Pacific Bell Enforcement of Tariff
In its Opening Brief, Greenlining urges this Commission to aggressively enforce existing rules and laws against cramming, particularly the rules and laws designed to safeguard customer choice and to protect customers from unauthorized charges. Among the existing rules and laws are the tariffs under which Pacific Bell provides billing and collection services.
Pacific Bell's billing and collection service business generates substantial revenues, and Pacific Bell's shareholders benefit from this business. The tariffs approved by this Commission, as well as the statutes, require that Pacific Bell bill only authorized charges. We insist that Pacific Bell enforce its tariffs to the letter to afford customers the level of protection mandated by those tariffs and statutes. We also insist that Pacific Bell enforce its tariffs in a timely fashion. We note here that Pacific Bell took almost two years to suspend USP&C's billing contract. During this time, USP&C continued to have access to end-user customers' local telephone bills and to bill them over $ 51 million. Prompt termination of noncompliant billing agents is essential to proper enforcement of this tariff and these statutes.
We also direct Pacific Bell to change its tariffs to preclude another subterfuge that USP&C attempted. When confronted by Pacific Bell with its excessive refund rates, USP&C announced that it was attempting to secure clients that billed for "1+" calls. According to USP&C, these billings traditionally have a much lower customer refund rate, and USP&C wanted to use these billings to "dilute" their other billings with higher refund rates. A billing agent whose activity results in excessive levels of refunds and end-user customer complaints must address the cause of those refunds and complaints. USP&C's subterfuge was intended to enable continued "business as usual" with the service providers whose unauthorized charges were causing the complaints.
To prevent any other billing agent from indulging in a similar subterfuge, we hereby direct Pacific Bell to revise its tariffs to preclude this practice.
1. USP&C is an aggregator of billings for telecommunications-related services, USP&C serves as a billing agent between these service providers and the Local Exchange Carrier (LEC), who actually bills the subscriber.
2. Pacific Bell's tariff Schedule Cal. P.U.C. No. 175-T requires that each billing and collection customer submit only accurate billings that are consistent with the service requested by and provided to the end-user.
3. The Agreement for the Provision of Billing and Collection Services between Pacific Bell and USP&C, Inc, dated August 11, 1998, provides that the agreement may be terminated if Pacific Bell receives more than one complaint per 30,000 bills rendered, or the USP&C's refund rate to customers exceeds 15% of the total amount billed.
4. USP&C's refund rate for Pacific Bell billings ranged from 36.5% to 69.02%, with an average of 52% for the period January 1998 to July 1999.
5. USP&C's refund rate for GTE billings averaged 48% for the period December 1998 to November 1999.
6. Pacific Bell approves all sub-CICs and requires, among other things, that the entity submit proof that all fictitious business name statements are registered and filed with the applicable jurisdiction.
7. The companies to which USP&C provided billing services obtained sub-CICs using different names for the same service provider and the same service.
8. The names used to obtain sub-CICs were not the names of natural persons, corporations, or corporate subsidiaries of the corporations to whom USP&C provides billing services, nor were these names registered fictitious business names.
9. 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.
10. USP&C's "service brand names" are meaningless to customers that had not reviewed the service provider's advertising materials.
11. The entities for which USP&C bills are not attempting to create a unique name for their services to "to identify and distinguish the services of one person . . . from the services of others."
12. The term "service brand name" has no relation to service marks and the product identification function service marks are intended to achieve.
13. Customers are likely to be confused by having several "service brand names" for the same service from the same provider.
14. A service description that is likely to cause confusion is not "clear."
15. As used by USP&C, "service brand names" do not provide customers with a clear and concise description of the service charged on the local telephone bill.
16. A billing agent, such as USP&C, is not the "party responsible for generating the charge," but may be the "entity responsible for resolving disputes regarding the charge."
17. Despite repeated warnings by Pacific Bell, USP&C was either unable or unwilling to take the steps necessary to reduce its customer refund rate to an acceptable level.
18. USP&C either knew or should have known that the billings it was presenting to Pacific Bell failed to comply with section 2890(b).
19. The Federal Communications Commission's Truth in Billing regulations do not address multiple trade names and multiple service names for the same provider and the same service.
20. USP&C billed at least 33,654 California customers for service providers that used multiple names for both the service and the service provider.
21. USP&C is a going concern with significant financial resources.
22. USP&C has demonstrated that it cannot conform itself to the requirements for billing agents imposed by Pacific Bell's tariffs and by the Public Utilities Code.
23. A customer refund rate of 52% with Pacific Bell and 48% with GTE is substantial evidence of widespread violations of 2890(b).
Conclusions of Law
1. Neither Black's Law Dictionary (7th edition), nor Merriam Webster's Collegiate Dictionary (10th edition) define "service brand name."
2. Black's Law Dictionary defines a "servicemark" as "a name, phrase, or other device used to identify and distinguish the services of a certain provider."
3. 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 . . .."
4. Section 2890(e)(2)(A) requires that a service or product description be clear and concise to all customers.
5. Section 2890(e)(2)(B) requires that the bill identify "the name of the party responsible for generating the charge" and the "the toll-free number of the entity responsible for resolving disputes regarding the charge."
6. 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).
7. The settlement agreement between CSD and USP&C is reasonable in light of the whole record, is consistent with the law, and is in the public interest.
8. The settlement agreement should be approved.
9. The public interest requires that all billing agents respond to any and all staff requests for information within 10 business days of receiving the request.
10. The Commission is authorized to order California LECs to cease to provide billing and collection services, and to require billing agents to pay a fine to the State of California.
11. Safeguarding the rights of customers and enforcing the provisions of §§ 2889.9 and 2890 requires that we order all California LECs permanently to cease providing billing and collection services to USP&C, its corporate affiliates, and any billing agents with which USP&C has common corporate officers or owners of 10% or more of outstanding stock.
12. USP&C should be fined for each time it billed a California customer on behalf of a service provider that used multiple names for the same service and billed under multiple provider names.
13. The totality of the circumstances includes a long-standing customer refund rate of over 52%, which supports imposing a substantial fine.
14. In consideration of the severity of the offense, the number of violations, and the conduct of the utility, the public interest requires that we impose a fine of $50 each offense, for a total of $1,680,000.
15. All California LECs should be ordered to cease permanently providing billing and collections services to USP&C, its affiliates, and any billing agents with whom USP&C has common corporate officers or owners of 10% or more of outstanding shares.
16. USP&C should show cause why it should not be required to disgorge all funds obtained from California customers and retained by USP&C for reserves, in payment of fees, or for any other purpose.
17. USP&C should show cause why it should not fined for presenting billings to a California LEC that failed to comply with 2890(b).
18. Probable cause exists to believe that Benchmark Communications, Inc., Messenger Com, Inc., Voice Delivery Systems, and Spring Telcom, Inc. have violated § 2890(b).
19. Benchmark Communications, Inc., Messenger Com, Inc., Voice Delivery Systems, and Spring Telcom, Inc. should be named as respondents to this proceeding, and should be ordered to appear and show cause why they should not be required to disgorge all funds obtained from California customers in violation of § 2890(b), and retained for reserves, in payment of fees, or for any other purpose; and fined for violating § 2890(b) by presenting billings with unauthorized charges to California LECs.
20. The public interest requires that Pacific Bell and all California LECs that provide billing and collections services enforce their billing and collection services tariffs to the letter and in a timely manner to afford customers the level of protection mandated by those tariffs.
21. The public interest requires that LECs revise their tariffs to disallow "dilution" of customer refund rates as described in this decision.
IT IS ORDERED that:
1. The settlement agreement affixed hereto as Attachment A and made a part hereof is approved, and the parties are directed to comply with the terms set forth in the settlement agreement.
2. No later than 60 days after the effective date of this order, USP&C, Inc. (USP&C) shall pay to the State of California, General Fund, the amount of $1,680,000. USP&C shall file and serve documentation of such payment on the day payment is made.
3. All California local exchange carriers (LECs) should shall permanently cease providing billing and collections services to USP&C, its affiliates, and any billing agents with whom USP&C has common corporate officers or owners of 10% or more of outstanding shares;
4. At a hearing to be scheduled by the assigned Administrative Law Judge, USP&C shall appear and show cause why:
a. It should not be required to disgorge all funds obtained from California customers and retained by USP&C for reserves, in payment of fees, or for any other purpose; and
b. A fine should not be imposed for presenting billings to a California LEC that failed to comply with § 2890(b).
5. Benchmark Communications, Inc., Messenger Com, Inc., Voice Delivery Systems, and Spring Telcom are named as respondents to this proceeding.
6. At a hearing to be scheduled by the assigned Administrative Law Judge, Benchmark Communications, Inc., Messenger Com, Inc., Voice Delivery Systems, and Spring Telcom shall appear and show cause why they should not be:
a. Required to disgorge all funds obtained from California customers in violation of § 2890(b) and retained for reserves, in payment of fees, or for any other purpose; and
b. Fined for violating § 2890(b) by presenting billings with unauthorized charges to California LECs.
7. The Executive Director shall cause the final decision to be served on Benchmark Communications, Inc., Messenger Com, Inc., Voice Delivery Systems, and Spring Telcom.
8. All billing agents shall respond to any and all staff requests for information within 10 business days of receiving the request. Should any billing agent fail to comply with such a request within the time allotted, we direct our Consumer Services Division staff 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 pursuant to § 2889.9(f).
9. USP&C's Motion to Dismiss and Consumer Services Division's Motion for Summary Adjudication are denied.
10. The Executive Director shall cause the final decision to be served on all LECs. Each LEC that provides billing and collection services to third parties shall comply with this decision and shall notify its billing and collection customers of their need to comply with the decision.
11. No later than 90 days after the effective date of this order, Pacific Bell shall make all advice letter filings necessary to revise its tariffs to preclude the practice of diluting unacceptably high customer refund rates, as described in this decision.
This order is effective today.
Dated , at San Francisco, California.
ATTACHMENT A
(SEE CPUC FORMAL FILES FOR ATTACHMENT A)
ATTACHMENT B
(SEE CPUC FORMAL FILES FOR ATTACHMENT B)
