|June 4, 1999
Office of the Secretary, Room 159
RE: Additional comments on Pay-Per-Call Rule Review
File No. R611016
As one of the participants in the Pay-Per-Call Rulemaking Workshop that was held by the Federal Trade commission May 20 and 21, we would like to offer the following additional comments on some of the issues that were discussed.
Some participants suggested that for presubscription agreements or other situations in which a PIN might be required, the vendor should be able to provide the PIN during the first call, followed by a written confirmation. It was further suggested that if charges were incurred between the time that the consumer received the oral and the written PIN and there was a dispute about authorization to bill to the number based on ANI, the charges would simply be removed.
We believe that it is essential to limit the potential for unauthorized billing, not to invite problems and rely on the billing entities to resolve them after the fact. For this reason, we still feel that the only way to safeguard the consumers who will be billed is to require that they be sent the PINs in writing and activate them by contacting an independent verification entity before the service can be accessed.
Furthermore, we do not feel that there should be different standards for reliance on ANI depending on whether services accessed through PINs are billed through the telephone bill or directly by the vendor. The point is that the responsible party for billing purposes should not be identified merely by ANI.
Alternative Payment Mechanisms
Because of the instantaneous nature of payment with use of debit cards, we continue to believe that they should not be allowed in presubscription agreements.
It is still not clear from the conflicting information that was presented at the workshop whether there is a way to automatically distinguish between credit and debit cards. However, when the consumer is setting up a presubscription agreement, it is certainly possible for the vendor to ask which type of card is being used.
Calling cards continue to be problematic because it is possible, and increasingly common, for the same entity to be both a communications carrier and a vendor of other types of services. Furthermore, consumers do not have the same dispute rights as with credit cards.
We agree that it would be helpful to the billing entities and to consumers if the notices contained additional information about their respective rights and responsibilities. If the vendor is allowed to continue to seek payment even after the disputed amount is removed by the biller, that would be useful for consumers to know. However, we would encourage the use of language such as "the provider of the services may attempt to pursue collection if it believes that the charges are legitimate" rather than a statement that the provider has the "right" to pursue collection..." We will address the question of whether the vendor should be able to pursue collection or be bound by its agent's decision to remove the charges later in these comments.
The clock should start running for initiating a billing review when the consumer receives the bill, not when it is transmitted, and that the billing notice should reflect this. Credit card disputes must also be initiated within a certain time of receipt of the bill. Obviously, it is difficult for consumers to question charges before they see them.
We also suggest that if information is provided about the possibility that a consumer's ability to obtain 900 number or other non-communications services may be blocked for failure to pay legitimate charges, the notice should instruct consumers to inquire about free blocking of 900 numbers from their lines as well as blocking that may be available for other types of services. We are concerned about consumers not being able to access "other non-communications services" for failure to pay 900 number charges. However, our concern is lessened if meaningful investigations are conducted to verify that charges are "legitimate" and if other non-communications services are clearly covered by the Rule so that consumers are ensured of adequate disclosures, verification, and dispute rights.
Finally, if this information is to be relevant and useful for the desired purposes, the billing notice must be provided on each bill in which charges for covered services appear.
Much of the discussion about billing disputes revolved around the interests of the different industry partners: the LECs to respond to their telephone customers concerns by promptly removing disputed charges; the service aggregators to know about disputes as quickly as possible in order to investigate them; the vendors to be able to rely on expected revenues. The consumer is often caught in the middle.
We commented that the telephone bill has become more like a credit card bill, and the analogy should extend to how credit card billing disputes are handled. If it is the policy of the LEC to remove the charges before an investigation has commenced, perhaps it should be presented to the consumer as a temporary adjustment contingent on the outcome of the investigation, and the billing notice should reflect the fact that the vendor may still choose to pursue collection later if it believes that the charges are legitimate. If in fact there is no real investigation, there can be no determination that the charges were "legitimate," and further collection efforts and negative credit reporting should be prohibited.
As for who should handle the investigation, if this is left up to the parties it must be made clear on the bill who the appropriate entity is, and that entity must be easily reached and responsive. We agree with the Florida Public Service Commission that there should be standards for handling disputes, including the requirement for a written acknowledgment to document that the consumer has initiated a dispute within the required time period. It is also imperative that the other entities be cooperative and communicative with each other. Holding them to at least a "knew or should have known" standard will help to encourage this.
Because 900 numbers are blockable, we agree that it is reasonable to bill using ANI with the presumption that the telephone subscriber holder has authorized such calls, as long as the consumer is able to rebut that presumption by affidavit. We do not believe that consumers will undertake such a procedure unless they are serious about disputes. Since it has been acknowledged that fictitious call records, tapping into junction boxes or hacking between switches can make it appear that 900 calls have been made by the telephone subscriber, it is vital to provide some means of countering the presumption that the charges are legitimate.
Finally, in regard to recurring charges, it is important to make clear that if a consumer disputes a charge one month and the next month another charge for the same service appears, it is part of the original dispute.
The obvious answer that emerged from the workshop for enabling spouses or housemates to order new telephone-billed services is to add their names to the telephone bill. This is something that the LECs can encourage people to do when they are initialing setting up telephone service and that service providers can suggest when consumers are interested in entering into presubscription agreements or buying other services that will be billed through the telephone bill. The other option is to arrange for billing through a credit card, an option that we believe is widely available (some would say too widely available) to consumers.
For non-blockable services, we continue to believe that independent third-party verification using live operators is the best way to ensure protection, not only for consumers but for vendors, who have an interest in reducing the number of disputes and billing adjustments. It is too burdensome for consumers to prove that tapes have been doctored or dummied.
We are opposed to the use of any type of negative-option for express authorization because of the abuses that we have already seen with slamming and cramming using negative option procedures. Consumers' agreements to purchase telephone-billed services should be made affirmatively.
Liability of Companies
Vendors should have strict liability for compliance with all provisions of the rule and have the duty to ensure that their agents are operating on their behalf in an appropriate manner. We believe that "knew or should have known" is a reasonable standard for the other parties involved in the provision and billing of services covered by the rule.
If this results in more care in the formation of business relationships between the various entities involved, that will be a positive outcome.
International Pay-Per-Call Services
We recognize the significant effort that some international pay-per-call services have made to provide consumers with disclosures and protections that are similar to those provided for 900 numbers. Unfortunately, they have not quite been able to provide identical disclosures and protection, even though from the consumer perspective, there is absolutely no difference between pay-per-call services provided through 900 or international numbers.
Whether there is an additional charge in excess of the toll-charge is not the point; this is not a call but a service that consumers are being charged for. They have a right to know the price before making their purchase decision. It is unreasonable to expect them to hang up from an international call that they have been solicited to make to obtain a service, place a second to their long-distance companies to find out how much the service will cost, and then call the first number back.
Furthermore, blocking is still not a practical option. There was considerable debate at the workshop about whether technology exists to address these issues. Our view is that the issues must be addressed if pay-per-call vendors wish to provide services through international phone lines.
In closing, we would like to thank the FTC for the care and consideration that it has taken in examining the consumer protection implications of telephone-billed purchases. The public workshop was a valuable opportunity to learn from each other as well as to provide FTC staff with more information. We look forward to the final rules that will emerge from this process.