Major Carriers, Consumer Groups, Clash on Need for Expanded Cramming Rules

"No matter what device they use, all telephone consumers are at risk of cramming,” the consumer groups insisted (http://xrl.us/bnc3fi). “The record makes clear that landline telephone cramming is widespread and harms consumers, defrauding the public of as much as $2 billion each year. However, VoIP and wireless customers are also at risk of the predatory practice.” The groups called on the FCC to adopt “a zero-tolerance policy for all forms of cramming.” Signing the comments were the Center for Media Justice, Consumer Action, Consumer Federation of America, Consumers Union, National Consumer Law Center and National Consumer League.

As an alternative, “the Commission could institute a requirement to opt-in to wireless third-party billing provided it implements strict and effective requirements on double opt-in mechanisms and transparent recurring charges,” the consumer advocates said. “Moreover, all wireless carriers must be required to report cramming complaints in order to monitor the incidence of wireless cramming and to determine whether additional measures might be necessary in the future.” The groups made the case that the FCC has the legal authority to expand its rules to take in both wireless and VoIP.

AT&T and Verizon said the record developed so far shows no further cramming rules are necessary. “AT&T and Verizon, in fact, have announced that they will cease providing third-party wireline billing services this year for most unaffiliated third-party non-carrier providers,” AT&T said (http://xrl.us/bnc3g6). “And BSG, one of the largest billing aggregators, has implemented a number of additional, stringent requirements to identify unscrupulous actors and prevent cramming. There is no basis in the record or otherwise upon which the Commission could reasonably conclude at this time that these measures are or will be ineffectual.” Imposing cramming rules on wireless “would be ineffective, harmful, or both,” AT&T said. “Although data use and demand for mobile data applications are sky-rocketing, the number of wireless cramming complaints remains tiny relative to the number of wireless bills rendered each month."

"In today’s fiercely competitive environment, Verizon has every incentive to avoid losing a customer due to unauthorized third-party charges,” the company said (http://xrl.us/bnc3i2). “Verizon has protections in place so that its wireless customers can enjoy the ease of using their wireless bills for third-party purchases or donations to charity that they affirmatively authorize,” the carrier said. “At the same time, Verizon is able to protect its wireless customers by requiring third-party providers to obtain specific customer authorizations (i.e., opt-ins) before each purchase."

The FCC’s cramming rules suffer from a “crucial need for revision,” NARUC said (http://xrl.us/bnc34e). The agency should “impose mandatory cramming rules to all voice service providers that assess telephone bills on consumers, including traditional wireline service providers, interconnected Voice-over Internet Protocol service providers and wireless service providers,” NARUC said. Voice service providers should also offer blocking options of third-party providers for free, disclose third-party blocking options to customers at least annually, and report billing complaint “trends and spikes driven by activity of specific third-party vendors to appropriate federal and state entities,” all by FCC mandate, the group said. The FCC’s disclosure mandates should be “clear and conspicuous,” it added, and any federal rules shouldn’t “preempt more stringent” state rules.

These cramming rules should apply not only to broadband customers but voice service customers, too, NARUC recommended. The Voice on the Net Coalition (VON) disagreed, saying (http://xrl.us/bnc34v) that any cramming rules shouldn’t apply to interconnected VoIP providers, and third-party provider opt-in requirements are “unnecessary and should also not be imposed on the VoIP industry.” These requirements would create unnecessary barriers for VoIP providers because VoIP is responsible for “less than 2 percent of all cramming complaints,” VON said.

Multiple states also recommend the FCC act on cramming. The “best solution,” said the Virginia State Corporation Commission, is a “full prohibition against third-party billing” rather than the current legislation, which it said allows third-party billing under “limited circumstances” (http://xrl.us/bnc34t). “Cramming is a violation of the Michigan Telecommunication Act” and customers should have the choice to opt in before third-party providers are introduced, the Michigan Public Service Commission said (http://xrl.us/bnc34r). Any rules on cramming should also apply to interconnected VoIP and CMRS service providers, it said. The FCC “should require all wireline and wireless providers to offer a third-party blocking service free of charge,” the Massachusetts Department of Telecommunications and Cable recommended (http://xrl.us/bnc34p). It also said the FCC should “explore” creating a do-not-cram program, similar to do not call.

The FCC’s deadline for submitting cramming reply comments should be extended to Aug. 9, said the National Association of State Utility Consumer Advocates (NASUCA) (http://xrl.us/bnc34n). That’s so the association can “review and study the initial comments,” of which there are several hundred, “and potentially to formulate thoughtful reply comments.” NASUCA’s comments (http://xrl.us/bnc343) said the FCC should adopt a rule “for all modes of telecommunications service that explicitly prohibits cramming,” without exception and with better authentication measures.