E. Billing Telephone Companies' Obligations
to Screen and Monitor Entities for Whom
They Bill

(1) Billing telephone companies must take reasonable precautions to screen vendors and billing agents before agreeing to provide billing services for them, in order to screen out unreliable or untrustworthy business entities.

(2) Before providing billing services to any vendor or billing agent, billing telephone companies must require and obtain from the vendor or billing agent the following information:

(a) If the company is a California corporation or other type of California business entity, its legal name as registered with the State of California (Department of Corporations), as well the name(s) under which it is doing business and marketing its products in California;

(b) If it is an out-of-state corporation, its legal name and name(s) under which it is doing business and marketing its products in California; the state in which it is incorporated; and proof that it is registered to do business in California.

Billing telephone companies must provide this information to the Commission upon request.

(3) Contracts to provide billing services for vendors and billing agents should provide that the billing telephone company will require proof of authorization for all charges disputed by subscribers, and that without such proof, the subscriber will be credited for the charge and the corresponding amount withheld from the vendor or billing agent. Billing telephone companies may impose fees on these vendors and billing agents for the cost of investigating and resolving subscriber complaints.

(4) Billing telephone companies must monitor the performance of the vendors and billing agents for whom they provide billing services, promptly investigate subscribers' complaints, whether written or verbal, of unauthorized charges and other billing errors, and promptly suspend billing on behalf of a vendor or billing agent whose charges are generating a significant number of complaints, or if the billing company has reason to believe unauthorized billings are being presented to it.

(5) Billing telephone companies must keep records of all subscriber complaints, both written and verbal, of unauthorized non-communications charges and other billing errors related to those charges for at least two years, and be able to categorize those complaints by vendor and by billing agent. Billing telephone companies will make this complaint information available to Commission staff upon request.

[Comment: As a further deterrent to cramming, billing telephone companies are encouraged to consider including escalating fee provisions in their contracts with billing agents and vendors, so that those vendors whose charges generate a large number of complaints quickly suffer financial consequences. The purpose of such provisions is to make cramming unprofitable for vendors and billing agents, thereby eliminating the incentive to engage in the practice and reducing the harm to consumers, as well as the number of complaints addressed to billing telephone companies and the Commission.]