Disclosure Rules Adopted to Combat Wireline Cramming; Wireless and VoIP Untouched
Truth-in-billing rules didn’t solve “cramming,” and neither did millions of dollars in forfeitures, FCC Chairman Julius Genachowski and Commissioner Robert McDowell said. On Friday the FCC revealed its latest attempt to alleviate what it called “a problem that has plagued telecommunications consumers for more than a decade,” with new rules requiring several disclosures by wireline phone companies. Public interest groups and some legislators say the FCC didn’t go far enough, as it declined to apply the rules to wireless or VoIP providers.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Cramming affects up to 20 million consumers annually with unexplained third-party charges that could be as little as $1.99 per month per consumer but in total contribute to a $2 billion-per-year industry, Consumer & Governmental Affairs Bureau acting chief Kris Monteith told the meeting. The new rules, passed unanimously, require phone companies to notify subscribers at the point of sale, on each bill and on their websites of the option to block third-party charges from their landline bills; and strengthen the commission’s requirement that third-party charges be separated from the telco’s charges on phone bills. “It will immediately alert consumers of the existence of such charges on their bills,” Monteith said. A further notice asks whether the commission should adopt additional protections, such as requiring landline companies to affirmatively get consumer consent before placing third-party charges on their bills.
Although the rules don’t apply to wireless or VoIP providers, the commission said it plans to monitor complaints from consumers of these services. Including wireless was discussed early on, but was not in the initial draft as circulated by Genachowski, FCC officials said.
Genachowski called the order “another important step in our consumer empowerment agenda.” Paraphrasing one of the comments the FCC received, he said that “getting crammed is like getting a charge on your credit card bill for a meal you never ate at a restaurant you've never been to.” Previous truth-in-billing rules and millions in forfeitures didn’t work because “where there’s economic incentive and a means, the bad guys keep on trying to rip consumers off,” he said.
McDowell is pleased the cramming order takes a relatively narrow approach by focusing only on disclosure requirements for wireline carriers, instead of expanding them to wireless and VoIP providers, which have not experienced as high a cramming rate, he said. “New regulations almost always cause collateral and unpredictable economic effects,” he said. “It’s my hope that the commission will keep this law of bureaucratic physics in mind.” Commissioner Mignon Clyburn said she’s pleased the commission is building upon the significant work of the Senate Commerce Committee to offer “very basic consumer protections."
Rep. Edward Markey, D-Mass., called the rules “welcome news for American consumers.” Markey said he looks forward to working with the FCC as it “continues to investigate this practice as it relates to wireless telephone services.” Senate Commerce Chairman Jay Rockefeller, D-W.Va., who led an investigation into cramming in 2011, called the order a “good thing” but wants more to be done. “Cramming cannot be allowed to migrate to other communications offerings, like wireless services,” he said. “I still believe legislation is needed to bring a halt to these fraudulent practices once and for all."
"Something” on cramming is better than “nothing,” but as Internet Protocol-based “services and wireless continue to replace traditional phone service, that ’something’ gets a lot more like ‘nothing,'” said Public Knowledge Legal Director Harold Feld. “This is yet another example of how the FCC’s refusal to address its authority over IP-based services compromises its ability to protect consumers and otherwise do its job,” he said. “Despite the fact that the vast majority of Americans get their landline service through some kind of VoIP, or rely entirely on wireless, the FCC refuses to address these services because doing so would potentially reveal it has no authority to stop such abuses. American consumers need the FCC to be a cop on the beat for IP-based services. Instead we have a neighborhood watch program hoping to scare off the bad guys."
"As far as VoIP is concerned, the commission is understandably nervous about its legal authority,” said Andrew Schwartzman, senior vice president of the Media Access Project. “This is one more reason why I predict that the commission will ultimately be forced to reclassify broadband services as subject to Title II obligations.” Consumers Union applauded the order but encouraged the FCC to expand its protections to wireless and VoIP customers. “More consumers are moving away from landlines towards wireless and VoIP services that aren’t guaranteed the same protections to combat unauthorized third party billing,” said Policy Counsel Parul Desai. “The same cramming abuses that happen on landlines can easily happen to wireless and VoIP customers."
Cramming is also a problem for VoIP and wireless, agreed Free Press Policy Director Matt Wood. “We definitely think consumers deserve protection on those platforms and services as well, but I'm not surprised the FCC is being cautious because of the authority issues,” he said. “We think that they have a solution to that.” Until the FCC reclassifies broadband, “I understand their caution,” he said.