Discussion

In this decision, we apply certain provisions of §§ 2889.9 and 2890 for the first time. The California Supreme Court has provided guidance for interpreting consumer protection statutes such as §§ 2889.9 and 2890. In upholding Department of Motor Vehicles regulations implementing an automobile repair consumer protection statute, the Court stated:

This statute was passed as a remedial statute, designed to protect the public. The dominant concern of this statutory scheme is that of protecting the purchaser from the various harms which can be visited upon him by an irresponsible or unscrupulous dealer. Protection of unwary consumers from being duped by unscrupulous sellers is an exigency of the utmost priority in contemporary society. As a remedial statute, it must be liberally construed to effectuate its object and purpose, and to suppress the mischief at which it is directed.

(Ford Dealers v. Dept. of Motor Vehicles, 32 Cal. 3d 347, 356 (1982)(citations omitted).)

The statutes we consider today, §§ 2889.9 and 2890, have the same purpose - protection of the public - as the repair statutes in the Ford Dealers opinion. We will, therefore, follow the Supreme Court's direction in liberally construing the specific provisions at issue here.⁴

1. Alleged Violations of § 2890(e)(2)(A) - Clear and Concise Description

Section 2890(e)(2)(A) requires that any person, corporation, or billing agent that charges subscribers for products or services on a telephone bill must include in the bill a "clear and concise description of the service, product, or other offering for which a charge has been imposed."

The undisputed facts show that USP&C used what it calls "service brand names" as the basis for the description it provided to California LECs for billing on subscribers' local telephone bills. The service brand names are listed in the foregoing table under the heading "Service Billed As." USP&C states that the service brand names were based on the advertising material that the service providers used when soliciting customers to purchase the product or service. USP&C contends that billing under the service brand name used in advertising will protect and assist customers by triggering in their minds that they had ordered this service. USP&C also stated that Pacific Bell limited to 12 characters the number of characters that it would include in the description on the bill, and that the service brand name is the best utilization of this minimal number of characters. For these reasons, USP&C argues that its use of service brand names meets the requirements of the statute for a clear and concise description of the product or service being billed.

CSD disagrees with USP&C's interpretation of the statute. CSD states that the service brand names used by USP&C are not clear descriptions because they do not describe to a reasonable person the product or service being billed. Consequently, CSD argues, USP&C failed to comply with the statute.

The statute does not define "clear and concise description." Black's Law Dictionary offers the following definition of "description:"

A delineation or explanation of something by an account setting forth the subject's characteristics or qualities.

(Black's Law Dict. (7^th ed. 1999) p.456, col. 2.) Applying this definition with the statute results in the requirement that the bill include an explanation of each charge which sets forth the characteristics or qualities of the product or service for which the charge has been imposed.

We begin by noting that the service brand names billed by USP&C reflect no hint at the nature of the service. For example, "PlanMgmt" does not suggest voicemail, and could reasonably be used to describe a wide variety of services. USP&C, thus, must rely on the service providers' efforts to bring these service names within the statutory requirements.

The audience that must draw meaning from these service names is also broader than USP&C claims. USP&C argues that its service brand names are "clear" because such names will evoke recognition in the minds of those customers who have reviewed the advertising. We reject this narrow interpretation of § 2890(e)(2)(A).

A clear and concise description must inform all customers of the characteristics or qualities of the product or service so that they can determine whether or not it was authorized. The purpose of the statute is not simply to enable customers to confirm authorized charges, but to also allow customers to identify unauthorized charges. USP&C's contention that customers who saw the advertising and ordered the service will recall placing the order when seeing an abbreviation of the service brand name, even if accepted as accurate, does nothing for the person victimized by an unauthorized charge. Providing these persons the information necessary to identify and dispute unauthorized charges is the primary focus of §§ 2889.9 and 2890. Therefore, to meet the clear description standard, the description must have meaning for all customers.⁵ USP&C makes no claim, however, that its "service brand names" have any meaning for those persons who did not see the advertising, but nevertheless were billed by USP&C. Thus, USP&C's service brand names fail to meet the statutory standard for this group of persons. As analyzed below, we also find that USP&C's service brand names fail to meet the statutory standard even for customers that have reviewed advertising materials.

We must clarify the definition of terms used. USP&C refers to the descriptions it used on the bills as "service brand names." USP&C did not define this term. Black's Law Dictionary (7th edition) contains no such term, nor does Merriam Webster's Collegiate Dictionary (10th edition).

Black's Law Dictionary does provide a definition of an apparently similar concept, namely "service mark." A service mark is "a name, phrase, or other device used to identify and distinguish the services of a certain provider." (Black's Law Dict. (7th ed. 1999) p.1373, col. 1.) Similarly, the Lanham Act, 47 U.S.C. § 1027, defines "service mark" as "any word, name, symbol, or device used . . . to identify and distinguish the services of one person . . . from the services of others . . .."

Service mark functions to identify and distinguish source and quality of intangible service, and trademark serves to identify and distinguish source and quality of tangible product. Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F.Supp 1339, (E.D.N.Y. 1994). Service marks and trademarks are subject to the same substantive rules of validity and infringement. McCarthy, J. Thomas, McCarthy on Trademarks and Unfair Competition, 4^th ed., West Group #13, (March 2000) p. 4-16. The purpose of service marks and trademarks is to:

make effective competition possible in a complex, impersonal marketplace by providing a means through which the consumer can identify products which please him and reward the producer with continued patronage. Without some such method of product identification, informed consumer choice, and hence meaningful competition in quality, could not exist.

Smith v. Chanel, Inc., 402 F.2d 562, 566 (9^th Cir. 1968).

Thus, where a service provider has identied and meaningfully distinguished its service name from that of different providers, such a name could convey a clear and concise description of the service. The name itself could become synonymous with the characteristics or qualities of the product or service for which the charge has been imposed.

Here, however, CSD has shown that service providers offer the same service under several different names. Spring Telcom, Inc., is not attempting to distinguish its 800 service from others when it offers the same service under four different, unrelated, and vague names: "CallMgr Plus," "Dial Plan," "Gateway Svc," and "Call Plan." We note also that Benchmark Communications, Inc., reorders the two-word name of its voicemail service, i.e., "Plan Mgnt" and "Mgtmt Plan."⁶ Thus, it is fair to conclude that the entities that USP&C allows to bill in this manner are not attempting to create a unique name for their services "to identify and distinguish the services of one person . . . from the services of others." As noted above, the purpose of service marks is to allow customers to recognize a particular service mark and associate it with a particular supplier. This association is critical to making the name functionally equivalent to a "clear and concise description." Here, in contrast, USP&C allows entities for whom it bills to use and advertise numerous service brand names for the same product.⁷ Accordingly, a service brand name, as used by USP&C, does not achieve the product identification function service marks are intended to achieve. Because they do not achieve the identification function, USP&C's service brand names cannot constitute a clear description of the service being billed.

In sum, USP&C's service brand names fail to meet the statutory requirements for customers that have not reviewed the advertising materials. The service brand names also fail to meet the requirements for customers that have reviewed the materials because multiple service brand names fail to achieve the product identification function necessary to make a name synonymous with a description.

2. Alleged Violations of § 2890(e)(2)(B) - Name, address, and telephone number of the Party Responsible for Generating the Charge and Information for Resolving Disputes

The version of § 2890(e)(2)(B) effective in 1999⁸ required that the bill provide two pieces of information to the customer: (1) "the name, address, and telephone number of the party responsible for generating the charge" and (2) "description of the manner in which a dispute regarding the charge may be addressed." To evaluate USP&C's compliance with these requirements, we turn to Attachment B, which is a copy of a page from a customer's local telephone bill (with identifying markings obliterated). Near the top of the bill is "USP&C" in large, all-capital block letters. Slightly above this heading appears "Questions about your bill?" and the telephone number "1-800-449-1056." Further down the page is a heading "Calls." Two subheadings are under this heading. The first is "Billed on Behalf of PROGRESIVETECHNOLOGY," under which is listed "Apr24" under the date column, "CALLMGR Plus" under the Place and Number Called column, and "32.00" under the Amount column. The next subheading is "Billed on Behalf of VOICEPROCESSINGSYS." Under this subhearing is "Mar24" for the date, "Gateway Svc" for the Place and Number Called, and "32.00" for the amount. Thus, each bill contains the name of USP&C and its toll free number as well as the name of the service provider(s).

CSD argues that the 1999 version of § 2890(e)(2)(B) required each billing agent to include, or cause to be included, the name of the company responsible for generating the charge, and that USP&C has failed to do this. CSD states that UCP&C included the name of the sub-CIC on the bill rather than the actual name of the company with whom USP&C has a billing contract, i.e. "VOICEPROCESSINGSYSTEM" rather than Spring Telecom, Inc. CSD provided evidence that the sub-CIC names are not registered as fictitious business names with the State of California, nor are these entities incorporated in the State of California. CSD also provided evidence that USP&C admitted that it did not know the relationship between the sub-CICs and the entities with whom it had billing contracts.

In response, USP&C states that it was the "party responsible for generating the charge" because it, and not the sub-CICs, had a billing contract with the LECs. USP&C also contends that end-user customers benefit from seeing its name on the bill because only USP&C has the system in place to handle customer inquiry service.⁹

USP&C is correct that, to the extent it provides customer inquiry service, its name and its telephone number should have been part of the customer inquiry directions because it was the contact for customers with questions about items billed on the USP&C page. USP&C, however, misses CSD's point. What CSD objects to is the use of the sub-CICs as names in the "Billed on Behalf of" section of the bill.

USP&C contends that it is the "party responsible for generating the charge" because it handled customer inquiry service. USP&C is correct that the statute required its name to be on the bill not because it was the "party responsible for generating the charge," but rather because contacting USP&C was necessary to address any dispute regarding the charge. USP&C's statutory interpretation would subsume "party responsible for generating the charge" into "description of the manner in which a dispute regarding the charge may be addressed." Withholding such basic information as the identity of the alleged service provider would not assist customers in understanding the charges on their bills. In fact, showing USP&C as the "responsible" party serves only to obfuscate, since the end-user customer likely never have heard of USP&C before getting the bill. We therefore reject USP&C's interpretation.

We turn then to CSD's argument that the name of the sub-CIC fails to meet the statutory requirement for the "name, address, and telephone number of the party responsible for generating the charge."¹⁰ As an initial matter, we note the name of the sub-CIC is not a California corporation name, it is not a registered fictitious business name,¹¹ it is not filed with or approved by this Commission, and, moreover, there is no evidence that the sub-CICs are authorized to do business in this state. CSD testified that it conducted a search of the California Secretary of State's records and found that none of the sub-CIC names were even registered as California business names. The record does show that many of the companies with whom USP&C has billing contracts do business under several sub-CICs, as illustrated in the table above. The record also shows that these various sub-CICs sell the same services on behalf of the same company. USP&C has also admitted that it does not know the nature of the legal relationship between the sub-CICs and the companies with whom it has billing contracts. Apparently, USP&C's (and Pacific Bell's) only requirement to obtain the right to place charges on end-users' local telephone bills for a particular provider name is that the name appear on some advertising materials.

Where the sub-CIC name is (1) not the name of a natural person or partnership, (2) not a corporate name, and (3) not registered as a fictitious business name pursuant to Business and Professions Code § 17900 et. seq., the sub-CIC name fails to meet the requirements of § 2890(e)(2)(B). The inadequacy of the sub-CIC is illustrated by Attachment B, which is an example of the misleading information presented to customers under USP&C's interpretation of the statute. The copy of the bill in Attachment B contains a $32 charge for "CallMgr Plus" from "PROGRESIVE TECHNOLOGY" and a $32 charge for "Gateway Svc" from "VOICEPROCESSINGSYS." Based on information presented by staff, we are able to conclude that these charges are both for the same service, personal 800 number service, from the same provider, Spring Telecom, Inc. Lacking a detailed report from a professional telecommunications investigator, customers would be unable to obtain this information. Accordingly, we hold that USP&C failed to include the name of the party responsible for generating a charge on a customer's bill when USP&C placed billings for sub-CICs under the three circumstances listed above.

USP&C also contends that its use of sub-CIC names is consistent with a recent Federal Communications Commission (FCC) order. The FCC Truth in Billing regulations require that "the name of the service provider associated with each charge must be clearly and conspicuously identified on the telephone bill." 47 CFR 64.2001(a)(1). The FCC recently clarified this regulation by stating that the "carrier's trade name, rather than its precise corporate or corporate subsidiary name" satisfies this requirement, and that "the carrier name on the telephone bill should be the name by which such company is known to its consumers for the provision of the respective service." (In re: Truth-In-Billing and Billing Format, FCC Docket No.98-170, ¶ 10 March 29,2000.) From this FCC statement, USP&C argues that the FCC approves of the use of sub-CICs on customer telephone bills.

USP&C, however, fails to acknowledge that nowhere in the FCC opinion or the regulations does the FCC consider the USP&C fact pattern; that is, multiple trade names and multiple service names for the same provider and the same service. Such a fact pattern would appear to be at odds with the FCC's stated objective of order: to " clearly identify the service provider." (Id. at ¶ 16.) Multiple, unregistered aliases provide little information about identity. Thus, we find that the FCC opinion is not dispositive of the facts before us.

2. Alleged Violations of § 2889.9(f) - Failure to Make Timely Response to Commission Data Requests

As noted above, USP&C and CSD filed a settlement agreement on this issue. Commission Rule of Practice and Procedure 51(e) requires, as conditions for approval, that settlement agreements be (1) reasonable in light of the whole record, (2) consistent with the law, and (3) in the public interest.

a. Reasonable in Light of the Whole Record

The record in this case reveals that CSD made its initial information request to USP&C on May 5, 1999, pursuant to § 2889.9(f). CSD subsequently made repeated efforts to obtain the information. USP&C did not fully comply until after this OII had been issued. CSD stated that USP&C had fully responded to the information request on November 10, 1999.

On January 7, 2000, USP&C and CSD filed a settlement agreement resolving all issues related to USP&C's compliance with CSD's information request. The agreement provides that USP&C will pay a fine of up to $114,000 to the General Fund of the State of California. Of that amount, $43,000 is payable upon Commission approval of the settlement agreement. The remaining amount is suspended pending USP&C's compliance with discovery requests as part of this proceeding.

The record shows that USP&C took over six months to respond to a Commission staff request for information. The record also shows that during the first six months of 1999, USP&C billed California customers over $14 million, with customers subsequently demanding return of 52% of that amount. These facts illustrate the critical importance of timely response to Commission staff requests for information.

USP&C's delayed response is simply incompatible with our regulatory objectives. Our duty to protect Californians from unauthorized billings on their local telephone bills requires that our staff receive prompt responses to all such information requests. USP&C's response does not meet this standard.

We therefore announce that we expect a billing agent to respond to any and all staff requests for information within 10 business days of receiving the request unless otherwise directed in writing by staff. Should any billing agent fail to comply with such a request within the time allotted, we direct CSD to prepare a resolution for inclusion on the next Commission meeting agenda ordering California LECs to cease to provide billing and collection services to that billing agent. (See § 2889.9(f).)

As for the settlement agreement before us, we find that, in light of the fine paid by USP&C, and its subsequent cooperation, the agreement is reasonable.

b. Consistent with the Law

Pursuant to § 2889.9(f), all billing agents are required to respond to Commission staff requests for information. Failure to do so is grounds for a Commission order directing California LECs to cease providing billing and collection services to the billing agent. The Commission may also impose fines against billing agents for failure to comply. (§ 2889.9(b)) Given these statutory remedial powers, we conclude that the actions required by the settlement agreement are consistent with the law.

c. In the Public Interest

The Commission is responsible for ensuring that the public is protected from certain practices by service providers and their billing agents. The settlement agreement results in payment of a fine which will have the desirable effect of deterring further such violations by this billing agent and others. The settlement agreement also resolves these issues without need for further hearings or appeals.

For these reasons, the Commission finds that the settlement agreement is reasonable in light of the whole record, is consistent with the law, and is in the public interest. The agreement is approved. Because the settlement is limited to USP&C's failure to make timely response to CSD's information request, the agreed-upon fine does not moot the other grave accusations in this investigation, or obviate the need for further sanctions that today's decision imposes.