Pay Per Call Billing Rule Review
FTC File No. R611016
The Ad Hoc Electronic Publishers Committee (hereinafter "EPC"), by its attorneys, Klein, Zelman, Rothermel & Dichter L.L.P., hereby submits comments with respect to the proposed Rules in the above-captioned matter, which were published in the Federal Register on October 30, 1998. EPC consists of audiotext providers, billing services, and publishers.
As more fully discussed below, EPC respectfully submits that some of the proposed Rules are overreaching or unduly vague, and that they should be amended accordingly.
1. Definition of "Billing Error"
The proposed Rules expand the definition of "billing error" to include allegedly unauthorized charges made from the line holder's phone under a presubscription arrangement or which otherwise are not avoidable by blocking. EPC believes that this change is overly broad.
First, the only way that an information provider can ascertain whether the charge is authorized is by asking the caller. If a caller indicates that s/he is the line holder, or that s/he is authorized by the line holder to incur the charge, there is no way in which the information provider can determine the accuracy of this claim. If an information provider has made a good faith effort to determine whether the charge is authorized and can prove this good faith effort (for example, through a voice capture), the information provider should not be penalized for the caller's fraud.
A line holder has a responsibility to safeguard his or her phone against all manner of unauthorized calls except audiotext calls provided under a presubscription arrangement. There is no reason to rely on the line holder to safeguard his or her phone for all other calls, but not for presubscribed audiotext calls. If an information provider makes a good faith effort to ascertain the caller's authority but is defrauded by the caller, the only wrongdoer is the line holder, who has failed to safeguard his or her phone. The information provider should not be penalized in this situation, where it has done nothing wrong.
Further, it appears that the proposed Rules permit only the line holder to authorize a charge. Clearly persons other than the line holder can be authorized to incur charges to the telephone. One spouse may be the line holder while the other spouse is not. If a husband authorizes a charge, but his wife is the line holder, typically the husband has the authority to incur charges on the line. Thus, charges should be sustained where the line holder or anyone authorized by the line holder has authorized the charge.
Further, anyone who has handled such complaints has heard voice captures with the line holder's own voice authorizing the charge. Notwithstanding this, the line holder continues to deny any knowledge of the call. The commentary to the proposed Rules provides that "Of course, if the voice recording was not of the person being billed, the vendor would not be able to sustain the charge". Short of expensive scientific testing of voice patterns, which is not practical given the cost of these calls, there is no way to prove that the voice capture is that of an authorized person. Thus, if unauthorized charges provided pursuant to presubscription agreement are to be considered billing errors, an exception should be made where there is a good faith effort to ascertain that the charges are authorized.
The Rules propose another new billing error where a charge is inconsistent with a blocking option selected by the consumer. EPC's quarrel with this change is that the Rules do not reflect who will pay for any credit that is issued.
If a caller has a 900 block, but the block is ineffective, the LEC should bear the financial responsibility for this error, which it caused. Even if a caller dials around a block, the information provider should not be penalized. LEC's do not share blocking information with information providers. There is no way in which information providers can determine whether a number should be blocked. Because the LEC's are the only parties with this information, and because they will not share it, they should pay for the credit for such charges.
2. PIN Numbers (§308(2)(i)
The proposed Rules provide that a PIN must be "unique to the individual." This means that the PIN must be assigned to the person who will be billed for the offered goods or services, not to a telephone number or account. Again, EPC believes that there should be exceptions for non-line holders who are authorized to incur charges or where there is a good faith effort to determine that the caller is authorized to incur the charge.
The proposed Rules also indicate that a PIN cannot be based on a number that is likely to be known to other persons, and provides examples such as a checking account number, credit card number, or social security number. In fact, these are not numbers likely to be known to other persons, but they are numbers likely to be easily remembered or ascertainable by the person assigned the PIN. Numerous entities, such as banks and credit card companies, use Social Security numbers to verify identity. There is no reason to hold information providers to a higher standard.
3. Presubscription Agreements (§308(2)(j)
The proposed Rules require that all disclosures must be provided to, and the agreement must be reached with, the consumer who will be billed for the service. Again, there should be an exception for other authorized callers and where the information provider makes a good faith effort to determine whether the caller is authorized to incur the charge.
4. Billing in Fractional Minutes(§308(10)(b))
The proposed Rules require billing by fractional minute. Virtually all common carriers assess charges in whole minute increments. As the commentary to the proposed Rules states, while fractional minute billing is possible technologically, it is not used by many carriers. (63 Fed. Reg. at 58,546). We will leave it to carriers to explain why this proposed Rule is infeasible, but EPC also believes that it is inequitable to permit all other telephonic communications to be billed in whole minute increments, but not audiotext services. We also note that any savings to consumers is likely to be negligible, particularly because the cost of changing the method of accounting is likely to be passed on to the consumer. Moreover, it is not the Commission's role to tell a company what it may charge, or in what increment it may charge, for its service. As long as the disclosures are clear, such as $2.00 per minute, the Commission's inquiry should be at an end.
5. Express Authorization for Telephone Billed Purchases (§308.17)
EPC's position on express authorization is set forth above. In addition, however, the proposed change to this Rule would make it a deceptive trade practice to bill or collect for a telephone billed purchase that was not TDDRA blockable, where it knew or should have known that the purchase was not authorized by the person being billed for it. The phrase "should have known" is not defined or discussed in the proposed Rules. If there is a voice capture of someone calling from the appropriate ANI who indicates that s/he is the line holder or authorized to incur charges to that line, this should defeat any inference that the vendor "knew or should have known" that the caller was not authorized to do so. There simply is no means by which a vendor can prove or disprove such a statement by a caller.
Moreover, there is no reason to make this a deceptive trade practice. The proposed Rules already make it a billing error for which a consumer can obtain a refund. There is no reason -- other than punitive ones -- to subject the vendor to further penalties for deceptive practices by the caller.
6. Prohibition on Use of Debit or Calling Cards to Form Presubscription Agreements
The proposed Rules will prohibit the use of debit or calling cards to pay for audiotext services. This will operate as a de facto ban on the use of credit or charge cards as well. When a caller provides a card number, there is no way in which the vendor can establish whether the card is a credit or debit card. Indeed, even if the card physically were offered for payment, there is no way in which to determine whether it is a debit or credit card, as they appear identical, often carrying the Visa or Mastercard logo. Thus, the only practical way in which to avoid violating this Rule is to relinquish the right to use credit cards.
7. Billing Dispute Resolution (§308(d)(2)(ii), n. 3 and 4)
The proposed Rules provide that if an information provider can establish by call transport records that a charge was made from a particular ANI, this only creates a rebuttable presumption that can be defeated simply with a sworn statement by the consumer that the call was not made. This provides far too much weight to a statement of a consumer trying to avoid a charge and far too little weight to computerized records kept in the ordinary course of business.
The fact is that many consumers are unaware of or have forgotten calls made from their homes or are trying to avoid legitimate charges. There is no indicia of reliability from such a statement, even one sworn under penalty of perjury. By contrast, transport records are inherently reliable, in that they are computerized and automatic.
Thus, a sworn statement by a consumer should not be sufficient to rebut the presumption that the call was made. EPC suggests instead that such a statement be accompanied by equally documentation as reliable as transport records, such as hotel or other travel records if the claim is that no one was in the home; police reports of intruders in the home; a birth certificate if the claim is that the call was made by a minor; or a letter from the consumer's LEC that there was a problem in the line.
For all of these reasons, the proposed Rules should be amended as set forth above.
Dated: New York, New York
March 9, 1999
Klein, Zelman, Rothermel & Dichter L.L.P.
ATTORNEYS FOR THE AD HOC ELECTRONIC PUBLISHERS COMMITTEE