FEDERAL TRADE COMMISSION
Washington, D. C. 20580
In the Matter of
Pay-Per-Call Rule Review-- Comment
FTC File No. R611016
COMMENTS OF SBC COMMUNICATIONS INC.
SBC COMMUNICATIONS INC.
ROBERT M. LYNCH
ROGER K. TOPPINS
One Bell Plaza, Room 3026
Dallas, Texas 75202
March 10, 1999
TABLE OF CONTENTS
- I. Introduction
- II. Response to General Questions
- III. Response to Questions on Proposed Specific Changes
- IV. Conclusion
SBC Communications Inc. ("SBC") on behalf of itself and its subsidiaries(1) files these Comments for the purpose of urging the Federal Trade Commission ("FTC") to move cautiously and not expand the current rules in such a manner that would unnecessarily burden the telephone billing process. SBC generally supports the efforts of the Federal Communications Commission ("FCC"), the various state Public Utility Commissions ("PUCs") and the Federal Trade Commission ("FTC") to protect consumers from unauthorized or even fraudulent charges. However, some of the proposed changes go too far and burden the entire industry, not just the wrongdoers that are causing the problems. SBC questions whether the complex and burdensome changes that some of the amendments to the rules would require in local exchange company ("LEC") billing practices will really have any substantial effect on cramming. SBC was an active participant in the industry group that formulated the "LEC anti-cramming Best Practices Guidelines" and believes that such industry forums produce the most practical solutions to the problems plaguing the industry today. SBC is also providing separate notice of its willingness to participate in any public workshop conducted by the FTC on the proposed Pay-Per-Call Rule.
(a) What is the effect (including any benefits and costs ), if any, on consumers?
Response: To the extent that the amendments to the rules require changes in the manner in which telephone bills are issued today, then the ultimate effect on consumers will be an increase in the price of telephone billed purchases. Local exchange telephone company billing systems are highly automated, designed to bill multiple small charges on a monthly basis at minimal cost. Making changes to those mechanized systems is very costly.
For example, elimination of the "Annual Notification" alternative will increase costs for every telephone company that is required to include the notification on each bill. Compliance with this rule change will require changes in the billing systems of the SBC companies and, presumably, all other billing entities that had relied on the annual notification alternative. In addition to the annual notification, SBC companies print the notification in the general information pages of its White Pages directories. Customers are done a disservice when regulators attempt to require the inclusion of too much information in telephone bills, thereby defeating LEC efforts to respond to customer demand for a shorter, simpler bill. Consideration should be given to using such other channels of communication in order to avoid the necessity of making costly changes to a LEC billing system. A careful cost/benefit analysis should be made before any change is required in the LEC billing process and it would be more appropriate for the FCC to make such analysis than the FTC.
Ultimately, SBC companies will be required to recover that additional cost from the vendors who purchase billing services from SBC and those vendors will, in turn, increase their prices to their customers. While the cost of this one change may not be prohibitive, the cumulative effect of this and other expanded billing requirements is more bill pages, with commensurate increases in paper for printing the bills and postage for mailing the bills. Customers are already complaining that there are too many bill pages and that bills are too confusing. Changes to a LEC billing system, particularly changes that lengthen the bill, usually require considerable advance notice and are very costly. It is SBC's position that the result of a careful cost/benefit analysis would be the conclusion that the benefits from the elimination of the "Annual Notification" option do not outweigh the cost of implementing that change.
(b) What is the impact (including any benefits and costs), if any, on individual firms that must comply with the Rule?
Response: Any changes to the rules that require a change in the billing systems of LECs is particularly burdensome at this time, when the LEC billing systems are undergoing changes to accommodate local competition and to solve the Y2K problem. The billing system is a computerized process and there are limited resources available for implementing changes in that process.
(c) What is the impact (including any benefits and costs), if any on industry?
Response: There is both benefit and cost to the industry. Certainly, the elimination of fraudulent billing practices that give the whole industry a bad reputation is beneficial to those ethical companies who are providing a much needed service. However, if the cost of that benefit causes the billing service to become too expensive to use, then the benefit may not be worth the cost.
(d) What changes, if any, should be made to the proposed Rule to minimize any cost to industry or consumers?
Response: SBC will recommend specific changes in the Response to Questions on Proposed Specific Changes below.
(e) How would those changes affect the benefits that might be provided by the proposed Rule to consumers or industry?
Response: It is the position of SBC that the changes it recommends will not adversely impact the benefits that might be provided to consumers or industry and, in some cases, will enhance those benefits.
Question 1: Unauthorized charges. Viewed together, do the new billing error and express authorization sections (proposed 308.2(b) and 308.17) of the proposed Rule adequately address the problem of consumers being charged for unauthorized telephone-billed purchases? Is the "knew or should have known" standard for vendors, service bureaus, and billing entities sufficient to address the deceptive practices that the Rule intends to prevent?
Response: For the most part, the new billing error and express authorization sections will adequately address the problem. However, in some instances the amendments go too far. Rule 308.17 requires the "express authorization of the person to be billed for the purchase." Telephone billing is often in the name of an individual, but is used by multiple responsible adults in the family. To restrict the ability to make any telephone billed purchase to the person whose name appears on the bill is unnecessarily restrictive, inconvenient for consumers and burdensome for vendors. Rule 308.17 should be amended to require only "the express authorization of the customer."
The "knew or should have known" standard is inappropriate for application to billing entities. Such standard, while somewhat vague, may be appropriate for application to vendors because they have contact with the customer. Thus, there is a basis for assuming that they either know or should have known. To impose that standard on others, such as the LEC that only provides a billing service will impose a burden that far outweighs the benefit to be obtained from this particular rule change. In addition, it would impose liability on a party that cannot control the circumstances that drive that liability. To date, it does not appear that the problems are being caused by billing entities; the remedy, therefore, should be directed at the entities that are causing the problems, not the billing entities.
The LEC subsidiaries of SBC would come within the scope of the broad proposed definition of "billing entities." Those subsidiaries bill for individual carriers and for billing aggregators who resell the billing service to numerous smaller carriers. There is no way for the SBC LECs to know whether the end user customer authorized charges or not, short of verifying every charge over the telephone with each end user customer. Such extraordinary activity would dramatically increase the cost of the billing service, for each and every billing service customer, not just those who engage in the practice of cramming. In addition, this type of activity could be viewed as anticompetitive and would be very confusing to the customer. Thus, it is SBC's position that no billing entity should incur liability for unauthorized charges submitted for billing by a vendor in the absence of some strong evidence of complicity in the fraudulent scheme.
SBC's current policy is that it will not bill for non-telecommunications related items and that policy is reflected in the terms and conditions of its billing and collection contracts. However, the SBC companies cannot enforce that policy prospectively because of the automated nature of the billing process; it can only discontinue billing pursuant to the terms of its billing contracts, if it becomes apparent that charges for non-telecommunications related items are being billed. Otherwise, the SBC companies would have to examine every item sent through for billing to make sure that it was in fact a telecommunications-related charge. An additional layer of verification would cause unnecessary delay and inconvenience to customers. Even if customers would accept some system of individual verification, the cost of such examination alone would cause the fees for the billing service to be prohibitive. Such remedies, while they might cure the problem, are worse than the problem itself because it causes LEC billing services to become so expensive that those billing services are not an option for other carriers, even those carriers that only provide local or interexchange telecommunications services.
SBC has recently implemented new remedies based upon its billing contract provisions that prohibit submission of unauthorized charges. In those instances where the SBC companies have received an inordinate number of complaints, the carrier is placed on ninety days probation. If the carrier does not reduce the number of complaints received to an acceptable level within that ninety-day period, the billing service is subject to suspension altogether. A billing entity that has in place such a fraud-prevention program should not be liable for any fraud perpetrated by a carrier for whom it bills, unless there is very clear evidence that the billing entity is a party to the fraudulent scheme.
Question 2: PIN Number. Does the requirement that a PIN, as defined in proposed 308.2(i), be used in connection with a presubscription agreement adequately address the problem of controlling access to audiotext services provided through toll-free numbers?
Response: The requirement of a PIN to be used in connection with a presubscription agreement should help to control access to audiotext services provided through toll-free numbers. Some clarification may be needed, however. Would the PIN requirement apply to voicemail services that the customer reaches via toll-free numbers? If so, can the PIN assigned to the customer to allow the customer to access his/her messages also function as the pin for authorizing charges? It would be unreasonably burdensome to require the customer to have to remember two different codes to operate his/her voice-mailbox. Most PIN numbering systems allow the customer to select their own PIN, within certain limitations. Thus, if the PIN requirement is to apply to voicemail, then the actual assignment of PIN should be left to the carrier, so that the carrier could allow the customer to select its own PIN and use the network PIN for both purposes, if desired.
Question 3. Presubscription agreement. Do the proposed changes to the definition of "presubscription agreement" (proposed 308.2(j)), together with the provision relating to prohibitions concerning toll-free numbers (proposed 308.13), adequately address the problem of consumers receiving charges on their telephone bills under presubscription agreements to which they were not a party?
Response: SBC is assuming that either this requirement does not apply to telephone related services, such as voicemail or internet service, or if the rules do apply, the PIN used to activate the service can also serve as the billing pin. Based upon that assumption, SBC has no further comments on this Question.
Question 4. Service bureau. The proposed definition of "service bureau" (proposed 308.2(n)) is designed to include billing aggregators, and to prevent an entity from escaping liability under the Rule by hiding behind "common carrier" status. Does the revised definition include the appropriate entities? Are there other entities that should be included?
Response: SBC offers no comment on this issue.
Question 5: Pay-per-call service. Does the proposed definition of "pay-per-call service"(proposed 308.2(g) rely on the appropriate criteria to identify a pay-per-call service? Are the exemptions to the proposed definition of pay-per-call service appropriate? Are there additional exemptions that should be included?
Response: SBC supports the expansion of the definition of "pay-per-call" to apply to audiotext services that may use a dialing prefix other than, or in addition to, the charge for the transmission of the call. Such expansion would appear to be within the scope of the congressional definition and the FTC's jurisdiction. However, the expansion of the definition of "telephone billed purchase" to apply to any purchase that is charged to a customer's telephone bill goes beyond the scope for the FTC's jurisdiction and is not reasonable. Congress limited the jurisdiction of the FTC by specifically defining the term "telephone billed purchase" to mean "any purchase that is completed solely as a consequence of the completion of the call or a subsequent dialing, touch tone entry, or comparable action of the caller." The FTC cannot legally expand its own jurisdiction through a rule change, nor is such a change needed.
Question 6: De minimis threshold for pay-per-call services. Does the proposed $.05 per minute or $.50 per call de minimis threshold strike the appropriate balance between services that should be considered pay-per-call and services that should not be considered pay-per-call? Should the proposed threshold be higher or lower? Will some vendors be required to undertake additional record keeping in order to demonstrate their exemption? Is there a more efficient alternative to the de minimis approach?
Response: It seems wrong to establish a safe harbor for fraud, even if it is for insignificant sums of money, but this very common sense exemption may free up scarce enforcement resources to pursue those wrongdoers who are imposing the most damage. It would appear, however, that a rule based upon the total amount paid by the consumer would provide better consumer protection, without imposing any greater burden on the vendors. A limit stated as a flat rate of even $2.00 or $3.00 charged to a single consumer would provide greater consumer protection than the rule as worded. Presumably, a vendor could escape liability for a charge of $900.00 to a single consumer under the proposed rules, if the vendor could prove that on average it came within the safe harbor based on the average amount collected from its customers as a group.
Question 7: Rebuttable presumption of payment to a vendor. In the absence of direct evidence of payment, is a rebuttable presumption the best method of determining whether remuneration has been provided to a vendor? If so, has the Commission described the appropriate circumstances under which it should presume that payment has been made to a vendor? If not, what is a more appropriate method of determining whether remuneration has been provided to a vendor? Are there other circumstances under which payment should be presumed?
Response: No, the imposition of a rebuttable presumption of payment to a vendor places the vendor in the position of having to prove a negative. It is more appropriate to require the customer to prove payment to the vendor, as is the case in just about every other commercial transaction. A customer that has paid a telephone bill has or can get a copy of a returned check, a draft or a cash receipt evidencing such payment. What documentation can a vendor produce that will show non-payment of a bill? There are no circumstances under which payment should be presumed, without some evidence of payment first being presented by the customer.
Question 8: Misrepresentation of cost. Does the proposed provision governing misrepresentation of cost (proposed 308.6) adequately address the problem of consumers being misled regarding the cost of services?
Response: Yes. The language is clear, yet broad enough to cover any misrepresentation of the price to be charged for the service.
Question 9: Beepers and pagers. Is there any non-deceptive way in which beepers or pagers are used or could be used to solicit calls to a pay-per-call service? Is the restriction in proposed 308.7 appropriate? Is it possible to make adequate disclosures in beeper or pager solicitations? Would it be appropriate to prohibit these types of solicitations altogether?
Response: It does not appear to be possible to make adequate disclosures in beeper or pager solicitations at this point in time, unless the beeper or pager can receive voice or text messages. It might be appropriate to prohibit these types of solicitations in any situation where there would be a charge on the initial response call. Alternatively, the FTC could consider the prohibition of such solicitations to all beepers and pagers that are not capable of receiving voice or text messages long enough to accommodate the appropriate disclosures.
Question 10: Nominal cost calls. Do the data suggest that $3.00 is an appropriate threshold for designation of "nominal cost calls" (proposed 308.9) for which no preamble is necessary? If not, what "nominal cost" threshold does the data support? Should the "nominal cost" figure be adjusted for inflation?
Response: SBC has no comment on the appropriate level of nominal cost calls.
Question 11: Fractional minute billing. Under what circumstances are telecommunications calls or services currently billed in increments of less than one minute? In what increments are these calls or services billed? What billing increments are technologically feasible? What costs, if any, would be associated with requiring pay-per-call services to bill in increments of less than one minute?
Response: There should be no requirement for billing in increments of less than one minute. Long distance calls have traditionally been billed by the minute, often with an initial three minute charge and a set fee for each minute thereafter. However, if you went even just a little over the three minute initial period, you were billed for the next minute. It is very costly for companies to change their billing practices and there is no need for companies to do so. There is nothing deceptive about billing by the whole minute. The rules should focus on adequate disclosure to the customer of the charge to be billed and the manner in which the billing will occur. If adequate disclosure is made, the vendor should be free to bill for any desired increment of time because the customer can always decline to purchase the service, if the customer finds the billing practice that has been disclosed by the carrier to be non-satisfactory. There is no need for regulation of billing time increments because if there is sufficient customer demand for fractional minute billing, the market will drive at least one or more carriers to make that change in order to meet the market demand. If there is not sufficient demand to cause even a few carriers to implement that billing change in order to meet customer demand, then the cost of imposing that change on all carriers certainly cannot be justified.
Question 12: Toll charges. Does the proposal to prohibit audiotext services from being billed as toll charges (proposed 308.12) adequately address the problem of consumers being charged for audiotext services in a manner that does not provide them with all of the TDDRA-mandated protections? Are there other, less restrictive, means to address the problem?
Response: SBC has no comment on this issue.
Question 13: Express authorization. What costs would be associated with obtaining express authorization from consumers for non-blockable telephone-billed purchases (proposed 308.17)? Are there methods of obtaining express authorization that would impose lower costs than those methods described in the Notice? Is the proposed Rule sufficiently flexible to accommodate technological developments that may make it easier to obtain express authorization?
Response: While this rule may be very reasonable as applied to the vendor, application of the rule to the billing entity is not reasonable. The billing entity (and presumably the service bureau), has no way of knowing that a charge was not expressly authorized by the person from whom payment is being sought. The only way for the billing entity to come within the standard of "know or should have known" would be for the billing entity to verify each charge with the billed customer. The effect of such a rule will be to raise the billing charges to such an extent that no one will be able to bill non-local or long distance charges on a telephone bill, not to mention the inconvenience to the customer. While SWBT does not contract to bill such charges on its telephone bills, not all companies follow that practice. Imposition of this rule could cause such an increase in the billing rates that telephone bill billing will no longer be an option for pay-per-call vendors.
Question 14: Billing statement disclosures. Do the modifications regarding the disclosures on billing statements (proposed 308.18) adequately address the problem of consumers being unable to reach the entity whose telephone number is listed on the phone bill for billing inquiries? Does the provision adequately address the problem that consumers often cannot reach the entity with the authority to provide refunds or credits?
Response: No, the real problem is not just the identification of the billing carrier, there is also the issue of accessibility. Just requiring that a telephone number be printed on the bill is not sufficient, if the vendors then fail to have someone available to talk to customers. For identification purposes, SBC has proposed the use of a national identifier number for carriers in the Truth-in-Billing proceeding at the FCC and would make the same proposal here. Each vendor should be provided a national identifier number for billing purposes and that number would then be required to be printed on every bill sent to an end user customer. Further, the same basic billing identifier should be issued to an affiliated group of companies, with varied suffixes to denote multiple DBAs. Such a numbering system would allow customers to avoid changing vendors to escape the fraudulent practices of one vendor, only to discover that the "new" vendor is just the old vendor operating under a different trade name.
Question 15: Service bureau liability. What effect will the additional direct liability of service bureaus pursuant to proposed 308.17 and 308.20 have on industry? Will it increase the level of industry's accountability to consumers? What effect will it have on cramming?
Response: Liability should only be imposed on those entities that are responsible for the problem and service bureaus do not appear to be responsible for the problem, except where the service bureau has an equity or revenue-sharing interest in the vendor's business. However, in such situations, the service bureau is really functioning partly as a vendor and should have liability as a vendor, not as a service bureau. It is the vendor that deals with the customer and imposes the charges. The best way to stop fraudulent practices is to hold the vendor responsible for all damages and to impose harsh penalties on vendors with significant numbers of repeated offenses.
Question 16: Billing entity liability. What effect will the additional liability of billing entities pursuant to proposed 308.17 and 308.20 have on industry? Will it increase the level of industry's accountability to consumers? What effect will it have on cramming?
Response: As previously stated, one possible result of the imposition of additional liability on billing entities is that such billing will not be available to the pay-per-call industry. The rates for billing services cannot support the additional cost of such potentially devastating liability. It is not reasonable, nor is it necessary, to impose liability on the billing entity because there has been no convincing evidence that the billing entities are causing the problems.
As previously stated, the rules should target the offending companies, not burden the whole industry because of the unfortunate practices of a few. Rule changes that drive up the cost of billing for everyone in order to attempt to restrain the fraudulent acts of a few will only serve to dampen competition, without serious impact to the subset of the market that is primarily responsible for the cramming problem. The imposition of liability on the billing entity is particularly troubling because of the vague "knew or should have known" standard.
Imposition of that standard will have practically no effect if enforced only when a customer can prove that the billing entity actually knew or really should have known that the customer did not authorize the charge. Alternatively, this proposed rule change could shut down the billing process if a broad interpretation of the standard is applied. No billing entity can verify even a reasonable sample of the charges routinely sent to the billing entity for billing. The only standard that makes sense is one that is based upon a presumption that the carrier "should have known" when certain factual patterns exist, i.e. the carrier has consistently had an extremely high level of complaints and has taken no action to remedy the situation. The more effective approach would be establishment of the principle that billing entities in such situations have a legal right to cease billing for vendors who display a pattern of billing charges without proper authorization, without thereby losing the ability to bill for its own affiliates. In many instances, the LECs have been able to identify the vendors or billing aggregators causing the problems, but are met with allegations of anti-competitive behavior whenever they try to remedy the situation. Carriers should not be held liable for problems caused by others without being accorded a level of control that allows them to avoid billing the problem makers.
Question 17: Information necessary to collect debts. Does the proposed Rule adequately address in proposed 308.20(n)(4) the need of vendors and service bureaus to obtain sufficient information from the LECs to continue collection activities against customers who refuse to pay valid charges?
- Response: Rule 308.20(n)(4) would impose an unreasonable notification requirement on a LEC functioning as a billing entity. Under current practices and procedures, there is no way for a LEC functioning as a billing entity to know whether a customer intended to pay any specific charge when a customer makes a partial payment with no explanation. When a customer actually disputes a charge, the LEC functioning as a billing entity routinely provides prompt notice of the non-payment of that disputed charge as a part of the billing process. But where the customer makes a partial payment without explanation, a very common occurrence, the LEC has no way of knowing which charges the customer is intending to pay or the reason for the partial payment. The general industry practice is to credit the partial payment to the oldest balance due, without regard to the nature of the charges that make up that balance.
- To impose rules that require the LECs to change their entire billing system to accommodate Pay-per-Call vendor's need for more specific information than is currently provided by the LEC billing system is arbitrary and unreasonable. The LEC billing system meets the LEC's billing needs as it exists today; it bills numerous small charges at very low cost per charge. Any FTC billing requirement should be imposed only on the vendors. The vendors can then negotiate with the LECs or other billing entities of their choice to determine whether those billing entities can fulfill the vendor's billing requirements, including the vendor's legal obligations as to billing.
- There is no need to impose this burden on the LECs, especially when the LECs have no way to fulfill the requirement in a partial payment situation. The vendors should be held responsible for securing all pertinent billing information necessary for their service, whether they secure that information directly from their customers or from other sources.
Question 18: Reporting times. If the period of time that LECs or other billing entities have to respond to a billing error notice is shortened from 90 to 60 days, what effect, if any, would this have on billing entities? Would this impose additional costs? Do the changes in the proposed 308.20 of the Rule that shorten the times by which the LEC must provide information to the vendor or service bureau sufficiently expedite the process so that vendors or service bureaus will be able to pursue collection of valid debts in a timely manner? Are these deadlines feasible?
- Response: While the time frames may be generally workable and the procedures may be generally acceptable, the provisions relating to when a customer fails to pay are extremely burdensome. It is very common for customers to pay less than the full amount of their telephone bill, with no explanation of the reason for the partial payment. Thus, a customer could pay less than the full amount of each month's telephone bill for a period of several months, without giving any notice that any part of that bill was contested. Any requirement that places the burden upon the telephone billing entity to determine which items a partial payment is to be credited against would be extremely burdensome and costly to the industry. Further the notification requirement is unreasonable. Normally, the billing contract would cover how and when notification to the vendor of the customer's failure to pay is to be made. The imposition of rules governing the interactions between the billing entity and the vendor appears to be overreaching and unnecessary.
Question 19: Chargebacks. Are the proposed changes to the dispute resolution section the most cost effective and appropriate ways to deal with industry concerns regarding the chargeback process?
- Response: No. Again, it seems unnecessary to try to regulate the interaction between the billing entity and the vendor. The industry has managed to operate with very little regulation of the relationship between the billing entities and the vendors for several years now. The most cost effective and appropriate way to deal with industry concerns about the chargeback process is to let competition among billing entities resolve the issue. The FTC's rules should focus on consumer protection, rather than attempt to interfere with carrier relationships in a competitive environment.
Question 20: Reasonable investigation. Does the proposed Rule adequately address in proposed 308.20 the problem of consumers becoming the target for a collection action without ever receiving an explanation or evidence that the alleged debt is in fact valid?
- RESPONSE: The proposed rule is much more extensive than necessary to accomplish that purpose. SBC objects to the application of the rule to billing entities and also objects to the requirement for a written acknowledgement of every customer billing dispute. Implementation of such a requirement would require drastic changes in the way the billing process is handled today and would certainly increase cost.
- Requirements as to how a customer billing complaint is to be handled should be imposed on the vendor, not the billing entity. While it may very well be the billing entity that ultimately fulfills the requirement, it should be doing so on behalf of the vendor pursuant to contract, not because the billing entity has any independent legal obligation to the customer.
- Any legal obligations arising from a pay-per-call transaction should be the obligation of one of the two parties to the transaction: the customer or the vendor. Either of those parties may then subsequently fulfill those duties itself or contract to have another fulfill it duties arising from the obligation. For example, a customer could direct its bank to pay its telephone bill on a monthly basis, but that contractual arrangement would not impose any duties arising from a pay-per-call transaction on the bank. The bank would merely be fulfilling its contractual obligation to the customer when it pays the bill that includes billing for a pay-per-call service. Likewise, a billing entity is involved in a pay-per-call transaction only because it has entered into a contract with the vendor or billing aggregator to fulfill some or all of the vendor or billing aggregator's duties arising from the transaction. There is no more reason to attempt to impose duties on the billing entity than there would be to impose duties on the bank in the example set forth above. Rule 308.20 should be changed to impose whatever requirements are ultimately deemed necessary after a careful cost/benefit analysis on the vendor, not the billing entity.
- The requirement for the method of providing a billing error notice on each bill and the requirement for a written acknowledgement of each notice of a billing error is extremely burdensome. It will dramatically increase the cost of the billing process and unnecessarily aggravate customers. The great majority of billing errors are today handled to satisfactory completion over the telephone, which is the most expeditious way to handle most billing complaints. For example, assume that a customer calls to indicate that a charge on this month's bill was already billed on last month's bill. That fact is verified while the customer is on the line, the charge is credited and the customer hangs up the telephone relieved that he/she has resolved the issue. Then two days later a letter shows up in the mail as to that issue that the customer thinks was all resolved. The customer is not going to be happy to have to read the letter and go back and check the bill to make sure it is the transaction that was already resolved and that the letter can be discarded. Further, the cost of the preparation of a letter and the cost of postage are totally wasted in those circumstances. Customers who choose to make purchases over the telephone, call in their complaints and conduct most of their personal business over the telephone should not be forced to return to a paper process in order to resolve a billing dispute.
Question 21: Evidence of debt. What evidence (other than ANI information) is currently created or maintained that would show the delivery of telephone-billed purchases? If no such evidence is created or maintained, what would be the costs, if any, associated with creating and maintaining such evidence. What would be the benefits?
- Response: For telephone-billed purchases that cannot be delivered over the telephone, there would normally be delivery or shipping records. However, those records may not be retained for any extended period of time and a longer retention period would necessarily increase costs.
Question 22: TDDRA blocking. What records do LECs maintain with respect to 900-number blocking? Do these records indicate the date a consumer-requested block became effective? What measures do LECs take to ensure that blocks are not turned off by someone other than the subscriber? Do LECs make blocking information available to billing entities who are conducting "reasonable investigations" of disputed charges for telephone-billed purchases? Should LECs be required to do so? What would be the costs and benefits associated with such a requirement?
- Response: Currently SBC local exchange companies maintain the 900 number blocking information in the customer's service record. When a customer requests 900 number blocking, a service order is issued to initiate a block at the switch. The customer's record indicates the block and the date the block was initiated. Customers can change the block in the same manner as the initial authorization of the block, through verbal authorization for the change. As in all customer contacts that result in service changes, customer service representatives ask questions to try to verify that they are speaking to the customer. Alternatively, customers have the option of having a passcode or assigned to their account to prevent unauthorized changes, if they choose to do so.
- SBC would oppose the imposition of additional blocking requirements on LECs. Typically blocking mechanisms are extremely costly and require major systems changes. SBC's position is that these issues are better addressed for common carriers through industry forums at the FCC. There is a very real potential for conflicting regulatory requirements if the FTC begins specifying blocking requirements for common carriers.
- SBC also wants to register its deep concern about the FTC "regulating LEC billing practices" through rules applying to "pay-per-call" or any other types of services. Billing services have been de-tariffed at the federal level for a number of years now, but the FCC retains oversight jurisdiction of the billing process. Competition has allowed the negotiation of the terms, conditions, and prices without any necessity for the FCC to exercise its oversight jurisdiction. It is the position of SBC that there is no need for any regulatory intervention in the common carrier billing process today. However, if any assessment is to be made regarding the necessity of rules applicable to the common carrier billing process, it should be the FCC making that assessment, not the FTC. In this new competitive era, it seems backward and unnecessary to impose regulatory rules on a service that was deemed competitive some years ago.
Question 23: Applicability to third-party debt collectors. The proposed definition of "billing entity" does not include an exemption for third-party debt collectors attempting to collect debts for telephone-billed purchases. Should there be such an exemption? What, if any, costs or benefits would be associated with such an exemption?
- Response: It would appear that the practices of third party debt collectors are adequately addressed by the Fair Debt Collection Act. Again, it is the position of SBC that the burden should be placed on the one entity that can avoid the problem of unauthorized charges: the vendor that negotiates the transaction with the customer and submits the charge to the billing entity for billing.
SBC and other responsible companies care too much about their customers and their business reputations to engage in the shoddy practices that are the target of the proposed rule changes. Yet, so long as LECs are required to bill for all carriers in order to be able to bill for their own affiliates, SBC and others could incur liability under the "know or should have known" standard for fraudulent practices that they had no practical power to detect or prevent. Such liability becomes especially burdensome when the real perpetrator of the fraudulent practices has folded up its tent and disappeared into the night, a not infrequent occurrence. SBC strongly supports the imposition of liability on the wrongdoers, but opposes the imposition of broad rules that greatly increase the cost of billing service for everyone and impose liability on the billing entity for fraudulent practices that the billing entity has no practical way to avoid.
SBC COMMUNICATIONS INC.
Robert M. Lynch
Roger K. Toppins
One Bell Plaza, Room 3026
Dallas, Texas 75202
March 10, 1999
1. SBC Communications Inc. is the parent company of various subsidiaries, including telecommunications carriers. These subsidiaries include Southwestern Bell Telephone Company ("SWBT"), Pacific Bell, Nevada Bell, and The Southern New England Telephone Company ("SNET"). The abbreviation "SBC" shall be used herein to include each of these subsidiaries as appropriate in the context.