Before the Federal Trade Commission
Pay-Per-Call Rule Review-Comment
Further Comments of ACUTA: The Association for Telecommunications Professionals in Higher Education
ACUTA, The Association for Telecommunications Professionals in Higher Education, submits these further comments on the above-captioned matter in response to issues that were raised during the Commissions Pay-Per-Call Rulemaking Workshop on May 20 21, 1999.
Personal Identification Numbers
Considerable comment was made at the Workshop from representatives of the Pay-Per-Call industry, to the effect that oral disclosure of a PIN at the time a Pay-Per-Call service is requested would be sufficient to constitute the formation of a presubscription agreement. ACUTA supports the comments by the National Association of Attorneys General, that oral or electronic disclosure of a PIN at the time of initial contact with the individual ordering a telephone-billed purchase would not be sufficient to create a pre-subscription agreement. We urge the Commission to adopt the standard that a written disclosure of the terms of the agreement must be provided along with the PIN to the individual responsible for payment of the bill, followed by a subsequent call to activate the PIN.
ACUTA believes that written disclosure of the terms of an agreement to the party responsible for paying the telephone bill, followed by subsequent disclosure of a PIN, is important from a consumer protection perspective. Such a requirement would clearly inform consumers of the terms and conditions of their purchase. It would also require the vendor, billing entity or other agent to ascertain the identity of the individual responsible for paying the bill for a telephone-billed purchase. This would enable them to determine whether the consumer making the purchase is authorized to have it billed to the telephone bill, or whether alternative payment arrangements should be made.
In response to concerns raised by industry representatives at the workshop regarding a delay resulting in lost business, we suggest that the written terms may be provided by U.S. mail, e-mail or fax to the person responsible for paying the bill.
The requirement for provision of written terms to the person responsible for paying the bill would mitigate the difficulties faced by business users who often receive bills for telephone-billed purchases that were not authorized by a person with proper authority.
Liability for Billing Consumers without Authorization
ACUTA encourages the Commission to adopt Section 308.17 of the Rule as proposed, which reads in part, "[i]t is a deceptive act or practice and a violation of this Rule for any vendor, service bureau, or billing entity to collect or attempt to collect, directly or indirectly, payment for such a [non-blockable] telephone-billed purchase where the vendor, service bureau, or billing entity knew or should have known that the charge was not expressly authorized by the person from whom payment is being sought." (emphasis added)
Representatives of the Pay-Per-Call industry, billing agencies, and carriers commented at the workshop that circumstances sometimes prevent them from knowing whether such a purchase was authorized by the person who is responsible for payment.
In light of the arguments raised at the workshop by industry representatives that mechanisms are not always available to them for access to information on the identity of the responsible party, ACUTA maintains that a Line Identification Database (LIDB) lookup should be the required method of obtaining this information. As a member of the public stated at the workshop on May 20, and as stated in ACUTAs written comments, the LIDB is available to vendors, service bureaus and/or and billing entities, and contains this information. Use of the LIDB to ascertain the identity of the responsible party would therefore be a reasonable safe harbor.
A second option that ACUTA believes might be effective as a safe harbor for mitigating a vendors liability is the option that was offered in Staff Handout D at the Workshop, consisting of sending a "written confirmation of the transaction" similar to the one specified by the Commissions Telemarketing Sales Rule Section 310.3(a)(3)(iii), to the address to which the billing statement will be sent, prior to actually charging the consumer for the telephone-billed purchase. We believe that such a written notice should include all of the information listed under this point in Staff Handout D, plus some additional language underlined below, giving the consumer information as to the method of correcting any unauthorized charges:
ACUTA also supports the statements made by several individuals at the public Workshop, to the effect that the provision of refunds when a complaint is filed is not an adequate means of protecting consumers and should not mitigate the liability of either vendors, service bureaus or billing entities.
Billing Notices of Rights and Obligations
The Commission staff sought comment at the Workshop regarding the proposed requirement to include a statement of consumers rights and obligations in every billing statement that includes charges for a telephone-billed purchase. The LEC and carrier representatives at the Workshop stated a preference for annual mailing of such statements.
ACUTA agrees with the rule as currently proposed, and believes that a single annual mailing would be inadequate. Annual notices would be less effective than a notice included whenever a telephone-billed purchase is charged, because consumers would not be likely to read and retain annual notices unless they have a need to use them. For this reason, we urge that such notices should be sent with the monthly telephone bill when and if telephone billed purchases other than local exchange and interexchange telecommunications services appear on the bill.
The Commission staff raised a number of questions during the workshop regarding the potential development of an industry-wide database, which may be used by billing entities, carriers, or vendors to identify consumers with a history of failing to pay for legitimate telephone-billed purchases. Participants in the workshop compared such a database to those that are currently maintained by the banking and credit card industries.
ACUTA does not object to the concept of an industry-wide database, as long as it is established with sufficient safeguards to protect the rights and privacy of consumers, it is structured and operated in compliance with applicable Federal and state laws, and consumer records are kept in a manner that would ensure the accurate identification of customers in the database.
Further, ACUTA supports the inclusion of customers in this database only if the customer refuses to pay for a charge after a billing entity has conducted a reasonable investigation and determined that the telephone-billed purchase was legitimate and not in error. We do not believe that customers who simply dispute a charge under the proposed Rule should be included in the database. As proposed, vendors in the pay-per-call industry could use information from this database to restrict or block the customers access to pay-per-call services and other telephone-billed non-communication purchases.
In addition to assisting vendors with identifying consumers who regularly fail to pay for valid pay-per-call charges, ACUTA believes that this database should provide a mechanism to allow customers (whether individuals, businesses or aggregators) to "opt out" of any telephone billed purchases of the type covered in the current rulemaking. ACUTA proposes that, if the FTC mandates or permits the creation and utilization of the proposed database, the Commission should mandate that the database include a provision allowing customers to request blocking on a per-line or per-number basis of pay-per-call and other telephone billed purchases other than regular local and long distance telephone service. This would protect the interests of consumers who do not wish individuals in their households to incur telephone-billed purchases for which the consumer would be responsible. In addition, it would allow business customers with either Centrex service or PBXs to block such purchases from phone numbers for which they are the party responsible for paying the bill. In order to make this feasible, the database must allow look-up by line or number, in addition to the name/address lookup proposed by the industry representatives at the Workshop.
Such a database would be analogous to those for direct mail marketing, which allow consumers to request placement in a database of individuals who do not wish to receive direct mail solicitations.
ACUTA appreciates the opportunity to have participated in the Pay-Per-Call Rulemaking Workshop on May 20 21. We believe that the Workshop provided valuable insight into the technical, financial, and legal aspects of implementing the proposed Pay-Per-Call Rule, and provided a valuable opportunity for various affected parties to contribute to the rulemaking record.
We urge the Commission to consider the significant needs and potential financial risk to business telecommunications users, including colleges and universities, hospitals, hotels, governmental agencies and private businesses, who are increasingly bearing the cost of unauthorized charges appearing on their telephone bills. We are hopeful that the Commission will take action through the rulemaking process to ensure that consumers are fully informed of their rights and obligations regarding telephone-billed purchases, that mechanisms are put in place to facilitate the correction of unauthorized charges, and that telephone-billed purchases are properly authorized by the individuals who are responsible for paying these bills.
The Association for Telecommunications Professionals in Higher Education