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.¹⁰
Comments were filed by AT&T Communications of California, AT&T Wireless Services of California, Cellular Carriers Association of California, Cingular Wireless, Cox Communications, Pacific Bell, Qwest,Verizon California, Verizon Wireless, Working Assets Funding Service, Inc., the Attorney General of California, California Small Business Roundtable/California Small Business Association, California Department of Consumer Affairs, Greenlining Institute/Latino Issues Forum, ORA, and TURN.¹¹

We have carefully considered all of the comments, and significant changes in response to them have been made to the rules governing authorization, revocation of authorization, billing format requirements, and complaint procedures, as well as to some of the definitions.

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 ended.

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 become a serious and widespread problem in recent years, for all classes of carriers.

4. The Commission's Consumer Affairs Branch received 3787 informal complaints related to wireless telephone service and billing in 1999, 5243 in 2000, and at least 3486 in the first half of 2001. Most of these complaints are billing disputes.

5. 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.

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

7. "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.

8. Requiring subscribers' informed consent to the release of confidential subscriber information by telephone companies will help to deter identity theft and other violations of subscribers' privacy rights.

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

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

11. 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.

12. 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.

13. 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.

14. 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 expired.

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 Rosenthal Fair Debt Collection Practices Act, Cal. Civil Code §§ 1788-1788.17, applies to the billing and collection activity of telephone corporations that bill for non-communications related charges on telephone bills.

10. 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.

11. California has a substantial state interest in ensuring that confidential information that telephone subscribers reveal to telephone companies in order to obtain services be kept confidential and not be released to third parties without a subscriber's written consent.

12. 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, that choose to provide billing services for non-communications products and services 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 immediately, and shall remain in effect until further order of the Commission.

3. Any telephone companies that plan to provide billing services for non-communications-related products and services pursuant to their billing and collection tariffs shall, before they begin offering such services to subscribers, revise those tariffs to make them consistent with the consumer protection rules set forth in Appendix A.

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

This interim order is effective today.

Dated July 12, 2001, at San Francisco, California.

LORETTA M. LYNCH

President

HENRY M. DUQUE

RICHARD A. BILAS

CARL W. WOOD

GEOFFREY F. BROWN

Commissioners

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, possibly in a modified form, in the Commission's forthcoming General Order on Rules Governing Telecommunications Consumer Protection. They will be found in Part III of that General Order. Some related provisions from other parts of the forthcoming General Order are included in these Interim Rules.