Education and Enforcement

In inviting comments from the parties, the rulemaking order in this proceeding asked a series of ten questions. One of those was, "What alternative approaches to telecommunications consumer protection should the Commission consider beyond those recommended in the staff Report?" The two themes most often proposed in response were consumer education and stronger enforcement.

Education

Parties addressed education from two perspectives: information provided by carriers about their specific product and service offerings; and information provided by government and public service-oriented groups to help consumers choose among diverse offerings from many providers. The former we have covered under Parts 1 and 2 above in discussing consumers' Right to Disclosure and the rules that help enforce that right. As helpful as full disclosure is, however, both carriers and consumer groups acknowledged that the emphasis of the carriers' disclosure efforts will always be persuasion, not education. True education to enable consumers to help themselves by making better choices must be independent from the sales motive, and that is best undertaken by consumer-oriented educators, not by the carriers. Parties offered a number of suggestions for improving education from this latter, consumer-oriented perspective.

Several consumer groups would have the Commission take a more active role in gathering service and rates data and publishing it in useful, easily understood formats for consumers. This would include, e.g., carrier-specific complaint statistics, service measures, rate comparison matrices, and listings of carriers by carrier class and geographic service area. Others would have the Commission be in addition or instead a facilitator, providing funding and working with and through consumer advocacy groups, community based organizations, and consumer-industry panels to educate consumers.⁸⁴

While consumer education (apart from disclosure) was not the primary focus of this rulemaking, the rulemaking order did recognize education as an important underpinning for consumer protection. The staff report referred to this as one of outcomes from the Commission's 1998 Consumer Protection Roundtable:

The Commission should foster a marketplace in which consumers are empowered and have confidence. This can be achieved through establishing rules, educating consumers, and helping consumers understand pricing of services.

The parties' comments and recommendations on education have given us both ideas and impetus, to the point that we are convinced that an immediate effort directed at consumer education is needed. In the rulemaking order, the Commission noted that consumer protection calls for more than simply establishing rules of conduct for carriers to follow. It requires consumers be knowledgeable of their rights and what recourse they have when their rights are violated. In fact, the order specifically sought input as to "what alternative approaches to telecommunications consumer protection ... the Commission [might] consider beyond those recommended in the staff report." Many stakeholders, both consumer-oriented groups and carriers, responded by suggesting that the Commission initiate an education program to accompany the new rules.

We agree. During the course of this proceeding, we have seen that there are good reasons for the Commission to consider a telecommunications consumer education program.

First, our experience at last year's public participation hearings and the large volume of mail we received in response to public notices demonstrated the frustration many consumers feel in dealing with carriers. For low income customers and those whose preferred language is not English, the problem is particularly acute, a view supported in the comments we received from organizations which represent them.

Second, defining consumers' rights and rules to enforce those rights is a recent concept in the context of telecommunications consumer protection. Rights and rules can only be fully effective when consumers know about them, the protections they offer, and what recourse and remedies are available. That will not happen without a special effort on the Commission's part.

Also, the new rights and rules will apply across all carrier classes: local exchange, wireless and long distance carriers. The consumer's relationship with local telephone companies has been defined through a century of experience. But that relationship is changing as local telephone service providers increasingly rely on selling optional services to enhance profits. Dealing with wireless and long distance carriers is a more recent and less-understood matter for consumers, made all the more challenging by the sometimes-bewildering variety and complexity of rate plans most wireless and long distance providers offer. Education is key here as well.

The Legislature has expressed its intent in Section 2896(d) that carriers provide, among other things, "information concerning the regulatory process and how customers can participate in that process, including the process of resolving complaints." Further, through Section 2897 it directed the Commission to apply those Section 2896 policies to all providers of telecommunications services in California and invited the Commission to supplement them as necessary. Educating telecommunications consumers about their Commission-enforced rights and rules certainly fits within the framework of Sections 2896 and 2897.

In September 2001 Assigned Commissioner Wood issued a ruling inviting parties to the proceeding and others to submit comments and suggestions for a telecommunications consumer education program. That ruling asked those who comment to present as full a range of options as possible on all aspects: What would an effective consumer education program look like and what should it cover? Who should carry it out, and over what time frame? How should it be funded? What practical problems might the Commission and participants face, and how could they be overcome? What legal considerations should the Commission be aware of? Based on the high level of interest the parties have demonstrated to date, their responses no doubt provide some excellent suggestions, and we will keep the proceeding open to consider them in a subsequent decision.

Meanwhile, education begins with informing consumers of their rights and these rules as quickly as possible. The rules in new G.O. ___ are by necessity somewhat technically worded to ensure carriers understand and comply with what is expected of them. Our Communications and Public Information Division will be preparing a simple, consumer-oriented summary of the new rights and rules that as part of a subsequent order in this proceeding we will direct the carriers to distribute to their subscribers. More immediately, the G.O. ___ rules will be posted on the Commission's web site. We will order links be pointed to them from the carriers' Internet sites, and under Part 2, Rule 6(k) the notice we require on each bill will invite consumers to view their rights and the rules on the Commission's web site. When the consumer-oriented rights and rules summary is ready, it too will be web posted and linked from carriers' web sites.

Enforcement

The second alternative measure parties mentioned for improving consumer protection was enforcement. Although parties on both sides endorsed stronger enforcement, consumer representatives wanted it in addition to the proposed consumer protection rules, while carriers almost universally urged the Commission to emphasize enforcement instead of new rules.

For the most part, carriers did not suggest specific measures we could use to boost enforcement effectiveness; consumer representatives did. One consumer group submitted the most extensive proposal, a series of five new Commission procedural rules proposed as new Rule 16, Enforcement in Part 2. Those included: (a) declaring the Commission would exercise concurrent jurisdiction over Business and Professions Code Sections 17200 et seq. and 17500 et seq.⁸⁵; (b) requiring carriers to produce documents and witnesses when subpoenaed in a California administrative or judicial proceeding; (c) allowing the Assigned Commissioner or ALJ at the outset of a complaint case to waive the Section 1701.2(d) requirement to complete adjudication cases within twelve months; (d) allowing pre-judgment attachment or bonds be required of defendants in Commission proceedings; and (e) requiring defendants to conduct customer surveys to show whether customers were indeed misled where a prima facie showing of misleading advertising has been made in a Commission proceeding. When other consumer parties expressed uncertainty as to whether the Commission has authority to enforce the Business and Professions Code, the consumer group revised its Rule 16 proposal to instead import the standards of Bus. & Prof. Code Sections 17200 et seq. and 17500 et seq. (the Unfair Competition Law) by defining charges imposed on telephone users by means of deceptive marketing as unjust or unreasonable charges or services under Public Utilities Code Section 451. Carriers opposed all of these proposals as beyond the scope of the rulemaking proceeding and not within the Commission's jurisdiction to enact.

The staff report referenced the Commission's authority to impose penalties under Public Utilities Code Section 2107 et seq. as part of its enforcement efforts. Consumer parties concurred and, in addition, would support civil actions against carriers when their activities violate consumers' rights. The Commission, they believe, should make clear that the courts have concurrent jurisdiction to remedy consumer fraud and other violations of the law by carriers subject to the Commission's jurisdiction. They point to the courts as being particularly well equipped through a substantial body of case law to adjudicate complaints alleging false or misleading advertising. A related recommendation would have the Commission "make it absolutely clear that the proposed rules are not intended to affect the ability of law enforcement officers to enforce civil and criminal statutes to protect the public."

Our new rules, which are based upon the Commission's authority under the Constitution and the Public Utilities Code (particularly Sections 701, 1702, 2885.6, 2889.3, 2889.5, 2896-97, and 2889.9-2894.10), are not, in fact, intended to insulate public utilities from liability under other statutory schemes such as the Unfair Competition Law. The Public Utilities Code provides that public utilities subject to the Commission's jurisdiction remain subject to other statutory schemes as well, whether those laws are enforced by the Commission or by the courts. Section 243 provides:

This part [Sections 201-2282.5] shall not release or waive any right of action by the State, the commission, or any person or corporation for any right, penalty, or forfeiture which may have arisen or accrued or may hereafter arise or accrue under any law of this State.

Penalties under this part of the Public Utilities Code do not displace penalties that may be imposed under other statutory schemes.⁸⁶ The Commission, moreover, has a duty to see "that the provisions of the Constitution and statutes of this State affecting public utilities, the enforcement of which is not specifically vested in some other officer or tribunal, are enforced and obeyed...."⁸⁷

Actions under the Unfair Competition Law "shall be prosecuted exclusively in a court of competent jurisdiction."⁸⁸ The Attorney General, district attorneys, and certain other law enforcement officers are authorized to prosecute such actions on behalf of the public, but the Commission is not. Thus, the authority to prosecute actions under the Unfair Competition Law on behalf of the public is clearly vested in other law enforcement agencies, and jurisdiction to impose penalties under that law lies exclusively in the superior courts.⁸⁹ District attorneys prosecute most of the consumer fraud actions brought on behalf of the public, and the Commission is required to provide them with complaint and investigation data concerning entities that they are investigating regarding possible consumer fraud.⁹⁰ Remedies under the Unfair Competition Law are cumulative and in addition to remedies that may be imposed under other laws.⁹¹ It is clear, therefore, that the Commission's consumer protection rules, and any action it may take to enforce them, do not deprive the courts of jurisdiction to entertain actions against regulated utilities brought by law enforcement officers under the Unfair Competition Law.

Thus, we agree with those parties who state that the Commission and the courts have concurrent jurisdiction over consumer protection matters, in the sense that public utilities are subject to standards and requirements enforced by the Commission and to consumer protection laws enforced by the courts. A business practice that violates the Public Utilities Code and our consumer protection rules - deceptive marketing, for example, or cramming or slamming - will likely also constitute an unfair and unlawful business practice under the Unfair Competition Law, and subject the offending utility to possible court-imposed sanctions under that law.⁹² Accordingly, we have added the following statement under Applicability in Part 2:

The Commission intends to continue its policy of cooperating with law enforcement authorities to enforce consumer protection laws that prohibit misleading advertising and other unfair business practices. These rules do not preclude any civil action that may be available by law. The remedies the Commission may impose for violations of these rules are not intended to displace other remedies that may be imposed by the courts for violation of consumer protection laws.

We have also acted on a suggestion regarding the filed rate doctrine,⁹³ which we agree should not be used to immunize carriers from liability for deceptive marketing and other unlawful conduct. The Commission does not permit carriers to limit their liability for willful misconduct, fraudulent misconduct, or violations of the law, and requires them to say so in any limitation of liability provisions included in tariffs. California courts have not allowed carriers to circumvent this Commission policy by omitting this important qualifier from their tariffs and then invoking the filed rate doctrine.⁹⁴ In this rulemaking proceeding we reaffirm the principle that tariffs, and any limitation of liability provisions included in tariffs, are not designed to immunize carriers from liability for willful or fraudulent misconduct and violations of the law. Accordingly, Rule 2(d) in Part 2 now requires carriers who misrepresent their rates, terms or conditions to grant relief to a subscriber who was affected by the misrepresentation.

Among their other suggestions, consumer groups included stepping up Commission efforts to investigate and fine violators, publishing the results of Commission enforcement actions, and an easily remembered 800 number for consumers to report complaints and violations to the Commission. Carriers and consumer groups alike cited enforcement as one of the most important justifications for retaining tariffs.

We agree with the many commenters who stressed the importance of enforcement. Effective enforcement requires standards that address current needs and practices in the industry. We have updated and clarified those standards with this new general order, filling gaps in our rules and making changes as warranted, and the resulting new consumer protection rules will facilitate our enforcement efforts.

The Commission has ample authority under the Public Utilities Code to enforce its orders: carriers who do not comply with the requirements of new G.O. ___ may be penalized under Section 2107 et seq.. At the same time, we will continue to work cooperatively with the Attorney General and District Attorneys, whose prosecutions of consumer fraud actions in court complement our own efforts to protect consumers from unfair practices by telecommunications providers.