[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

[[Page S4408]]

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.
                                 ______