[Congressional Record Volume 159, Number 83 (Wednesday, June 12, 2013)]
[Senate]
[Pages S4407-S4409]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. ROCKEFELLER (for himself, Ms. Klobuchar, and Mr.
Blumenthal):
S. 1144. A bill to prohibit unauthorized third-party charges on
wireline telephone bills, and for other purposes; to the Committee on
Commerce, Science, and Transportation.
Mr. ROCKEFELLER. Mr. President, I rise to introduce the Fair
Telephone Billing Act of 2013. This legislation would protect millions
of American consumers and businesses from unauthorized charges on their
wireline telephone bills.
In 2011, the Senate Commerce Committee, which I chair, completed a
year-long investigation into unauthorized third-party charges on
telephone bills, a practice commonly referred to as ``cramming.'' The
investigation confirmed that third-party billing through wireline
telephone bills had likely cost American consumers and businesses
billions of dollars in unauthorized charges.
This legislation will put an end to cramming on wireline bills once
and for all.
Unauthorized third-party charges on telephone bills have plagued
consumers for years. Cramming first emerged in the 1990s. Following the
breakup of AT&T and the detariffing of ``billing and collection
services'' by the Federal Communications Commission, telephone
companies opened their billing and collection systems to third-party
companies offering a variety of services, some of which were completely
unrelated to telephone services.
For the first time, telephone numbers worked like credit card
numbers. Consumers could purchase services with their telephone numbers
and the charges for these services would later appear on their
telephone bills.
There has been much debate over the extent to which telephone
companies were required to allow third parties to place charges on
customers' phone bills, but the last of any Federal obligations ended
in 2007. Since that time, with the exception of a few state
requirements, telephone companies have been free to allow, or not
allow, whatever companies they choose to place third-party charges on
their customers' telephone bills. The telephone companies chose to
allow all sorts of companies to place charges for all sorts of
services.
Throughout the 1990s, state and federal law enforcement saw a
dramatic increase in complaints about unauthorized charges on telephone
bills. In response, the Federal Communications Commission and the
telephone industry created voluntary guidelines to combat cramming.
Throughout this same period, Congress also convened hearings on the
issue, and each time, the telephone industry used these voluntary
guidelines to argue that congressional action on cramming was not
needed. Several bills were introduced, but none were adopted. Now we
find ourselves, over a decade later, still discussing cramming. We
cannot make the same mistake again.
In 2010, I opened the Committee's investigation into cramming to
better understand the scope of the cramming problem. The investigation
showed that over the past decade, cramming caused extensive financial
harm to all types of wireline telephone customers, from residences and
small businesses, to government agencies and large companies. All the
while, the largest telephone companies were making large profits,
likely generating over $1 billion in revenue by placing third-party
charges on their customers' telephone bills.
It was shocking to learn that many third-party vendors that were
placing charges on telephone bills were illegitimate and appeared to
have been created solely to exploit a broken system. Consumers reported
being charged $10 to $30 a month for so-called ``services'' that they
never authorized. These included weekly e-mail messages with
``celebrity gossip'' and ``fashion tips,'' and others completely
unrelated to wireline telephone services--such as ``online photo
storage'' and ``electronic facsimile.'' In some of the most egregious
examples, unauthorized charges had been added to the bills for
telephone lines dedicated to fire alarms, security systems, bank
vaults, elevators, and 911 services.
The Committee investigation also determined that many of the services
being charged to consumers' telephone bills seemed to serve no
legitimate purpose, frequently did not function properly, and were
often available elsewhere for free.
The investigation involved a review of thousands of consumer
complaints and interviews with more than 500 individuals and business
owners whose
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telephone bills included charges from third parties. Not one of these
individuals or entities believed they had authorized the charges.
Further, many of these consumers complained that when they found
unauthorized charges on their telephone bills, they were unable to get
the money refunded, either from the carrier or from the third-party
vendor. That is unacceptable.
In response to the Committee's investigation, the three largest
wireline telephone companies--AT&T, Verizon, and CenturyLink--took
positive steps to eliminate cramming on wireline telephone bills,
including a decision to stop allowing the placement of most third-party
charges on wireline telephone bills.
The Fair Telephone Billing Act will ensure that all wireline
telephone companies and providers of interconnected VoIP services are
required to take the same steps so that cramming on telephone bills
never happens again.
In short, the bill would prohibit any local exchange carrier or
provider of interconnected VoIP services from placing any third-party
charge on a customer's bill, unless the charge is for a telephone-
related service or a ``bundled'' service that is jointly marketed or
sold with a company's telephone service.
Under the bill, a telephone company that places prohibited charges on
a customer's bill is responsible for refunding to the customer any
charge for services the customer did not authorize.
The bill also includes a narrow exception for two categories of
third-party billing services: telephone-related services, such as
collect calls; and ``bundled'' services, such as satellite television
services offered together with phone service. This bill recognizes that
such legitimate types of billing offer substantial benefit to
consumers.
In recent years, increasing numbers of consumers have transitioned
from traditional wireline telephone service to interconnected VoIP
services and more are expected. Since consumers likely do not see a
distinction between traditional wireline service and interconnected
VoIP services, I believe these services need to be included. It is
important to ensure that all telephone customers are offered the same
protections from unauthorized charges.
It also has become clear that cramming now extends to wireless bills.
When I introduced a similar bill last year, I included provisions that
would have directed the Federal Communications Commission to create
rules to prevent cramming on wireless telephone bills. Since that time,
the Senate Commerce Committee has been examining cramming on wireless
bills, and I believe this issue demands additional attention. I do not
want to see in a few years that cramming has simply migrated from
wireline to wireless. It is important that we examine the extent to
which third-party wireless billing practices raise any issues distinct
from third-party wireline billing practices, so we can best determine
appropriate policies for protecting against consumer abuses in this
context.
Cramming has likely already cost consumers and businesses billions.
The Fair Telephone Billing Act would stop practices that Congress,
regulators, and consumers agree are nothing more than a cover for
fraud.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 1144
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fair Telephone Billing Act
of 2013''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) For years, telephone users have complained that their
wireline telephone bills included unauthorized third-party
charges.
(2) This problem, commonly referred to as ``cramming,''
first appeared in the 1990s, after wireline telephone
companies opened their billing platforms to an array of
third-party vendors offering a variety of services.
(3) Since the 1990s, the Federal Communications Commission,
the Federal Trade Commission, and State attorneys general
have brought multiple enforcement actions against dozens of
individuals and companies for engaging in cramming.
(4) An investigation by the Committee on Commerce, Science,
and Transportation of the Senate confirmed that cramming is a
problem of massive proportions and has affected millions of
telephone users, costing them billions of dollars in
unauthorized third-party charges over the past decade.
(5) The Committee showed that third-party billing through
wireline telephone numbers has largely failed to become a
reliable method of payment that consumers and businesses can
use to conduct legitimate commerce.
(6) Telephone companies regularly placed third-party
charges on their customers' telephone bills without their
customers' authorization.
(7) Many companies engaged in third-party billing were
illegitimate and created solely to exploit the weaknesses in
the third-party billing platforms established by telephone
companies.
(8) In the last decade, millions of business and
residential consumers have transitioned from wireline
telephone service to interconnected VoIP service.
(9) Users of interconnected VoIP service often use the
service as the primary telephone line for their residences
and businesses.
(10) Millions more business and residential consumers are
expected to migrate to interconnected VoIP service in the
coming years as the evolution of the nation's traditional
voice communications networks to IP-based networks continues.
(11) Users of interconnected VoIP service that have
telephone numbers through the service should be protected
from the same vulnerabilities that affected third-party
billing through wireline telephone numbers.
SEC. 3. UNAUTHORIZED THIRD-PARTY CHARGES.
(a) In General.--Section 258 of the Communications Act of
1934 (47 U.S.C. 258) is amended--
(1) by amending the heading to read as follows: ``SEC. 258.
PREVENTING ILLEGAL CHANGES IN SUBSCRIBER CARRIER SELECTIONS
AND UNAUTHORIZED THIRD-PARTY CHARGES.''; and
(2) by adding at the end the following:
``(c) Prohibition.--
``(1) In general.--No local exchange carrier or provider of
interconnected VoIP service shall place or cause to be placed
a third-party charge that is not directly related to the
provision of telephone services on the bill of a customer,
unless--
``(A) the third-party charge is from a contracted third-
party vendor;
``(B) the third-party charge is for a product or service
that a local exchange carrier or provider of interconnected
VoIP service jointly markets or jointly sells with its own
service;
``(C) the customer was provided with clear and conspicuous
disclosure of all material terms and conditions prior to
consenting under subparagraph (D);
``(D) the customer provided affirmative consent for the
placement of the third-party charge on the bill; and
``(E) the local exchange carrier or provider of
interconnected VoIP service has implemented reasonable
procedures to ensure that the third-party charge is for a
product or service requested by the customer.
``(2) Forfeiture and refund.--
``(A) In general.--Any person who commits a violation of
paragraph (1) shall be subject to a civil forfeiture, which
shall be determined in accordance with section 503 of title V
of this Act, except that the amount of the penalty shall be
double the otherwise applicable amount of the penalty under
that section.
``(B) Refund.--Any local exchange carrier or provider of
interconnected VoIP service that commits a violation of
paragraph (1) shall be liable to the customer in an amount
equal to all charges paid by that customer related to the
violation of paragraph (1), in accordance with such
procedures as the Commission may prescribe.
``(3) Additional remedies.--The remedies under this
subsection are in addition to any other remedies provided by
law.
``(4) Definitions.--In this subsection:
``(A) Affirmative consent.--The term `affirmative consent'
means express verifiable authorization.
``(B) Contracted third-party vendor.--The term `contracted
third-party vendor' means a person that has a contractual
right to receive billing and collection services from a local
exchange carrier or a provider of interconnected VoIP service
for a product or service that the person provides directly to
a customer.
``(C) Third-party charge.--The term `third-party charge'
means a charge for a product or service not provided by a
local exchange carrier or a provider of interconnected VoIP
service.''.
(b) Rulemaking.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Federal Communications Commission,
in consultation with the Federal Trade Commission, shall
prescribe any rules necessary to implement the provisions of
this section.
(2) Minimum contents.--At a minimum, the regulations
promulgated by the Federal Communications Commission under
this subsection shall--
(A) define how local exchange carriers and providers of
interconnected VoIP service will obtain affirmative consent
from a consumer for a third-party charge;
(B) include adequate protections to ensure that consumers
are fully aware of the charges to which they are consenting;
and
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(C) impose record keeping requirements on local exchange
carriers and providers of interconnected VoIP service related
to any grants of affirmative consent by consumers.
(c) Effective Date.--The Federal Communications Commission
shall prescribe that any rule adopted under subsection (b)
shall become effective for a local exchange carrier or
provider of interconnected VoIP service not later than the
date that the carrier's or provider's contractual obligation
to permit another person to charge a customer for a good or
service on a bill rendered by the carrier or provider
expires, or 180 days after the date of enactment of this Act,
whichever is earlier.
SEC. 4. RELATIONSHIP TO OTHER LAWS.
(a) No Preemption of State Laws.--Nothing in this Act shall
be construed to preempt any State law, except that no State
law may relieve any person of a requirement otherwise
applicable under this Act.
(b) Preservation of FTC Authority.--Nothing in this Act
shall be construed as modifying, limiting, or otherwise
affecting the applicability of the Federal Trade Commission
Act (15 U.S.C. 41 et seq.) or any other law enforced by the
Federal Trade Commission.
SEC. 5. SEVERABILITY.
If any provision of this Act or the application of that
provision to any person or circumstance is held invalid, the
remainder of this Act and the application of that provision
to any other person or circumstance shall not be affected
thereby.
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