FCC Proposes Rules to Protect Customers From Bill Cramming; Senate Sets Hearing

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The Federal Communications Commission at its July 12 meeting launched a rulemaking to provide additional safeguards for consumers against unwanted or “mystery” fees on monthly phone bills—a practice commonly referred to within the telecommunications industry as “cramming.”

The FCC, without recently departed Commissioner Meredith Attwell Baker, voted unanimously, 4-0, to issue the notice of proposed rulemaking for public comment, part of an agency-wide push to broaden protections for consumers of telecommunications services.

“Consumers don't often know what the word ‘cramming’ means. But they know what it's like to get an unauthorized charge on their phone bill,” said FCC Chairman Julius Genachowski, citing complaints of unauthorized charges for services ranging from horoscopes to diet plans.

According to a survey conducted for the Federal Trade Commission, only 1 in 20 cramming victims ever notices the charges. “It can go undetected for months or years,” Genachowski said.

The Senate Commerce Committee is also looking into the issue, and plans to hold a hearing July 13 and release a report in an effort to find a solution to cramming.

Notice of ‘Blocking Services.'

The NPRM proposes, among other things, to require traditional landline telephone companies to notify consumers at the point of sale, in monthly billing statements, and on corporate web sites about any “blocking” services available to prevent third parties from imposing charges on top of those incurred for monthly telecommunications services.

Companies would also have to separate any third-party charges from charges for traditional phone services. The FCC's Truth in Billing rules already require telecom companies to separate local charges from long-distance charges on monthly billing statements; the same requirements would apply for non-“common carrier” services, under the proposed rules.

For wireline and wireless telecommunications services providers, the FCC is proposing a new requirement to include on bills and web sites a notice informing consumers about the option to file complaints with the agency about alleged incidents cramming.

The NPRM also posed a number of additional questions, such as whether phone companies should be required to offer customers the option to block third-party charges from their bills altogether and, if they do not offer such blocking services, whether those companies should notify customers about their options to prevent such charges.

Noting that millions of American consumers are victims of cramming every year, the FCC will further explore whether both wireline and wireless services providers should be required to provide accurate contact information for third-party vendors on monthly billing statements, and “screen” third parties for prior rule violations before agreeing place their charges on customer bills.

For wireless phone service in particular, the item seeks comment on whether the same rules currently applicable to landline phone companies should also apply to all classified commercial mobile radio service (CMRS) providers and to providers of interconnected voice-over-Internet protocol (VoIP) service.

More broadly, the item seeks comment on whether the FCC should prohibit third-party charges on telephone bills altogether.

NPRM Follows Agency Actions.

The FCC's vote follows a recent decision by the agency to charge four telephone companies for allegedly billing thousands of customers for long-distance service without their authorization.

The FCC in June issued the sanctions against Main Street Telephone ($4,200,000); VoiceNet Telephone, LLC ($3,000,000); Cheap2Dial Telephone, LLC ($3,000,000); and Norristown Telephone, LLC ($1,500,000) for adding what is known as “dial-around” long-distance service to bills, which circumvent a customer's normal long-distance carrier.

Following an investigation by the FCC last fall, Verizon Wireless agreed to pay a $25 million fine to settle allegations that the company erroneously billed millions of customers for “mystery” data charges. The company will also refund 15 million customers an estimated $52 million.

By Paul Barbagallo