BEFORE THE FEDERAL TRADE
In the Matter of:
900-Number Rule Review; Request for Comment Regarding ossible Modification of Definition of "Pay-Per-Call Services" Pursuant to the Telecommunications Act
FTC FILE NO.: R611016
FLORIDA PUBLIC SERVICE COMMISSION COMMENTS
Pay-per-call (PPC) billing, specifically charges to telephone bills, continues to be a major source of complaints from Florida consumers, and the number of complaints are on the rise. The Florida Public Service Commission (FPSC) believes additional consumer safeguards should be considered to address common forms of billing abuse. Attachments to our comments provide examples of the following types of complaints which suggests that the bills are not in compliance with existing requirements:
Based on our review of these common complaints, the FPSC makes the following suggestions:
1) Consideration should be given to expanding the definition of pay-per-call to incorporate the many forms of access used by segments of the industry, including masqueraded international toll.
2) The Federal Trade Commission (FTC) should consider specifically requiring the information provider to be responsible for obtaining authorization for its charges, not allowing the information provider to bill or initiate collection action based on the assumption that if the call originates from a phone number that the subscriber is automatically liable.
3) Consideration should be given to prohibiting information providers, service bureaus, and collection agencies from misleading telephone subscribers that they are legally bound to pay for any unregulated PPC charges on their telephone accounts, even if the charges were not authorized.
4) Consideration should be given to prohibiting information providers, service bureaus, and collection agencies operating on behalf of the information provider from rebilling directly the charges removed from a telephone bill and from threatening or actually reporting negative credit reports to credit bureaus when fraudulent calls, masqueraded charges, charges for services not in compliance with applicable rules, or unauthorized charges are involved.
5) The FPSC urges the FTC to consider incorporating the added consumer safeguard of a billing block option. The FPSC has proposed that the Federal Communications Commission (FCC) consider making available a billing block option to local exchange subscribers. This option would be limited to those who request it. As envisioned, this option would allow telephone subscribers to block bills to their account from third-parties, unless the electronic billing record includes the proprietary personal identification number (PIN) of the subscriber associated with the telephone number. Without the correct PIN, the charge would be automatically rejected by the telephone company and would not appear on a subscriber's telephone bill. The FPSC believes this type of consumer safeguard would be an additional tool for consumers to use since the complaints attached suggest that dialing blocks are no longer effective. With this feature, information providers would have to obtain the authorized PIN number or risk having their charges automatically blocked.
Our comments are limited to our suggestions above and to responses to certain questions set forth in the FTC's invitation to comment.
I. General Issues for Comment
1. Is there a continuing need for the 900-Number Rule?
Yes. In 1995, the FPSC received over 800 PPC complaints from Florida consumers. In 1996, the FPSC received 1,179 inquiries, and for the first three months of 1997, the FPSC has received 153 complaints. We believe it is too soon to determine whether the level of complaints this year signifies a downward trend. Therefore, we believe it is apparent, based on the large volume of complaints, that there is a continuing need for the 900-Number Rule. In addition, the increase in complaints between 1995 and 1996, indicates that changes to the Rule are appropriate.
2. What effect, if any, has the Rule had on consumers?
2c. What changes, if any, should be made to the Rule to increase the benefits to consumers?
For the most part, the FPSC believes the Rule has had a positive effect on consumers. However, some PPC providers are continuing, apparently willfully, to disregard the Commission's definition of a PPC by billing for calls to numbers other than those beginning with 900. For example, the current rule requires PPC numbers to begin with the 900 service access code. However, the rule definition states that it does not include "any service the charge for which is tariffed." In our review of complaints, it appears that some PPC providers are deliberately "hiding" behind the Commission's exclusion of tariffed services from the definition of pay-per-calls by billing an excessive amount as the tariffed charge for some unwanted service. Examples of this type of complaint can be found on pages A1 - A4 (Nielsen complaint) and A5 - A21 (Burgess complaint). These complaints deal with services for N11 and 700 numbers, which are tariffed. The FPSC believes that the Commission's definition should be expanded to include any call by any access code that initially or ultimately results in charges to a telephone subscriber above the normal tariffed toll charges of an equivalent service provided by the subscriber's authorized carrier. The provider must be responsible for obtaining explicit authorization for such services, in writing. Alternatively, the information provider may obtain the LEC specific PIN, generally available to any LEC subscriber, to document authorization. Otherwise the subscriber should be able to reject charges for such services as unauthorized. This would be helpful in protecting subscribers from abuse of their accounts by visitors or through clip-on type fraud.
6. Are there additional advertising, operating, or other standards for the audiotext industry not included in the Rule that might now be desirable or necessary to prevent deception or other abuses, or to prevent evasion of the Rule's requirements and prohibitions?
Yes. As documented in the attached complaints, many of the calls allegedly made were in response to advertisements. However, segments of the industry, in the cases attached, have evaded the definition of pay-per-call by various means. The FTC's definition of pay-per-call might be amended to include any call, by any service access code, excepting telephone directory assistance, that results in the provision of a live or recorded audiotext message or the provision of entertainment, information or services charged to a telephone bill. In the event that the commission does not believe it has the latitude to make such a change to the definition, the commission could urge the FCC to make the suggested changes or seek statutory authority.
In addition, the FPSC cannot stress enough the importance of making the PPC providers more responsible in obtaining authorization from the customer of record. The PPC provider should be required to produce verification that the customer of record authorized the call. Right now, a consumer is guilty until proven innocent. This brings up the question of how a customer of record can prove that he did not make a call. In one complaint (pages A63-A65), the consumer was billed for a PPC on her 5/17/96 bill and upon receipt of the bill, immediately disputed the charges. The PPC provider advised the customer by letter dated 5/29/96 that the charges would not be removed as the customer is responsible for "all charges incurred by that telephone." Subsequently, the PPC provider notified the FPSC by telephone call on 5/31/96 that it had discovered hackers were apparently breaking into condo meter rooms and making pay-per-calls and billing them to the condo residents (pages A61-A62). That is what happened in the above example and the subscriber's bill was subsequently credited for the fraudulent charges. How could this customer have proven that she did not make the call? The PPC provider at first believed that because Automatic Number Identification (ANI) captured the customer's number, the call was made from her telephone. This was later proved erroneous.
For this and other reasons, the FPSC believes that before PPC providers can bill consumers for PPC charges, a method should be considered in which providers are first required to obtain a valid authorization number (for those customers requesting the billing block option) much as any merchant would, of necessity, obtain a customer's complete Visa credit card number.
8. How should the FTC's Rule be amended to harmonize with changes and proposed changes in the FCC's regulatory approach?
The FPSC believes that the FTC should add a statement to its rules that any differences with the FCC's rules are to be interpreted with the more stringent requirement prevailing.
10b. Are there additional definitions that should be added to the Rule? Explain.
The FPSC believes that the Commission's definitions should be expanded upon. For example, the definitions might include the term "billing block option" to define an option available to subscribers for blocking the billing of any pay-per-call service for which the provider has not obtained specific authorization through a LEC proprietary card PIN number. To address PPC masqueraded as international toll, perhaps the definitions section should define any international telephone numbers published to solicit calls that cost more than 75 cents per minute as PPC. The definitions should also address and include the telemarketing of debit/credit cards, 800 number services, conference calls and other services with initial or recurring monthly charges from other than the subscriber's preferred carrier as PPC.
11b. Should entities engaging in service bureau functions be covered by the rule, even if they also engage in "common carrier" functions at other times?
Yes, to prevent industry segments from evading the rule by looking for new exemptions to exploit.
12e. Should the Rule require that a presubscription agreement be in writing?
The FPSC believes that PPC providers should be required to obtain the agreements from the customers of record in writing, similar to the Letter of Authorizations (LOAs) required by primary interexchange carriers to switch a customer's long distance carrier. Legitimate PPC providers should welcome the added responsibility of obtaining LOAs from customers of record to avoid the time and expense of investigating consumer complaints that a service was not ordered. Examples of complaints that would have been avoided would include pages A44 - A60.
14. Does the Rule provide adequately for disclosing the cost to consumers prior to making a call to a 900 number service?
The FPSC believes that legitimate PPC providers do adequately disclose the cost prior to the consumer making the call to a 900 number. However, it is those companies that advertise local or 800 and 888 numbers, and international numbers that evade adequately disclosing costs to consumers. By incorporating these forms of access into the definition of PPC, the FTC may better enforce its existing rules to address the types of abuses included in the attached complaints.
16. Is the requirement governing "telephone solicitations" in section 308.3(h) clear, meaningful, and effective?
Telemarketing appears to be the basis for charges to subscriber telephone bills for items such as debit cards, blocking services, member services, discount services and credit card offers. Based on complaints to the FPSC, the subscribers never ordered and in some cases never received the items allegedly agreed upon and billed for. The requirement governing "telephone solicitation" may not need to be modified if the definition of pay-per-call is modified to include the services described above.
IV. Operation and Standards
25. What impact has the Rule had on complaints, and requests for credits or refunds not authorized by subscribers?
Based on complaints and inquiries to the Florida Public Service Commission, complaints (1,179) in 1996 were 37% higher than 1995. Without the rule complaints would probably be higher still. Consumers complain about phantom calls, advertising which results in unauthorized teenage access of PPC services, deceptive and misleading ads for job services and fraudulent calls. In addition, our investigation has documented that some calls billed by an information provider as 900-number calls were never made (pages A89 - A95). Based on our review, the FPSC believes the current rule has not provided adequate consumer safeguards.
V. Billing and Collection
31a. How does "phantom billing" occur?
31b. What procedures and safeguards should exist to ensure that customers are billed only for calls actually placed from that customer's phone?
31c. How does a billing entity determine that billing tapes or other records of calls are genuine?
The FPSC believes that "phantom" billing does occur. Our investigation of one complaint documents that the subscriber charged for 900-number calls had a working 900-number block in place at the time. Moreover, the transport provider for the 900-number in question confirms that such a call did not transit its network (pages A89 - A95). One could conclude that the information provider made up the charge. Based on this and other complaints we have reviewed there appear to be no protections built into local exchange company billing systems to limit anyone using the services of a service bureau or billing clearinghouse from initiating a bill to anyone at anytime for anything, without authorization. The charges simply appear on a subscriber's telephone bill.
In other cases, the question remains whether someone broke into a meter room at a condominium and made calls using a resident's phone line (pages A61 - A67). Time and again, the FPSC receives responses from PPC providers advising that its only "proof" that the billed PPC was made from a customer's telephone is ANI. As pointed out by one PPC provider (pages A61 - A62), that is not always a correct assumption.
For these reasons, the FPSC believes consumers deserve to have a billing block option for their local telephone service considered by the commission, as described herein, to provide additional safeguards to them to prevent recurring billing and collection abuses and evasion of applicable rules by segments of the PPC industry.
Because the consumer protections implemented thus far in response to the Telephone Disclosure and Dispute Resolution Act have not been sufficiently effective, the Florida Public Service Commission urges the Federal Trade Commission to implement additional consumer safeguards as outlined herein with special emphasis on those charges billed to subscribers' local telephone accounts.
1) The FTC should consider expanding the definition of pay-per-call to encompass the variety of charges masqueraded as international toll, debit card, credit card and member services, and services provided through service access codes other than 900.
2) Consideration should be given to making information providers responsible for obtaining authorization for specific charges and whether information providers should be allowed to bill or initiate collection action based on the assumption that if the call originates from a phone number the subscriber is automatically liable.
3) The FTC should determine whether information providers should be prohibited from misleading telephone subscribers that they are legally bound to pay for unregulated PPC charges on their telephone accounts if the charges were not authorized.
4) The FTC should consider whether information providers, service bureaus and collection agencies operating on behalf of the information provider should be prohibited from rebilling directly the disputed charges removed from a telephone bill and from threatening or actually reporting negative credit reports to credit bureaus.
5) In addition, consideration should be given to allowing subscribers to establish a LEC proprietary card billing block to prevent billing for unauthorized charges. If a LEC proprietary card blocking option is not feasible, other alternatives include establishing some form of oversight of billing practices in view of billing abuses as described herein; and requiring a clause in LEC billing contracts to address termination of such agreements with service bureaus, clearinghouses or information providers upon sufficient showing of continuing abuse of applicable federal or state requirements.