BEFORE THE FEDERAL TRADE COMMISSION
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
FLORIDA PUBLIC SERVICE COMMISSION COMMENTS
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
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
- 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
- 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
CYNTHIA B. MILLER
FLORIDA PUBLIC SERVICE COMMISSION
2540 Shumard Oak Blvd.
Tallahassee, FL 32399-0850
DATED: FEBRUARY ____, 1999