X. Comments on Draft Decision

The draft decision of the assigned Commissioner was mailed to the parties on the service list for public review and comment on June 1, 2001. Any comments were required to be filed by June 20, 2001; reply comments were not permitted.

Rule 77.7(f)(9) of the Commission's Rules of Practice and Procedure provides in relevant part that:

...[T]he Commission may reduce or waive the period for public review and comment under this rule regarding draft decisions...for a decision where the Commission determines ...on its own motion, that public necessity requires reduction or waiver of the 30-day period for public review and comment. For purposes of this subsection, "public necessity" refers to circumstances in which the public interest in the Commission adopting a decision before expiration of the 30-day review and comment period clearly outweighs the public interest in having the full 30-day period for review and comment. "Public necessity" includes, without limitation, circumstances where failure to adopt a decision before expiration of the 30-day review and comment period would place the Commission ...in violation of applicable law, or where such failure would cause significant harm to public health or welfare. When acting pursuant to this subsection, the Commission will provide such reduced period for public review and comment as is consistent with the public necessity requiring reduction or waiver.

The Commission is required by law to adopt rules setting forth the necessary billing safeguards for the inclusion of non-communications charges on or before July 1, 2001. Parties have already been afforded one round of comments and reply comments on the initial draft of these rules, and those comments and replies have been considered in the interim rules we adopt today. We balance the public interest in issuing these interim consumer protection rules by July 1, 2001 as required by Section 2890.1 against the public interest in having a full 30-day period for review and comment on the draft decision.

We conclude that the former outweighs the latter.

Findings of Fact

1. Effective July 1, 2001, Public Utilities Code Section 2890's prohibition against including non-communications-related charges on subscribers' telephone bills will end.

2. In AB 994, the Legislature directed the Commission to issue consumer protection rules to protect telephone subscribers from the additional risks inherent in opening up telephone bills to non-communications-related charges.

3. Unauthorized charges on telephone bills, known as "cramming," and other types of billing errors, have been a serious and widespread problem in recent years.

4. Thousands of telephone subscribers have complained to the Commission that their efforts to get unauthorized charges removed from their telephone bills or to have other types of billing errors corrected have been frustrating and time-consuming.

5. Opening up telephone bills to non-communications-related charges greatly increases the risk to subscribers of having unauthorized charges placed on their telephone bills.

6. "Credit identity theft," the use of a consumer's personal identification and credit information and the thief's use of this information to obtain money, credit, goods, services, and other things of value in the victim's name, is also a growing consumer problem in California.

7. At this time, the Commission does not know what security procedures billing telephone companies intend to use to ensure that only authorized charges are included on the telephone bills they issue to subscribers.

8. Effective safeguards are needed to ensure that only charges authorized by telephone subscribers are included in telephone bills.

9. Because many consumers initially will be unaware that effective July 1, 2001, non-communications-related charges could be included in their telephone bills, billing telephone companies should be required to obtain subscribers' affirmative consent before opening up their telephone bills to non-communications charges.

10. At this time, the Commission does not know whether billing telephone companies will impose "finance charges" as defined by the federal Truth in Lending Act, in connection with non-communications-related charges.

11. The public interest in adopting rules governing non-communications related charges on telephone bills on or before July 1, 2001 outweighs the public interest in a full 30-day public review and comment on the draft decision and interim rules.

12. This Interim Order should be made effective immediately to begin protecting California telephone subscribers from unauthorized non-communications charges on their telephone bills.

Conclusions of Law

1. The primary purpose of Public Utilities Code Sections 2889.9 and 2890 is to deter cramming.

2. Public Utilities Code Sections 2889.9 and 2890 authorize the Commission to issue rules to safeguard the rights of telephone consumers with respect to their telephone bills, specifically, to deter cramming and to provide meaningful and effective remedies.

3. The Commission has jurisdiction, pursuant to Public Utilities Code Section 2889.9(b), to require telephone corporations operating in California and, in addition, billing agents and other persons or corporations that are not public utilities but that are responsible for generating charges ultimately placed on the telephone bills of California subscribers, to comply with the requirements of Sections 2889.9 and 2890, and with the Commission's implementing rules, in order to effectuate the consumer protection purposes of those statutes.

4. The Commission has jurisdiction to require wireless telephone service providers operating in California to comply with its consumer protection rules.

5. Effective July 1, 2001, Section 2890's prohibition on the inclusion on non-communication-related charges on telephone bills expires.

6. Public Utilities Code Section 2890.1 directs the Commission to adopt by July 1, 2001, any additional rules it determines are necessary to implement the billing safeguards of Section 2890 with respect to non-communications related charges.

7. To the extent billing telephone companies impose finance charges in connection with charges unrelated to telephone service, the underlying transactions and the billing for those transactions will be subject to the federal Truth in Lending Act, 15 U.S.C. § 1601 et seq., and Regulation Z, 12 C.F.R. § 226.

8. The Truth in Lending Act requires that state regulations governing the types of transactions regulated by Truth in Lending be consistent with federal law.

9. The federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) and the California Uniform Electronic Transactions Act (Civil Code §§ 1633.1-1633.17) permit legally binding contracts to be formed via electronic communications, including electronic signatures, provided the parties agree to the use of electronic communications to send and receive specified documents.

10. The period for public review and comment on the draft decision should be reduced, pursuant to Rule 77.7(f)(9).

INTERIM ORDER

IT IS ORDERED that:

1. The Interim Rules Governing the Inclusion of Non-Communications-Related Charges on Telephone Bills, set forth in Appendix A to this Decision, are hereby adopted and shall apply to telephone corporations operating in California, and to billing agents and other persons or corporations that are not public utilities but that are responsible for generating charges ultimately placed on the telephone bills of California subscribers.

2. These Interim Rules shall become effective on July 1, 2001, and shall remain in effect until further order of the Commission.

3. Order Instituting Rulemaking 00-02-004 shall remain open pending further order.

This interim order is effective today.

Dated , at San Francisco, California.

INTERIM RULES GOVERNING NON-COMMUNICATIONS-RELATED CHARGES ON TELEPHONE BILLS

(See Public Utilities Code Section 2890, as amended

effective July 1, 2001) ⁽

(Note: These interim rules will be included in the Commission's forthcoming General Order on Rules Governing Telecommunications Consumer Protection. They will be found, with some modifications, in Part III of that General Order. Some related provisions from other parts of the forthcoming General Order are included in these Interim Rules.