Part 4: Rules Governing Billing for Non-Communications-Related Charges

Cramming, the submission or inclusion of unauthorized, misleading, or deceptive charges for products or services on subscribers' telephone bills, has become a serious problem in California in recent years. In an effort to address the problem, the Legislature enacted Sections 2889.9 and 2890, which contain provisions designed to deter cramming, and authorized the Commission to adopt rules needed to accomplish the consumer protection purpose of those statutes.

On July 12, 2001 we issued D.01-07-030 adopting a set of interim rules governing the inclusion of non-communications-related charges on telephone bills. We stated that those rules, possibly with some modifications, would be incorporated into and superseded by the new general order we adopt in this decision. Those essentially unchanged D.01-07-030 rules were included in the June 2002 draft decision.

In their comments on the June 2002 draft, wireline carriers sought a complete reversal of direction from D.01-07-030 by way of two major changes, along with a number of lesser changes. First, the wireline carriers would eliminate the option established in D.01-07-030 for a consumer to lock his or her bill against non-communications-related charges. Where D.01-07-030 adopted an opt-in standard for such billing, the wireline carriers would delete that and offer neither an opt-in nor an opt-out provision to customers seeking to immunize themselves against non-communications-related cramming. Second, the wireline companies would rely entirely on the vendors who sell products and services, and the billing aggregators who act as middlemen relaying those charges to the billing telephone companies, for all authorizations and recordkeeping. The responsibility for processing subscriber complaints would still fall to billing telephone companies, but they would be able to delegate investigations to vendors or billing aggregators as their agents and would delete the provision that currently makes billing telephone companies responsible for their agents' compliance with the rules. They state their view as, "Anti-cramming safeguards should resemble anti-slamming safeguards, where the responsibility for obtaining, processing, and maintaining customer authorization is at the point of purchase - not at the point of billing." Since the Commission has no jurisdiction to enforce its rules over point-of-purchase vendors, the changes wireline carriers suggest would effectively strip from Part 4 most of its consumer protective value.

Among the other changes suggested, one carrier asked to have additions made to the list of charges defined as being communications-related, and to require that the Commission act within 90 days on any petition to include further additions. The Part 4 definition of non-communications-related charges is modeled on the Legislature's list set forth in former Section 2890(a) (now expired), and is by its own terms not exclusive; expanding the list to cover all possibilities is both impractical and unnecessary. And the Commission already has a mechanism in place under Section 1708.5 that allows petitions to adopt, amend or repeal a regulation, making it also unnecessary to add a separate provision to that effect in Part 4.

In the D.01-07-030 interim rules, we indicated in Section J, Penalties, our intent not to preclude district attorneys, the Attorney General, or other law enforcement agencies from obtaining injunctive relief, civil penalties, and other relief permitted by law against a billing telephone company, billing agent, or vendor that violates the rules. The June 2002 draft decision proposed a minor revision in Part 4, Section J, to make it clear that we intend that same provision apply to violations of state law. We have also changed our definition of "solicitation" in Part 2 of the general order, and that new definition is also included in Part 4 for consistency. The only other changes are minor, non-substantive changes to promote consistency with the remainder of the general order. The rules set forth in D.01-07-030, otherwise essentially unchanged and no longer interim, are now Part 4, Rules Governing Billing for Non-communications-Related Charges, of new General Order ___.