9. Cramming Rules
Cramming is the placement of an unauthorized charge on a consumer's phone bill. This Part describes laws that address cramming, identifies deficiencies of related Interim Non-Com Rules, and supports adoption of general cramming rules that will apply to both communications and non-communications charges.
P.U. Code §§ 2889.9 and 2890 were enacted in order to deter cramming and clarify related rights and remedies available to California consumers. The Legislature directed that these laws be read together.190
In enacting the laws, the Legislature stipulated that P.U. Code §§ 2889.9 and 2890 apply not only to utilities, but also to non-utility billing agents and other persons or corporations responsible for generating a charge on a subscriber's phone bill. Thus the Commission may impose penalties on persons or corporations that violate the cramming statutes, even if the violators typically are not subject to our jurisdiction.191
The fundamental prohibition against cramming is found in P.U. Code § 2890. This statute states that "[a] telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized."192 This provision applies to communications and non-communications charges alike.
According to P.U. Code § 2890, there is a rebuttable presumption that "an unverified charge . . . was not authorized by the subscriber and that the subscriber is not responsible for that charge."193 With regard to direct dialed telephone services, however, the statute provides that "evidence that a call was dialed is prima facie evidence of authorization."194
P.U. Code § 2890 also states that a telephone company may not bill on behalf of any person or entity that generates a charge, unless that person or entity complies with a number of requirements.195 Among other provisions, third party vendors and billing agents are directed to provide a clear and concise description of products or services for which a charge was imposed, establish a process for expeditiously resolving subscriber disputes, and maintain a toll-free telephone number at which the provider maintains sufficient staff to respond to disputes.196
If a subscriber disputes whether a charge was authorized, P.U. Code § 2890 places parameters around a billing entity's response to the subscriber's complaint. The statute declares that "an entity responsible for generating a charge on a telephone bill" must, within thirty days of receiving the complaint, either verify the subscriber's authorization of the charge or undertake to resolve the billing dispute to the subscriber's satisfaction.197
Moreover a subscribers' local telephone service may not be disconnected for failure to pay non-communications-related charges or certain communications-related charges. P.U. Code § 2890(c) declares that a subscriber's local telephone service may be disconnected for nonpayment only if the charges at issue relate to the subscriber's basic local telephone service; intra local access and transport area (LATA) and interLATA telephone service; or international telephone service.198
The Legislature further instructed the Commission to establish reporting requirements regarding cramming-related complaints.199 P.U. Code § 2889.9 states that these requirements should apply to all complaints that involve a telephone company providing billing services to a third party vendor or billing agent.200
Finally the Legislature recognized that there might be a need for related Commission action as well. P.U. Code § 2889.9 declares that the "commission may adopt rules, regulations and issue decisions and orders, as necessary, to safeguard the rights of consumers and to enforce the provisions of this article."201 More narrowly, after deciding it should allow non-communications-related charges to be placed on consumers' phone bills, the Legislature directed the Commission to adopt any rules it deemed necessary for ensuring § 2890 protections effectively applied to non-communications-related charges.202
The Commission adopted Interim Non-Com Rules in 2001.203 When it adopted these rules, the Commission stated that the Interim Rules should be re-evaluated after eighteen months, in order to assess their effectiveness and whether changes were necessary.204 Outside of this proceeding, no such review has taken place in the past five years.
The Interim Non-Com Rules impose a number of requirements related to the placement of non-communications-related charges on subscribers' telephone bills. Among other provisions, the Rules direct a carrier to obtain their subscribers' prior written authorization before placing non-communications-related charges on their subscribers' bills.205 Also the Rules mandate the use of a personal identification number ("PIN") or equivalent security device before subscribers can initiate a transaction that results in a non-communications-related charge being placed on their phone bill.206
Parties' comments on the Interim Non-Com rules sharply divide consumer organizations from telecommunications carriers, and the AG from DOD/FEA. The consumer organizations and AG and argue that the Interim Non-Com rules should be upheld; the telecommunications carriers and DOD/FEA maintain that they should be repealed. We review and discuss these positions below.
Consumer organizations supporting the Interim Non-Com Rules include California Small Business Roundtable/California Small Business Association ("CSBRT/CSBA"), DRA, Greenlining, LIF, and TURN. Advocating on behalf of these rules, CSBRT/CSBA states that it endorses the Interim Non-Com Rules, because many small business owners report that they are charged with products and services they did not order, are frustrated by the lack of responsiveness by carriers, and are "outraged" by the time and energy it took to reverse unauthorized charges on their phones.207
DRA argues that the Interim Non-Com Rules, and especially the requirement of a PIN, give significant security to the phone as a charge-authorizing device.208 DRA adds that entering a PIN is a very minor burden for consumers, as it observes that consumers regularly enter a PIN when they use a debit card.209
Greenlining and LIF similarly support the Interim Non-Com Rules. They both fear that, absent the Interim Rules, consumers will face "an increased risk of unauthorized charges," a risk that they say some consumers cannot afford to take.210 They worry that consumers' phone service could be placed at risk due to nonpayment of non-communications charges,211 and based on this concern, Greenlining requests that the Commission clarify that local telephone service "will not be terminated because of non-payment of non-com services."212
TURN reasons that the Interim Non-Com Rules, in and of themselves, are not unduly burdensome. The advocacy organization accuses the phone companies of making "overly-restrictive interpretations of the rules to make their point" that the rules are unworkable.213 TURN maintains that, in reality, the Interim Non-Com Rules give carriers "flexibility to design their own protection practices."214 It observes that the Interim Rules allow carriers to choose any procedure that offers security equivalent to that of a PIN.215 While recognizing that the category of "communications-related charges" includes "broadband, video, pay-per-use, information services and messaging services," TURN adds that the Interim Non-Com Rules have a "narrow application."216 TURN points out that prepaid smart card technology currently is employed in Europe and Asia, and wireless carriers would not have to comply with the Interim Non-Com Rules if they used this technology to facilitate non-communications billing.217
The AG concludes that "there is no real burden placed on carriers by the California rules."218 The AG observes that the Interim Rules offer flexibility by allowing carriers to use alternate verification devices that are equivalent to a PIN.219 Moreover, in the absence of the Interim Non-Com Rules, the AG speculates that carriers still would not offer non-communications billing services: The AG cites examples of non-communications billing activity in foreign countries as evidence for the its belief that "the current technology in other countries does not even allow for billing to a telephone bill," and it cites lack of non-communications billing activity in the United States as evidence that "carriers have been unable or unwilling" to engage in offering domestic services subject to the Interim Non-Com Rules.220
The AG argues that the repeal of Interim Non-Com Rules will create "the risk of massive fraud."221 The AG speculates that, without the Interim Non-Com Rules, all it would take to place an unauthorized charge on another person's phone bill is knowledge of the individual's name and phone number.222 According to the AG, an "identity theft would merely need to look in a telephone book and begin billing purchases to that phone number," and victims of identity thieves will have to "wade through the long process of proving they did not authorize such charges."223 The AG further reasons that repeal of the Interim Non-Com Rules would be ill-advised, because "customers must be provided with adequate information regarding the types of services for which they are billed and the company responsible for assessing the charge."224
In contrast to the AG and consumer organizations, the Wireless Carriers, Wireline Carriers, Verizon Wireless, and DOD/FEA urge us to repeal the Interim Non-Com Rules in their entirety.225 The telecommunications carriers and DOD/FEA base their arguments on both legal and policy grounds.
The Wireline Group argues that the current rules are "unworkable" and hinder the development of many potential service offerings, such as paying for the download of a song on a DSL line with a charge on a monthly phone bill.226 It notes that even at the time of the adoption of the rules, parties to the proceeding argued that the rules were so strict that they "rendered ineffective the legislature's intent," and characterizes the AG's proposal, which shaped the Interim Non-Com Rules, as a "repeal" of the legislation that allowed carriers to place non-communications-related charges on phone bills.227 Assessing the situation now, Sean Beatty, testifying on behalf of the Wireline Group, declares that the Interim-Non Com Rules indeed have made it uneconomic for some carriers to bill for non-communications services.228 The Group observes that no carrier in California offers non-communications services to its customers.229
The wireless companies base their recommendation for repeal of the Interim Non-Com rules on a technical evolution in the wireless industry: the use of a wireless phone as a point-of-purchase authorization device. Evidence placed in the record by Wireless Carriers reveals that in other countries wireless phones now may be used to purchase movie tickets, mass transit tickets, and other low-cost items.230 Foreign carriers facilitating these purchases employ a variety of billing models, including one that places non-communications charges on a consumer's phone bill. Rebutting AG assertions to the contrary, Verizon Wireless establishes that existing technology allows for charges to be placed on a subscriber's telephone bill, and this form of billing is currently employed outside the United States.231 Verizon Wireless adds that, "[m]ore fundamentally, the proponents misunderstand the import of this evidence when they attempt to distinguish these examples of how these services are paid for."232
The Wireless Carriers argue that financial incentives of carriers alleviate the need for any prescriptive regulation of non-communications billing activities. The carriers explain that multiple factors drive them to avoid complaints. First, customer service calls to live representatives are expensive: One such call costs a carrier approximately seven dollars.233 Second, wireless companies may lose customer goodwill and loyalty.234 Third, if a charge was indeed unauthorized, the carrier must credit the charge to the bill.235
DOD/FEA concurs that the Interim Non-Com Rules should be repealed. It reiterates that the rules are cumbersome, and consumers will continue to enjoy statutory protections that exist independent of the Interim Rules.236
After reviewing the parties' comments, we hold that the record developed in this proceeding indicates that there is good reason to repeal the Interim Non-Com Rules. We find it significant that in the four years that the Interim Rules have been in place, we have no evidence that a single carrier in California has elected to offer this billing service pursuant to requirements imposed by the Non-Com Rules. This lack of activity suggests that the Interim Rules do not work as intended and lends credence to the criticism that these are "extremely prescriptive rules that attempt to micromanage transactions concerning non-communications products and services."237
Evidence related to jurisdictions outside of California does not contradict this conclusion. Foreign activity shows that carriers, in the absence of the Interim Non-Com Rules, are ready, willing, and able to place non-communications charges on their customers' phone bills. Within the United States, it is more difficult to draw any significant conclusions from the absence of non-communications billing practices in states that do not place any special restrictions on non-communications billing. While the AG interprets a lack of non-communications billing activity as an indication that carriers are not inclined to offer this type of billing service, the carriers' inactivity, just as reasonably, could be interpreted as evidence that California's rules are impeding billing developments here as well as in other states. California rules would require a national carrier to adopt a state-specific billing regime, which may be technically difficult or prohibitively expensive, given that most carriers have multi-state footprints.238
Furthermore we recognize that key elements of the Interim Non-Com Rules, namely the "opt-in" and "PIN" requirements, may be inconvenient for consumers and unduly burdensome for carriers. We find that the opt-in requirement has discouraged non-communications services billing. Specifically record evidence demonstrates that the requirement of a "written prior authorization" has been arduous for certain small and midsized carriers, because of the costs of tracking which customers have opted-in.239 Other forms of opt-in, including opt-in via a phone call, are also hassles for consumers electing to use their phones for non-communications applications, and may be particularly unneeded for devices such as cell phones, for which a customer's perception of the device's capabilities and uses is evolving.
We also find that requiring use of a PIN (or equivalent security measure) makes it more inconvenient for consumers who want to charge non-communications items to their cell phone bills. Imposing a PIN requirement in California may foreclose many potential uses of wireless handsets. For example, as Verizon Wireless points out, in Japan consumers can wave their wireless handsets over turnstiles to board mass transit trains.240 Yet requiring customers to stop and enter a PIN is largely incompatible with such a use. It is difficult to think that a customer rushing for a train would find it convenient to stop and enter a PIN.241
While a number of parties point out that devices other than a PIN may be used,242 we are not convinced that an "equally reliable security procedure" affords a carrier much more flexibility than a PIN. The Interim Non-Com rules do not define what qualifies as a PIN-equivalent procedure, and the risk that an alternate security procedure would be challenged may deter carriers from developing other such procedures.243 Also it is unclear if any alternate procedure would be less burdensome than a PIN. For example, the AG states that biometric devices, such as fingerprint and facial recognition software, may qualify as equally secure protections.244 These biometric devices depend upon technologies that may be too expensive for use in everyday wireless handsets. Thus while a carrier may be able to choose among PIN-equivalent devices in theory, a lack of "equivalent" options may mean that a carrier is effectively required to offer PIN protection.
It makes little sense to micromanage the form of security, given that there are a number of security measures a carrier could adopt in order to minimize the risk of cramming. These measures may include, but are not limited to, allowing customers to place spending caps on individual non-communications charges, block non-communications, or preset the amount of money charged to their monthly bill.245 While arguably not equivalent to a PIN, these security measures may afford consumers as much, or more, protection than a PIN.
Additionally the Interim Non-Com Rules base the regulatory regime on an uncertain and arbitrary distinction among different types of charges. The line between communications-related and non-communications-related charges is subject to dispute. For example, as evidenced by a complaint case currently before the Commission, parties may disagree about whether a ring tone qualifies as a non-communications charge or a communications charge.246 Also it is altogether unclear that this distinction is more important than any other charge-based distinction. As pointed out by DRA, a thief can quickly amass thousands of dollars worth of unauthorized communications charges, just as he may be able to amass thousands of dollars of non-communications charges.247 Perhaps more significant is a distinction between charges greater than $50 or less than $50.
Finally, and most importantly, we conclude that repeal of the Interim Non-Com Rules likely will not result in any significant detriment to consumers. We agree with the Wireline Group's assertion that carriers have strong financial incentives to adopt significant security measures. We recognize that it is costly for carriers to resolve complaints, and reducing their complaint levels is to their advantage.248 Consequently we doubt that a phone company would adopt a business model that easily allows a thief, armed only with a name and phone number, to place unauthorized charges on its customers' phone bills.249 This model would work against the carrier's own best interest.
Consumers continue to benefit from significant statutory protections too. The protections in P.U. Code §§ 2889.9 and 2890 forbid placement of unauthorized charges on a telephone bill, prohibit disconnection of local service for nonpayment of any non-communications charge, require disclosure of how to resolve a cramming complaint, and provide a means for expeditiously resolving a dispute regarding an allegedly unauthorized charge.250 These cramming provisions have been the basis for significant enforcement actions,251 and our repeal of the Interim Non-Com rules does not alter or reduce telephone companies' obligations under the statutes.
The course of this proceeding, however, has convinced us that rules are needed to provide clarification of the statutes that address cramming. Multiple parties call for the full readoption of the Interim Non-Com Rules in this decision. They argue that "[t]hese provisions are important . . . because they set clear standards for providers and provide self-help remedies that are simple, efficient and effective for consumers."252 To the extent that the Non-Com Rules address billing and complaint resolution related to cramming, we respond to these comments below.
We recognize that clarification of the cramming statutes is needed. Parties' comments indicate that many do not understand the key components of the existing cramming statutes. Multiple consumer organizations incorrectly assert that the repeal of the Interim Non-Com Rules would leave consumers with little or no protection against the placement of unauthorized non-communications-related charges on their phone bills.253 Consumer representatives also voice unfounded fears that, absent the Interim Non-Com Rules, consumers would have difficulty disputing unauthorized charges placed on their phone bills,254 and assessment of unauthorized charges could place consumers' phone service at risk.255
Responding to this confusion, we adopt cramming rules that clarify carriers' significant responsibilities under existing statutes. Our adoption of these rules is consistent with the Legislature's directive that we adopt any rules we deem necessary for enforcement of the cramming provisions.256
We focus on carriers' responsibilities in particular, because as we have recognized in prior decisions, "[r]esponsible practices by the billing telephone companies . . . can prevent most cramming."257 Telephone companies, regardless of whether they originate a charge, have the ultimate responsibility for handling customer complaints.258 So while we consistently have acknowledged that "the various participants in the billing chain must be held accountable for their part in the billing process . . . ,"259 our adoption of the cramming rules today appropriately recognizes that telephone companies act as a particularly important link in the billing chain.260
Also the cramming statutes' account of obligations imposed on third party vendors and billing agents is more detailed than their account of obligations imposed on telephone companies that bill on behalf of these entities. Thus adopting cramming rules that address and clarify carriers' responsibilities is particularly valuable for consumers.
The cramming rules we adopt today establish, first and foremost, that "[t]elephone companies may bill subscribers only for authorized charges." P.U. Code § 2890(a) does not put any qualifications on its statement that a telephone bill may only contain subscriber-authorized charges.261 Thus a carrier's responsibility to avoid placing unauthorized charges on its customers' phone bills extends to situations where a charge may originate with a billing agent or third party vendor. This responsibility is the same regardless of whether the charge at issue is communications-related or non-communications-related.
The cramming rules also reiterate and establish guidelines regarding the "rebuttable presumption that an unverified charge for a product or service was not authorized by the user." 262 The rules identify evidence that a carrier may use to prove that a user provided authorization. In particular, the rules state that user authorization may be established with "(i) a record of affirmative user authorization, (ii) a demonstrated pattern of knowledgeable past use, or (iii) other persuasive evidence of authorization." The rules also echo § 2890 and declare that "evidence that a call was dialed is prima facie evidence of authorization" with respect to direct dialed telecommunications services."263
Moreover the cramming rules make it clear that significant remedies are afforded to consumers who have been crammed. The rules dictate that while a complaint investigation is pending, a "subscriber shall not be required to pay the disputed charge or any associated late charges or penalties; the charge may not be sent to collection; and no adverse credit report may be made based on non-payment of that charge." This directive is consistent with the presumption that a user did not authorize a charge. As we stated above, the burden is on the carrier to establish authorization of a disputed charge; prior to establishing this authorization, the carrier must treat a charge as if it was unauthorized and may not require the subscriber to make any payment of the disputed charge.
The cramming rules further provide that a carrier must resolve a cramming complaint within thirty days of the date the carrier received the complaint. Specifically the rules state that "the telephone company, not later than 30 days from the date on which the complaint is received, shall either (i) verify and advise the subscriber of the user's authorization of the disputed charge or (ii) undertake to credit the disputed charge and any associated late charges or penalties to the subscriber's bill." While an argument may be made that this response time is already required by the plain language of § 2890(e), we want to remove any doubt as to what type of response is required of a carrier when its subscriber informs it that an unauthorized charge was placed on his phone bill.264 A carrier must provide the same complaint resolution response, regardless of whether the carrier itself initiated the charge in question.
P.U. Code § 2889.9 states that carriers will be subjected to reporting requirements regarding their resolution of the cramming-related complaints. We are tasked with establishing specific procedures for these reports, and in an effort to fulfill that obligation, we direct staff to hold a workshop that discusses how all carriers shall meet this statutory requirement. This workshop shall occur no more than 180 days after the issuance of this decision. Afterwards staff shall propose cramming-related reporting requirements that direct carriers to provide, among other items, the number and percentage of cramming complaints that take more than thirty days to resolve.265 staffThe Commission subsequently will establish a venue for adopting appropriate reporting requirements that apply to all Commission-regulated carriers.
Finally we observe that these carrier-focused rules in no way alter the statutorily-dictated responsibilities of persons or entities that originate charges placed on phone bills. P.U. Code § 2890 establishes that a consumer may contact a third party vendor or billing agent directly; these charge originators must reverse a disputed charge if it was unauthorized.266 Third party vendors and billing agents are part of the billing chain and therefore share responsibility for ensuring that only authorized charges are placed on consumers' phone bills. This responsibility extends to both communications-related and non-communications-related charges.
In sum, our repeal of the Interim Non-Com Rules ensures that our regulatory regime does not unduly stifle innovation in the telecommunications marketplace. We hold that a framework that treats communications and non-communications charges differently does not make sense; instead, in its place, we adopt cramming rules that apply to both communications and non-communications charges. These rules benefit consumers by clarifying that phone companies are ultimately responsible for any unauthorized charges placed on their customers' phone bills. Placing this responsibility on carriers ensures that they will actively monitor the entities for whom they provide billing and collection services, and will adopt appropriate safeguards to prevent their bills from being used to facilitate illegal cramming.
190 Stats 1998 ch. 1036 (stating that the two Senate bills that added §§ 2889.9 and 2890 to the P.U. Code should be "read together and serve as a deterrence to cramming").
191 Cal. Pub. Util. Code § 2889.9(b).
192 Cal. Pub. Util. Code § 2890(a).
193 Cal. Pub. Util. Code § 2890(d)(2)(D).
194 Id.
195 Cal. Pub. Util. Code § 2890(d).
196 Id.
197 Cal. Pub. Util. Code § 2890(e). See also D. 00-01-015 (further limiting "disconnection of basic residential and single line business service (i.e., Flat Rate and/or Measured Rate services) to nonpayment of non-recurring and recurring charges for basic residential and single line business services, including all mandated surcharges and taxes").
198 Cal. Pub. Util. Code § 2890(c) ("The commission may only permit a subscriber's local telephone service to be disconnected for nonpayment of charges relating to the subscriber's basic local exchange telephone service, long-distance telephone service within a local access and transport area (intraLATA), long-distance telephone service between local access and transport areas (interLATA), and international telephone service.").
199 Cal. Pub. Util. Code § 2889.9(d).
200 Id.
201 Cal. Pub. Util. Code § 2889.9(i).
202 Cal. Pub. Util. Code § 2890.1. Prior to 2001 telephone companies were not allowed to bill for non-communications charges.
203 Interim Opinion Adopting Interim Rules Governing the Inclusion of Non-Communications-Related Charges in Telephone Bills, D.01-07-030.
204 Id. at 4.
205 D. 01-07-036, App. A, Part C(1), p. 7.
206 Id. at App. A, Part C(2), p. 9. These rules also address a consumer's opt-in revocation, a telephone company's responsibility for its billing agents, a consumer's right not to have basic service disconnected for nonpayment of non-communications related charges, complaint procedures, readable bill format, confidential subscriber information, and the Commission's ability to impose fines on entities that fail to comply with these rules.
207 CSBRT/CSBA Opening Comments, p. 3.
208 Reply Brief of the Office of Ratepayer Advocates (Nov. 7, 2005), p. 20.
209 Id.
210 Opening Comments of Latino Issues Forum on Proposed Decision Revising General Order 168, p. 6 ("LIF Opening Comments"). See generally Comments of the Greenlining Institute on the Proposed Decision of Commissioners Peevey and Kennedy Issuing Revised General Order 168, pp. 5-7 (Jan. 17, 2006) (worrying about increased abuse of consumers) ("Greenlining Opening Comments"); LIF Opening Comments, pp. 6-7 (same).
211 Greenlining Opening Comments, p. 6; LIF Reply Comments, p. 3. The organizations apparently are unaware of P.U. Code § 2890(c), which states that a subscriber's local phone service may not be disconnected for nonpayment of non-communications-related charges or certain communications-related charges.
212 Greenlining Opening Comments, p.7.
213 Reply Brief of The Utility Reform Network (Nov. 7, 2005) ("TURN Reply Brief"), p. 17.
214 Consumer Groups Opening Comments, p. 20.
215 TURN Reply Brief, p. 16 (citing Tr. 1450).
216 Id. at 18.
217 Id. at 18-19.
218 AG Opening Comments, p. 40.
219 Id. at 40.
220 Id. at pp. 38-40.
221 Id. at 34.
222 Id. at 34.
223 Id. at 33-34. See also Reply Comments of California Small Business Roundtableand California Small Business Association, p. 2 (echoing the AG's concerns) ("CSBRT/CSBA Reply Comments").
224 Id. at 37. The basis of this comment is unclear. In large part the AG's concern is addressed by existing protections found in P.U. Code § 2890(d)(2). The statute requires all persons and entities that initiate a charge on a phone bill to include, or cause to be included, 1) "a clear and concise description of the service, product, or other offering for which a charge has been imposed," and 2) the name of the person or entity generating the charge.
225 Wireless Carriers Opening Brief, pp. 41-47; Verizon Wireless Opening Brief, pp. 44-47.
226 Wireline Group Reply Brief, pp. 9-12.
227 Id.
228 Tr. at 1479:27-1480:8 (Beatty, Wireless Group).
229 Id. at 11.
230 Wireless Carriers Opening Brief, p. 46. But see TURN Reply Brief, p. 18 (arguing that these are examples of "prepaid smart cards embedded in the wireless phone," and maintaining that the examples, therefore, are "not analogous").
231 Verizon Wireless Reply Brief, p. 2.
232 Id.
233 Wireless Carriers Reply Brief, p. 47.
234 Id.
235 Id.
236 DOD/FEA Opening Comments, p. 9.
237 Wireless Carriers ACR Comments, p.25.
238 See Herman Declaration (describing difficulties in creating state-specific billing regimes).
239 Tr. at 1479:27-1480:8 (Beatty, Wireless Group).
240 Verizon Wireless Opening Brief, p. 46. Other similar applications are being developed for vending machine items, movie tickets, and other low-cost items. Wireless Carriers Opening Brief, p. 46.
241 The fact that this specific example of non-communications billing is facilitated by a prepaid card is irrelevant. This scenario evidences just one of many ways in which the Interim Non-Com Rules may impede market development.
242 CSBRT/CSBA Opening Comments, p. 4; TURN Reply Brief, p. 16.
243 Katz Opening Testimony, p. 32.
244 AG Opening Comments, p. 40. Additionally DRA rules out one feature that could conceivably qualify as an equally reliable security measure: DRA maintains that the unique electronic identifier in a wireless handset is not as secure or effective as a PIN, and therefore is not an adequate substitute for a PIN. DRA Opening Comments, pp. 18-19.
245 Verizon Wireless notes that it already is offering choices like these to its customers. Verizon Wireless's Comments on the Alternate Proposed Decision of Commissioner Grueneich, p.14 (Feb. 14, 2006).
246 C. 05-07-022.
247 DRA Opening Comments, p. 20 (describing a "recent, well-publicized case of a customer whose wireless handset was stolen and who incurred subsequent billing of more than $26,000 for fraudulent calls").
248 Id. at p. 47.
249 The AG voiced concerns about this scenario in its opening comments. AG Opening Comments, p. 34.
250 Laws of general applicability, such as contract law and Bus. & Prof. Code § 1700, also shield consumers from liability for unauthorized charges.
251 The Commission has imposed significant fines pursuant to its authority under cramming statutes. See, e.g., Investigation of USP&C, D. 01-04-036 (ordering reparations and imposing a $1,750,000 fine on USP&C in response to USP&C's placement of unauthorized charges on local telephone bills).
252 CSBRT/CSBA, p. 1. See also AG Opening Comments, p. 37 ("A repeal of the previously adopted rules is certainly ill-advised."); Greenlining Opening Comments, p. 6 (supporting the Interim Non-Com Rules "in full"); LIF Reply Comments, pp. 6-7 (stating "the Commission should absolutely forego any attempt to rewrite . . . the Non-Communications Billing Rules"). The Interim Non-Com Rules, like the cramming rules we adopt today, address party responsibility and complaint procedures regarding cramming. D. 01-07-030, App. A, Part G.
253 See CSBRT/CSBA Opening Comments, p. 1 (stating that this decision will leave "small business and residential consumers exposed to unfair and abusive . . . billing . . . and will invite[e] operators to again victimize California consumers"); DRA Opening Comments, p. 18 (holding that "the Commission jeopardizes consumers by removing all Non-Com security requirements from the consumer protection rules"); LIF Opening Comments, p. 6 (contending that repeal of the Interim Non-Com Rules "opens up a pandora's box . . . by streamlining the process by which unscrupulous companies may place all manner of charges on an unsuspecting customer's phone bill").
254 See AG Opening Comments, p. 34 (characterizing resolution of a cramming complaints as a "long process" where subscribers have to "prov[e] they did not authorize such charges"); CSBRT/CSBA Opening Comments, p. 3 (stating that without the Interim Non-Com Rules, "[t]here would be . . . no requirement ensuring that consumers reach a customer service representative and easily correct unauthorized charges"). See also AG Opening Comments, p. 34 (supporting its conclusion that repeal of non-communications rules will harm consumers by arguing that "customers must be provided with adequate information regarding the types of services for which they are billed and the company responsible for assessing the charge").
255 Greenlining Opening Comments, pp. 6-7 (expressing concern "that customers will be disconnected from their phone services for nonpayment of non-communications charges"); LIF Opening Comments, p. 6 ("Requiring that consumers be exposed to unauthorized charges without adequate protections is simply not fair to those consumers who only need a phone to be able to work, keep track of their family, and address emergencies.").
256 Cal. Pub. Util. Code §§ 2889.9(i), 2890.1.
257 Interim Opinion Adopting Interim Rules Governing the Inclusion of Noncommunications-Related Charges in Telephone Bills, D. 01-07-030, p. 12.
258 Id. at 17.
259 Id. 12.
260 See also Final Opinion on Rules Designed to Deter Slamming, Cramming, and Sliding, D. 00-03-020 (stating that the "Legislature also has recognized the key role of Billing Telephone Companies").
261 Cal. Pub. Util. Code § 2890(a) ("A telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized.").
262 See id. at § 2890(d)(2)(D) (establishing the rebuttable presumption).
263 See id. at § 2890(d)(2)(D) ("With regard to direct dialed telecommunications services, evidence that a call was dialed is prima facie evidence of authorization.").
264 P.U. Code § 2890(e) states the following: "If an entity responsible for generating a charge on a telephone bill receives a complaint from a subscriber that the subscriber did not authorize the purchase of the product or service associated with that charge, the entity, not later than 30 days from the date on which the complaint is received, shall verify the subscriber's authorization of that charge or undertake to resolve the billing dispute to the subscriber's satisfaction" (emphasis added). The statute does not define what an "entity responsible for generating a charge" is, and it could be argued that a carrier who did not originate the charge nonetheless could qualify as an entity responsible fore generating the charge. See D. 01-07-030, p. 5 (noting that some "carriers . . . have argued . . . that the phrase is ambiguous because billing agents also play a role in `generating a charge' on a subscriber's bill).
265 We expect that many complaints may be resolved easily within thirty days.
266 See Cal. Pub. Util. Code § 2890(d-e) (placing a series of requirements on "[a]ny person, corporation, or billing agent that charges subscribers for products or services on a telephone bill").
