Pay-Per-Call Rule Review: Reponse to Notice of Proposed Rulemaking: 16 C.F.R. Part 308, FTC File No. R611016 #5

Submission Number:
Cynthia B. Miller
Florida Public Service Commission
Initiative Name:
Pay-Per-Call Rule Review: Reponse to Notice of Proposed Rulemaking: 16 C.F.R. Part 308, FTC File No. R611016

Washington, DC 20580

In the Matter of:

Pay-Per-Call Rule Review; Request for Comment
Regarding General Questions and
Questions on Proposed Specific Changes

FTC FILE NO.: R611016


On May 7, 1997, the FPSC submitted comments to the Federal Trade Commission (FTC) regarding the 900-Number Rule Review. The Florida Public Service Commission (FPSC) is pleased with the Federal Trade Commission's (FTC) consideration and inclusion of the FPSC's recommendations in the proposed Pay-Per-Call Rule.

During 1998, the FPSC's Consumer Affairs Division resolved 1853 cramming complaints. The FPSC fully supports the proposed rule and endorses it in its entirety. In the following paragraphs, the FPSC provides general comments regarding the proposed dispute resolution procedures and specifically addresses six of the FTC's questions on proposed specific changes.

General Comments

In the dispute resolution procedures (Section 308.20), the FTC proposes that a customer provide notice of a billing error no later than 60 days after the billing entity transmitted the first billing statement that contains the disputed charge. While it may appear that 60 days are sufficient for the customer to make the required notification, many consumer complaints from small to medium sized business entities, as well as individual consumers indicate otherwise. The FPSC believes that when an investigation reveals that a telephone-billed purchase is an error, the customer should be reimbursed for the billing error retroactive to the time a charge for the service first appeared on the billing statement. If the charge is determined to be an error, the consumer should not be penalized just because of a failure to detect the erroneous charge in past billings. Based on complaints received by the Commission and the fact that we currently allow 12 months for notification of billing errors in our existing local exchange rules, the FPSC recommends changing the 60 days notification in the proposed rule to 12 months.

Further, the FPSC believes that the either/or requirements expressed in Sections 308.20(c)(2)(i) and 308.20(c)(2)(ii) may lead to confusion for many consumers. In proposed Section 308.2(c)(2)(i), the billing entity may issue credit for the charge but the consumer may or may not be contacted by another entity. As an alternative, Section 308.20(c)(2)(ii) requires that the billing entity conduct a detailed investigation of the consumer's notice of billing error.

We believe that if the billing entity corrects the billing error and credits the customer's account for any disputed amount, the customer should not be subjected to any future collection efforts imposed by other entities. The billing entities should be required to include in their agreements with vendors a clause describing the authority of the billing entity to credit customers' accounts. Once the billing entity has determined that a credit is appropriate, the decision should be final. An alternative is to eliminate the requirements of Section 308.20(c)(2)(i), and leave Section 308.20(c)(2)(ii) as the only recourse for the billing entity to resolve notices of billing errors submitted by customers. In other words, eliminate the proposed Rule's either/or option that is afforded the billing entities.

Questions on Proposed Specific Changes

The FPSC has reviewed the questions enumerated by the FTC on proposed specific changes and provides the following:

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?
The FPSC supports proposed Section 308.2(b), which seems to capture most, if not all, of the circumstances, situations, and conditions for billing errors that consumers might experience with regard to telephone-billed purchases, and the express authorization requirement proposed in Section 308.17. However, the FPSC does offer a recommendation.
In Section C. Discussion of Proposed Revisions to the Rule, 2. Proposed Revisions to Specific Provisions, Subpart C--Pay-Per-Call Services and Other Telephone-Billed Purchases, the FTC discusses, at great length, the meaning and examples for the term "express authorization". The FPSC believes that the term "express authorization" should be defined, in Proposed Section 308.2, along with explicit methods a vendor must use to obtain express authorization from the person from whom payment will be sought. By defining specific methods to obtain "express authorization", the Rule precludes argument from the vendor, service bureau, or billing entity about whether or not it knew or should have known that the charge was not expressly authorized by the person from whom payment is being sought.
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 type of solicitations altogether?
The FPSC does not know of any way the required disclosures could be displayed on most types of beepers and pagers commonly used by the public. Thus, we support the prohibition of vendor's access to beepers and pagers for soliciting calls to a per-per-call service.
Typically, businesses use beepers and pagers as a means to generate sales for increased profits through improved productivity, better quality of service, and an alternative access to them by their customers or potential customers. Others, such as family members or friends, use beepers and pagers as a means of rapid access to one another in case of emergencies or simply to precipitate contact.
It is the belief of the FPSC that very few, if any, users of beepers and pagers anticipate or desire to be solicited for pay-per-call services via that media. With the exception of business entities, most users of beepers and pagers are typically very selective to whom they pass their pager or beeper numbers, which may suggest that solicitations by pay-per-call service providers are not welcome.
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?
The FPSC does not support the concept of nominal cost calls. For any call made by a consumer to a pay-per-call service, a preamble stating the charge should be required, no matter the cost. The FPSC receives many complaints from consumers where the amount reflected on the telephone billing statement is under the three dollars threshold proposed in Section 308.9 of the proposed Rule. If the FTC determines that a threshold is appropriate, the FPSC does not endorse adjustments for inflation. Increased competition, similar to that witnessed in the interexchange telecommunications market, should ultimately occur, driving pay-per-call costs lower and generation of a higher percentage of calls in the nominal cost call category. The free market should be allowed to dictate the number of calls that may eventually fall in the category of three dollars or less, and an automatic increase in the cost threshold for defining a nominal cost call should not be artificially stimulated for the purposes of eliminating preambles. If a significant growth in the number of calls that fit into the nominal cost category occurs, the FTC may be forced to revisit this rule to possibly reduce the threshold, depending on the number of consumer complaints submitted.
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?
Many interexchange telecommunications service providers in Florida routinely bill for intrastate toll calls in less than one-minute increments. Many interexchange telecommunications service providers bill a minimum of one minute, however, after the initial minute, it is quite common to bill for toll charges in six-second increments. Infrequently, some providers do bill for toll calls in six-second increments with an 18 second minimum. The technology exists and is used by interexchange telecommunications service providers to time calls, thus permitting billing in less than one minute increments and this same technology can be used by pay-per-call service providers. We believe that pay-per-call service providers may currently be paying interexchange telecommunications service providers in increments of less than one minute in those cases where the pay-per-call provider collects revenue and then pays the telecommunications company for time used on its network.
Even though the technological capability exists and is currently used by interexchange telecommunications companies, the FPSC does not necessarily endorse regulation that requires vendors of pay-per-call services to bill in less than one-minute increments. Competition among vendors of pay-per-call services should be allowed to dictate the billing increments, just as it does in the telecommunications markets. The FPSC does endorse disclosure by vendors who bill using time-based charges for pay-per-call services. Disclosures should include the minimum amount of time that will be charged (we recommend no greater than one minute, if the call's duration is less than one minute) plus the billing increment and the cost per increment when the call exceeds one minute's duration.
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?
The FPSC believes that the proposed amendments to the Rule are not clear regarding the methods for vendors to obtain express authorization from the consumer. See response to Question 1. Express authorization and the methods for obtaining such are crucial to the proposed Rule's intent of protecting the consumer from unscrupulous vendors. Because the definition of "express authorization" and the methods for obtaining this authorization are not included anywhere in the text of Part 308, it is assumed that a vendor has total flexibility in determining the method of obtaining authorization to bill a consumer. The FPSC recognizes that the presubscription requirements define certain methods for obtaining a person's permission to be billed for purchased goods and services. However, in the proposed Rule, we do not believe that "express authorization" has direct ties to the presubscription requirements or to any other requirement for vendors to obtain a customer's authorization other than the phrase "express authorization".
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 inquires? Does the provision adequately address the problem that consumers often cannot reach the entity with the authority to provide refunds or credits?
Generally. At face value, the modifications to the Rule appear to adequately address the problems that are identified in the FTC's question. However, in Section 308.18(d), the terminology "readily obtain answers", is open to interpretation. For example, the consumer who places a call to the displayed local or toll-free telephone number would not expect to receive a busy signal for days on end or to get no answer even if the call rings through. Based on the FPSC's experience, as well as numerous experiences reported by consumers, attempting to reach entities, who are currently listed on telephone billing statements as a point of contact for billing inquiries, has been very difficult or, sometimes, totally impossible.
To increase a consumer's chances of making contact with the entity for whom the local or toll-free telephone number is provided, standards need to be defined. For example, standards may define call completion expectation (what percentage of consumers' calls should result in an answer by a live person on the first attempt) or whether a recording device is acceptable. If a recording device is acceptable, how much time should pass before the consumer receives a follow-up call from the servicing entity? If service standards are not imposed, the FTC will have no viable means of enforcing its requirement that customers are or are not able to readily obtain answers and unscrupulous vendors will use their own standards to argue what "readily obtain answers" means. In most cases, a consumer's and vendor's perspective regarding this matter will not be in harmony. It is likely that some vendors will take advantage of a consumer's impatience and frustration, knowing that the consumer may simply give in and pay for the unauthorized charge. If this happens, the purpose and intent of the proposed Rule may be significantly diminished.

Respectfully submitted,

Senior Attorney

2540 Shumard Oak Blvd.
Tallahassee, FL 32399-0850
(850) 413-6082

DATED: FEBRUARY ____, 1999