambles for such services, even if it would cost the consumer money? What should such a preamble disclose?
- Would it be possible for international audiotext calls to be billed in the same (or similar) fashion as 900 numbers if IPs were required to inform LECs and long distance carriers (in advance) that such numbers are actually "pay-per-call" services?
- Could current Rule requirements be applied fairly to non-900 audiotext services? Would different disclosure, billing, billing notice, and blocking requirements be necessary? Would these different requirements be fair to 900 number operators? Would these requirements give a competitive advantage to such services that had more lenient requirements?
- What can be done to ensure that consumers have the right to dispute charges for any audiotext services which are billed as a result of a consumer having made a telephone call? How can consumers identify the IP who provides an audiotext service via an international number? How can the issue of disconnection for failure to pay non-900 number charges be addressed?
- 12:30 - 1:30 p.m. Lunch break
- 1:30 - 2:30 p.m.
- For what types of services should a presubscription agreement be required? Should the FTC rule require that presubscription agreements be in writing? To be signed by the telephone subscriber? What about electronic form?
- How might the current 900 Number Rule be modified to be consistent with the changes in TDDRA made by the Telecommunications Act of 1996? With the changes made to the FCC regulations as a result of the 1996 Act? With the additional changes proposed by the FCC?
- What additional steps can be taken to ensure that a telephone subscriber is not billed (either by secondary collection efforts or otherwise) for a presubscription service agreed to by a third party? By a minor?
- What can be done to prevent consumers from unknowingly entering presubscription agreements whereby they are charged on a monthly basis? What can be done to ensure that consumers who have done this can easily dispute or terminate such agreements? Are the IPs making themselves available to consumers who have done this to receive and respond to complaints and requests for cancellation?
- 2:30 - 3:30 p.m.
- Should additional measures be taken to protect consumers from misleading sweepstakes offers which utilize pay-per-call services? Should preamble requirements be changed? Should the Rule require additional disclosures relating to the odds of winning or the alternative means of entry? Should the Rule prohibit certain types of misrepresentations in connection with sweepstakes?
- What types of calls currently fall under the nominal cost exemption? What is the chargeback rate for these calls? Should the nominal cost threshold be changed? Should it be adjusted for inflation periodically?
- What modifications to the preamble requirements, if any, are necessary to deal with offers of "free time?" Should an IP have to provide a tone or other signal which informs a consumer when free time has expired? Should such tones be required to indicate any rate change which occurs during a call? Alternatively, should preamble requirements be modified to deal with such situations?
- With respect to adult pay-per-call services, what is the current industry practice regarding the parental permission admonition? What data exists to support the assertion that the dual warnings referred to in comments is confusing to consumers or ineffective in reducing the incidence of calls by minors?
- 3:30 p.m. Break
- 3:45 - 4:30 p.m.
IMPACT OF NEW TECHNOLOGY
- Many commenters expressed concern about premature regulation of Internet advertising. Yet consumer agencies are receiving increased numbers of complaints regarding audiotext services that are using this new medium. In addition, new telecommunications technology will provide new opportunities for provision of audiotext services (e.g., video conferencing).
- What types of technology are likely in the near future that will extend the opportunities for audiotext services? How can regulators craft rule provisions that will be broad enough to avoid becoming obsolete as new technologies are developed?
- Are the general consumer protection statutory provisions sufficient to regulate new technologies as they develop? Are there sufficient complaints to justify special coverage of Internet advertising at this point?
- 4:30 p.m. Public participation
- 4:45 p.m. Closing Remarks -- Eileen Harrington