7. Assignment of Proceeding

John A. Bohn is the assigned Commissioner and Maribeth A. Bushey is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. Based on previously filed comments and reply comments, as well as D.00-03-010, D.00-11-015, and GO 168, Part 4, Commission's Staff prepared a draft set of rules for California Billing Telephone Corporations, which the Assigned Commissioner mailed to all parties on February 12, 2010, along with an assigned Commissioner's Rule setting forth the procedural schedule for considering the draft rules and any proposals from the parties.

2. Comments on the proposed rules were received from 25 parties, and 18 parties filed reply comments.

3. The record in this proceeding shows that California telephone corporation subscribers continue to experience unauthorized charges on their telephone bills.

4. The person in possession of a wireless handset cannot reasonably be presumed to be the account subscriber, absent authorization from the subscriber for the Billing Telephone Corporation to place third-party charges on the subscriber's bill for the line served by the handset.

5. Disputing an unauthorized charge with the Billing Telephone Corporation is time-consuming and inconvenient, particularly for modest charges.

6. Unscrupulous Service Providers may place unauthorized charges on numerous subscriber bills, refund charges upon dispute, and retain all uncontested but unauthorized billings.

7. Billing Telephone Corporation subscribers should have the option of directing the Billing Telephone Corporation to place no third-party charges on the subscriber's bill.

8. Wireless providers are beginning to expand the types of third-party services available to subscribers.

9. The Commission should revisit the issue of whether subscribers should opt-in or opt-out of the ability to purchase services and content by third-party providers due to advances in the capabilities of wireless handsets and offerings by third-party service providers.

10. Subscribers should be informed that their bills are open to charges from third party service providers and that they have the option to block access at anytime and with no additional cost.

11. A subscriber cannot be presumed to authorize the placement of third-party charges on their telephone bill unless the subscriber is first informed that third-party charges may be placed on the bill and understands the consequences of allowing this to occur.

12. Billing Telephone Corporation subscribers who are aware that their bills are open to charges from other Service Providers may be more diligent in examining their bills for unauthorized charges.

13. The administrative burden of the reporting requirements can be eased in light of other directives to the Billing Telephone Corporations.

14. The Commission held legislative, not evidentiary, hearings when adopting GO 168.

Conclusions of Law

1. California Billing Telephone Corporations may only bill for charges authorized by the subscriber, and the subscriber is the person or entity responsible for paying the invoice from the Billing Telephone Corporation.

2. A person in possession of a wireless handset is not necessarily the subscriber and actions by that person may not be presumed to constitute subscriber authorization.

3. No California Billing Telephone Corporation is required to offer billing services to third parties.

4. Billing Telephone Corporations should provide their subscribers with options to block or limit offerings by third-party service providers at no cost and to actively inform subscribers of these options.

5. Billing Telephone Corporations should remain fully responsible for refunding all unauthorized charges presented to subscribers in the Billing Telephone Corporations' bills, regardless of whether the subscribers unsuspectingly paid the charges.

6. The definition of subscriber as used in Pub. Util. Code §§ 2889.9 and 2890 includes persons lawfully in possession of a wireless handset where the subscriber has been informed by the Billing Telephone Corporation that the subscriber's line is open to third-party charges.

7. CTIA's alternate proposal does not comply with the requirements of Pub. Util. Code § 2889.9(d).

8. It is reasonable to use refunds to subscribers as a proxy for subscriber complaints.

9. The Director of the CPSD should be authorized to issue citations to any Billing Telephone Corporation or Billing Agent that fails to submit the quarterly report as required by the California Telephone Corporation Billing Rules in a complete and timely fashion as follows:

a. Up to 30 days late, a citation requiring payment of $500 to the General Fund;

b. 30 to 60 days late, a citation requiring payment of $5,000 to the General Fund;

c. No less than 10 days before issuing a citation, the Director shall give the Billing Telephone Corporation or Billing Agent notice of the impending citation and an opportunity to submit the report; and

d. The Commission may also take such further actions as may be necessary to protect the public interest.

10. The Commission should exercise its remedial statutory authority granted pursuant to Pub. Util. Code § 2889.9(b) over Billing Agents and Service Providers using the billing services of California Telephone Corporations.

11. The Public Utilities Code provides the Commission comprehensive authority over the billing practices of California Telephone Corporations.

12. Safeguarding the rights of consumers requires that California Billing Telephone Corporations, Billing Agents, and Service Providers comply with the California Telephone Corporation Billing Rules.

13. The California Telephone Corporation Billing Rules, Attachment A to today's decision, should be adopted as Revised GO 168, Part 4.

14. Safeguarding the rights of consumers requires that the Commission's staff supervise the availability of enhanced consumer education materials at the CalPhoneInfo web site.

15. Safeguarding the rights of consumers requires that the carriers meet as necessary with the Commission's staff to review and update consumer education materials in the carrier's tariffs, web sites and customer information.

16. Safeguarding the rights of consumers requires the carriers to expand and enhance the availability of useful information on third-party billing, including not to dispute and block such charges, to all consumers.

17. No evidentiary hearings are required.

ORDER

IT IS ORDERED that:

1. The California Telephone Corporation Billing Rules attached to this decision as Attachment A are adopted as Revised General Order 168, Part 4. All Billing Telephone Corporations, Billing Agents, and Service Providers must comply therewith at the earliest practicable date but in no event later than 90 days after the effective date of this order.

2. The Communications Division staff must prepare a report, in collaboration with the Consumer Protection and Safety Division, on developments in the wireless industry, including new types of offerings by third-party providers beyond Premium short messaging services. The report must include findings on whether the cramming rules adopted by this decision sufficiently protect customers from unauthorized charges. This report shall be prepared and served on parties to this proceeding by no later than January 1, 2013.

3. All Billing Telephone Corporations who offer third-party billing and collection services shall cooperate with the Telecommunications Division and the Consumer Protection and Safety Division and participate in meetings and workshops for the purpose of developing materials to educate consumers on how to avoid having unauthorized charges placed on bills. The workshops shall not only develop content for the CalPhoneInfor web site maintained by the Commission, but also shall discuss actions taken by the Billing Telephone Corporations to inform consumers of the ability to block third-party services and their related charges. Such workshops must occur no less than once each calendar quarter for the first year after the effective date of this decision and no less than annually thereafter. The consumer information must contain clear and concise descriptions of third-party billing, specific steps to dispute an unauthorized charge, a summary of the responsibilities of a Billing Telephone Corporation, comprehensive information on means to block or limit such charges and such other information as the Commission may require to safeguard the rights of consumers. All carriers offering third-party billing services must participate in such workshops.

4. Rulemaking 00-02-004 is closed.

This order is effective today.

Dated October 28, 2010, at San Francisco, California.

MICHAEL R. PEEVEY

President

JOHN A. BOHN

TIMOTHY ALAN SIMON

NANCY E. RYAN

Commissioners

Commissioner Dian M. Grueneich, being necessarily absent, did not participate.

ATTACHMENT A

Revised General Order 168, Part 4

California Telephone Corporation Billing Rules

1. Applicability:

These rules apply to all Billing Telephone Corporations and Billing Aggregators and specify the responsibilities and procedures that must be followed to address and report cramming-related issues. Cramming occurs when an unauthorized charge is placed on a Subscriber's telephone bill.

These rules supersede the rules adopted in Decision (D.) 00-03-020, as modified by D.00-11-015, and replace General Order 168, Part 4, adopted in D.06-03-013. Compliance with these rules does not relieve Billing Telephone Corporations of other obligations they may have under their tariffs, other Commission General Orders and decisions, FCC orders, and state and federal statutes.

These rules shall not be interpreted to create any new private right of action, to abridge or alter a right of action under any other state or federal law, or to create liability that would not exist absent the foregoing rules.

2. Definitions:

2.1. Billing Agents: Any entity which provides billing services for Service Providers directly or indirectly through a Billing Telephone Corporation.

2.2. Complaint: Any written or oral communication from a Subscriber alleging that an unauthorized charge was included in the Billing Telephone Corporation's bill to the Subscriber.

2.3. Service Provider: A person or entity, other than a Billing Telephone Corporation, that originates the charge or charges that are billed to the Subscriber of the Billing Telephone Corporation.

2.4. Billing Telephone Corporation: A telephone corporation that bills a Subscriber for products and services.

2.5. Telephone Corporation: Any telephone corporation (as defined in Pub. Util. Code § 234) operating within California. This term includes resellers and wireless telephone service providers.

2.6. Unauthorized Charge: Any charge placed upon a Subscriber's telephone bill for a service or goods that the Subscriber did not agree to purchase, including any charges that resulted from false, misleading, or deceptive representations. Charges that relate to a change in a subscriber's selection of a provider of telecommunications service are excluded from these rules and are subject to Part 3 (Rules Governing Slamming Complaints) of this General Order.

2.7. Subscriber: Either one of the following:

(1) The person or entity identified in the account records of a carrier as responsible for payment of the telephone bill;

(2) Any person authorized by such party to charge services to the account;

(3) Any person lawfully in possession of a wireless handset where the subscriber of record, after being fully informed of the optional nature of this feature and the associated responsibilities, has authorized the Billing Telephone Corporation to place third-party charges on the Subscriber's bill for the line serving the handset. This provision does not relieve the subscriber of any obligation to under their service agreement to promptly report a lost or stolen wireless handset to the Billing Telephone Corporation.

2.8. Investigation: An inquiry conducted by (i) the person or entity from which the disputed charge originated, (ii) a Billing Telephone Corporation, (iii) the Commission, or (iv) any other relevant government agency, such as the District Attorney's office in the Subscriber's county or the State Attorney General.

3. Authorization Required:

Billing Telephone Corporations shall only place charges that have been authorized by the Subscriber on the Subscriber's telephone bill. All charges billed without Subscriber authorization are unlawful.

All disputed charges for which no verification of Subscriber authorization is available are subject to a rebuttable presumption that the charges are unauthorized. A Billing Telephone Corporation may establish that the Subscriber authorized the charge by (i) providing a record of affirmative authorization from the Service Provider, (ii) a demonstrated pattern of knowledgeable past use, or (iii) other persuasive evidence of authorization. With regard to direct dialed telephone services, evidence that a call was dialed is prima facie evidence of authorization. This presumption can be rebutted with evidence that the call was not authorized.

4. Billing for Authorized Charges Only:

Billing Telephone Corporations shall bill Subscribers only for authorized charges. Billing Telephone Corporations shall adopt protocols which prohibit Billing Agents and Service Providers from submitting, directly or indirectly, charges for billing through a Billing Telephone Company that the Subscriber has not authorized. Billing Telephone Corporations must monitor or cause to be monitored, either directly or through a Billing Agent, or other entity, each Service Provider's continuing compliance with this requirement. Such monitoring shall include review of the Service Provider's marketing materials, scripts, customer verification records, or other such information as may be necessary to demonstrate that the Service Provider is obtaining valid Subscriber authorizations.

5. Responsibilities of Billing Telephone Corporations:

The Billing Telephone Corporation bears ultimate responsibility for all items presented in a Subscriber's bill and must take the following measures to ensure that only authorized charges from lawful Billing Agents and Service Providers are included in the bill. Prior to approving a Service Provider or Billing Agent for the provision of billing services, the Billing Telephone Corporation shall directly or through another entity conduct a reasonable inquiry of the Service Provider's or Billing Agent's history of violations of state or federal law or rules relating to consumer protection and current ability to operate lawfully.

At service initiation, all Billing Telephone Corporations shall disclose to Subscribers that the Billing Telephone Corporation has opted to provide billing and collection services to Third Parties and that such charges may be placed on the Subscriber's bill, absent action by the Subscriber.

Wireless Billing Telephone Corporations shall explain at service initiation in clear and concise written terms that the Subscriber's line is open to charges from third-party Service Providers and that the Subscriber has the option to block these charges. The Billing Telephone Corporation shall not charge for blocking and must allow Subscribers to add or remove this feature quickly and easily. Billing Telephone Corporations must remind Subscribers in writing no less than once each calendar year that third-party charges may be placed on the bill and of the option to block such charges at anytime and at no additional cost. The Billing Telephone Corporation shall explain the blocking option in neutral terms and shall not attempt to influence the Subscriber's decision.

For wireline Billing Telephone Corporations, this option to block third-party services shall not extend to any services they are required by law to provide, such as the option to purchase long distance services from a competitor, or services or products offered by their affiliates.

The Billing Telephone Corporation has an affirmative duty to investigate Subscriber allegations of unauthorized billings, and where there are reasonable grounds of concern that a pattern of unauthorized charges may have occurred, to take the initiative to determine whether other Subscribers may have been subjected to unauthorized charges. The Billing Telephone Corporation shall resolve all Subscriber complaints of unauthorized charges as required in Rule 8, Resolution. If a Subscriber contacts the Billing Telephone Corporation to dispute a billed item from a Service Provider, the Billing Telephone Corporation must promptly address and resolve the dispute without deflecting the Subscriber to the alleged Service Provider. Except as allowed under these rules, the Billing Telephone Corporation shall not state or imply the law or regulations require it to provide billing services to third parties.

6. Monitoring of Subscriber Billings:

Each Billing Telephone Corporation is responsible for monitoring the billings it controls for the purpose of preventing and detecting unauthorized charges, and for the prompt termination of billing services to Billing Agents and Service Providers that present unauthorized charges. Each Billing Telephone Corporation shall have in place and comply with a protocol for identifying unauthorized charges and suspending or terminating billing services to any Billing Agent or Service Provider that has submitted unauthorized charges.