5. Issues Not Addressed by 1998 Legislation

The 1998 California legislation addresses nearly all of the recommendations made by Staff. In the Workshop Report, Staff had recommended the Commission adopt rules requiring that (1) written authorization for billed charges be on a document separate from any advertising or inducements, (2) all charges be authorized either in writing or verbally, and (3) LECs adopt performance standards for their billing customers which require authorization and penalize excessive consumer complaints.

The new § 2890(c) requires that any written authorization be in a separate document from solicitation materials, and § 2890(b) requires that all charges billed must be authorized. Thus, Staff's first two recommendations have been adopted by the Legislature.

5.1. "Best Practices" Guidelines

The role of the local exchange carrier in setting standards for access to the telephone bill, however, has not been addressed by the Legislature. The Federal Communications Commission (FCC) encouraged local exchange carriers to take on this topic and develop voluntary guidelines that comprehensively address the issue of unauthorized billing.⁷ The resulting guidelines, which were adopted by a committee comprised of local exchange carrier representatives, cover customer authorization and also set out recommendations for local exchange carriers to follow in:

· screening products and services,

· inserting special contract provisions for dealing with billing agents, and

· adopting complaint level thresholds at which the local exchange carrier may take action including terminating the billing contract.

We find the FCC guidelines to be fully consistent with Staff's recommendations. A complete set of the Guidelines is attached to this decision as Attachment A. While we recognize that our Billing Telephone Companies currently have in place specifications on many of the topics included in the report, we agree with the FCC that a comprehensive set of measures is needed to best protect the public and that the role of the Billing Telephone Companies is critical. The guidelines also address matters on which SB 378 and AB 2142 are silent, especially requirements for billing contract provisions, such as screening of products. (See Section I of the guidelines.)

5.2. Parties' Comments on the Draft Decision

In the Draft Decision, the ALJ proposed to direct the Billing Telephone Companies to address the topics included in the guidelines and either adopt the guidelines or demonstrate that they have better consumer protections in place. In this way, the guidelines would become the mandatory minimum level of consumer protection.

In their comments on this proposal, several parties objected to the Commission turning voluntary guidelines into mandatory minimum standards. The small LECs pointed out that these are not rules, per se, but rather a compilation of practices employed by certain large LECs to prevent cramming, and that the FCC has not formally approved these guidelines.

Although we find that a comprehensive review of Billing Telephone Companies' policies for third party billing is necessary, we do not wish to discourage the industry from creating compilations of best practices on a voluntary basis. Adopting as mandatory a voluntary set of guidelines may have this undesirable effect. Nevertheless, we wish to ensure that the Billing Telephone Companies have thoroughly considered each of these practices and made a determination of how best to protect their end user customers. Therefore, we order all Billing Telephone Companies to file a report in 45 days indicating on a topic-by-topic basis that they currently have in place or will put in place a directive that will address each consumer protection provided by the guideline.