‘Cramming’ Further Notice Contemplates Opt-In Requirements

"Verizon recently agreed to settle a class-action lawsuit regarding cramming by agreeing to not place third-party charges on new consumers’ bills unless the new consumers give Verizon affirmative approval,” the further notice said. “As a result, in this Further Notice, we seek comment on further measures to prevent cramming, including an opt-in requirement similar to what Verizon has agreed to do. We seek additional detailed information on whether an ‘opt-in’ approach is warranted and if so, how the opt-in requirement should be structured, and how best to implement such a mechanism.” In addition to reimbursing several years’ worth of unauthorized charges, the settlement implemented an opt-in requirement in which any new Verizon customer would have to affirmatively state whether they would allow third-party charges (CD March 2 p11).

The commission asked for comment on whether an opt-in requirement would “meaningfully address the problem of cramming,” whether it should apply to all consumers or only to new ones, whether third-party charges for telecom services should be exempt and whether any analogous opt-in requirements in telecom or other industries “might inform our decisions.” On implementation, the commission sought comment on the mechanics of an opt-in program: “Should the Commission adopt an all-or-nothing opt-in where the consumer has an opportunity to opt-in or reject all third-party charges of any type, including long distance and other third-party carrier charges? Alternatively, should the consumer have the choice to opt-in or reject carrier and non-carrier charges separately, or should the consumer have an opportunity to indicate that they choose not to receive third-party billing charges unless or until they are consulted about specific individual charges from third parties?"

Now that opt-in is on the table, telcos might unilaterally decide to adopt a corporate opt-in policy in the hopes of dissuading the FCC from approving additional anti-cramming guidelines, said Medley Global Advisors analyst Jeff Silva. “It would be the carriers’ way of saying, ‘We got the message.'” Silva said the FCC should be careful “not to overplay its hand on cramming, since it could make the agency even more of a target for Republicans who claim over-regulation is slowing the economic recovery as one of their election-year talking points."

The commission also questioned whether it even has the legal authority to adopt an opt-in requirement, either under its Title I ancillary authority, or under Section 201(b) of the Communications Act, which gives the agency authority to regulate practices “for and in connection with” telecom services. It also sought comment on any First Amendment concerns an opt-in requirement might raise. “I do think that 201 is going to be enough” to give the FCC authority in this case, said Free Press Policy Director Matt Wood. As for the requested analogous opt-in requirements, “any number of Web services have opt-in requirements without commerce grinding to a halt,” he said. “In general, opt-in requirements are almost always preferable for consumers, as they give users an opportunity to make an informed decision, and require affirmative action on their part,” said Andrew Schwartzman, senior vice president of the Media Access Project. “Opt-out provisions are much more likely to be ignored."

Public Knowledge Legal Director Harold Feld said these kinds of opt-in provisions are “extraordinarily useful” in preventing mystery charges. “It makes as much sense as it does to require my signature on a credit card slip,” he said. “It shows that I really did it.”