The Federal Communications Commission (FCC) guidelines, sources say, don't mesh with many existing state rules and may not offer guidelines for the electronic age of billing, two of many stresses that could force billing issues into court for clarification.
Restraining itself from mandating specific rules, the FCC in April issued general guidelines on the content and format of telephone bills. In the federal agency's truth-in-billing and billing format docket, the FCC approved a rulemaking it hopes will ensure that consumers get clear and accurate information on their telephone bills. The order also coincides with the commission's ongoing efforts to decrease slamming, when a consumer's long distance carrier is changed without permission, and cramming, the inclusion on a telephone bill of charges for products or services not authorized by the consumer.
The line between the federal billing and cramming rules really isn't very clear, says Amy S. Gross, in-house counsel for Technologies Management Inc. (TMI), Winter Park, Fla. "Cramming rules are billing rules to some extent," she explains. "'You can't place this on a bill until confirmed or verified,' which is a cramming rule. 'You must put certain information on a bill this way,' which is a billing rule. They're intertwined," she says, "and that creates confusion."
In its order, and largely because of the rise in cramming, the FCC attempts to clear all this up. The commission requires telephone companies to revamp their monthly bills to completely describe all charges and to highlight any new company whose charges may have been added to the most recent bill.
Cramming is "now the second largest category of written complaints received by the FCC" behind slamming, says a source in the FCC's enforcement division. Each company listed on the bill must be clearly identified, with a toll-free number for consumers to call with complaints. The order also requires telcos to clearly state which charges, if not paid, will result in termination of service. The commission's broad guidelines implement three basic principles consumers should know: who is asking them to pay for service; what services are they being asked to pay for; and where they can call to get more information about the charges appearing on their bill.
The commission's guidelines also aim to reduce customer confusion about the nature of the services being billed by requiring that carriers clarify when they may withhold payment for service--such as disputing a charge--without risking the loss of their basic local service. The FCC's rules also require carriers choosing to place line items on bills to use standard labels to identify these charges. The FCC seeks further comment to determine those appropriate labels, as well as whether it should apply all the truth-in-billing rules adopted in the wireline context to wireless carriers.
Getting Slammed
Consumer confusion over telephone bills has significantly contributed to the growth of slamming, cramming and other types of telecommunications fraud, the FCC says. Companies that engage in these practices seem to rely on consumer confusion over telephone bills to mislead consumers into paying for services they didn't order. Slamming, the No. 1 consumer complaint to the FCC and in most states, poses particular concern. Because there are separate slamming rules to follow in each state, there's no standardization for describing services on a bill. So a breeding ground has been created for slammers who exploit the confusion.
The FCC's slamming rules, combined with the new truth-in-billing rules, have been designed to combat this problem. But together, both sets of rules present challenges for carriers, says James Veilleux, president of VoiceLog LLC, a provider of third-party verification services based in Charlotte, N.C. Veilleux explains, for instance, that Joe Consumer may open his bill one month and discover--thanks to the new billing rules--that his carrier has changed. Joe waits a month before complaining, then refuses to pay--based on the FCC's rule absolving customers of the first 30 days' billing. After investigation, the carrier finds it has a recording of Joe's wife authorizing the carrier change, but the script of that authorization doesn't meet the requirements of Joe's state. And while Joe's wife can authorize the change under the state's rules, she isn't the subscriber, as is required by FCC rules. So Joe refuses to pay anything to the new carrier, since under his state's rules, he doesn't have to pay for a service not properly authorized.
"State rules still apply," Veilleux says. "At least 38 states have rules against slamming, and at least 20 states' rules are significantly different from the FCC's," including:
- Allowing third-party verification (TPV) as the only form of verification;
- Defining the specific script of a TPV call;
- Allowing someone other than the subscriber to give authorization for a carrier change;
- Requiring TPV providers to be certified; and
- Deviating in the form and content of letters of authorization (LOAs).
"Since most carriers market in more than one state, and many of them market nationally," Veilleux says, "it is difficult to meet every rule in every state with one national verification method." For example, he says California allows only TPV, while Arkansas doesn't allow TPV unless the carrier gets permission from the regulatory commission. While this is the most glaring conflict across states, Veilleux says there are a number of others.
So how can state rules work in concert with federal rules? "TPV and LOAs are the closest thing to universal verification mechanisms across the states' and FCC rules," Veilleux says. "While no one form of verification meets the rules in every jurisdiction, using these two methods and making necessary changes in a few states will allow a carrier to meet the rules almost everywhere."
Since many states pattern their regulations on the FCC rules, Veilleux says it's unlikely that major deviations--such as banning FCC-approved verification methods--will occur in more than a handful of states. "The FCC has sent strong signals that it won't preempt the states," he adds. "And because the FCC's [billing] rules are pretty ambiguous, states can still adopt their own regulations, although they can't ignore the federal regulations. This will have to be clarified in court, I think."
The Telemarketing Connection
Slamming equals telemarketing, says Paul Gehri, senior vice president of sales and marketing for Billing Concepts Inc., a billing clearinghouse based in San Antonio, Texas. Telemarketers "harass customers to make the hard sell," he says, "and it's downright slamming and cramming."
"Truth-in-billing ... should have been tied to truth-in-marketing ... because there's nothing [in the billing guidelines] about truth-in-selling," Gehri says. "As a clearinghouse, [the FCC's rules] force us to be the police, a Gestapo of telemarketers who stretch the FCC guidelines all the way across the board. They're not monitored, and they should be."
Jacquelene Mitchell, president and chief operating officer of Billing Concepts, says the new industry billing standards are making a difference so far, but "now the piece that has to be hammered out ... is telemarketing," she says. "There needs to be authority over telemarketers because there's no control over these guys."
Billing clearinghouses "are clearly caught in the middle between the ILECs (incumbent local exchange carriers) and their customers," says TMI's Gross. "From the ILEC perspective, the clearinghouse is their customer and thus must substantiate all the charges they submit for billing. From the clearinghouse perspective, they are neither the carrier nor the marketing agent and have nothing to do with the sale and have no knowledge of rates, solicitation practices, etc. So they really are being forced to police their own customers and get involved in their business. And they probably have to take a lot of grief from their customers. They've really been put in an awkward situation."
As for third-party verifiers, they should be certified, bonded and monitored by the FCC, practices currently not required, sources say.
"Why the FCC doesn't want to put teeth into TPV is beyond me," says a source who asked not to be named. The looming fear is that slamming and cramming will increase once a local customer can switch from a long distance provider to a local carrier and to a reseller to provide all of his services. "Then the problem will get even worse," the source says, "and the FCC will have more nightmares than they ever dreamed of because where will all those complaints go then?"
"We don't know if independent third-party verifiers are actually independent," Mitchell adds. "They multisell to multiclients using any means to sell a product. It's a problem that has to be addressed on the federal level."
That idea is more compelling if you believe, as some do, that TPV could be the wave of the future. One industry consultant says TPV is "the most practical way to determine truth-in-billing," and it's also accepted in most states as a legitimate practice that helps curb slamming and cramming.
In another twist, Brian Valente, senior director of marketing for Just In Time Solutions Inc., a software vendor in San Francisco that handles electronic billing and presentation, says the FCC's billing guidelines are focused on paper bills--the presumption being that the bill has been delivered--not billing handled electronically online. "In the electronic world, when a bill is posted there's no mail and no delivery notification," Valente says. "This will have to be revisited by the FCC."
Consumer privacy is another notable issue to watch, Valente adds. Because billing is changing and may not be the main customer grabber anymore, providers are finding new ways to collect customer data and reinforce their brands. They're doing this largely from Internet websites, or portals, where companies such as Just In Time Solutions can help telcos profile customers online, tracking what sites a customer has visited, for instance, to devise personalized marketing to that customer. Telcos must get customer authorization to do this, Valente says, and the company can use only the data that's not protected.
Privacy always has been "a red herring," says Rich Aroian, vice president of marketing and strategic alliances for Saville Systems, a Burlington,Mass., customer care and billing firm. Consumer concerns over privacy, however, have dwindled as consumers learn more about the technology that addresses privacy issues, Aroian says. "As consumers become more aware of how firewalls and encryption work, for example, their concerns will go away," he says.
"Privacy is an important and delicate issue," Valente says. "Telcos need to be proactive in addressing it." If not, there's a possibility more federal legislation will be enacted. "And that would be unfortunate," he says. "The FCC is not the best arbitrator over these newer technologies."
Clearly Confusing
While generally pleased with the FCC's truth-in-billing order, the Washington-based Competitive Telecommunications Association (CompTel), which represents competitive telecom carriers and their suppliers, warns that the FCC's attempt to force carriers to differentiate betweenservices that can and can't be disconnected for failure to pay long distance charges might ultimately confuse consumers even more.
"CompTel has always believed thatthe FCC should only adopt general guidelines to ensure that telephone companies' billing practices promote rather than undermine the interests of consumers," says H. Russell Frisby, Jr., president of CompTel. "However, we are concerned that the new rules are unnecessarily burdensome on competitive providers of direct billing services." Moreover, Frisby says, the requirement informing consumers their local service will not be compromised if they fail to fulfill their payment obligations to long distance carriers "could be an invitation to consumers to treat those obligations cavalierly."
CompTel, of course, suggests the commission regulate only the ILECs' billing practices. Many ILECs, in fact, began revamping their bills long before the FCC's new rules came out this spring.
Enforcement
Clearly, if you listen to most of the recommendations from Capitol Hill of what the FCC should be in the future, it's an enforcement agency. Regarding truth-in-billing, this will be a huge risk, says TMI's Gross. "It's hard to know how these really broad guidelines can be enforced," she says. "These are rules you need to take seriously."
Stateside, a few have started to adopt truth-in-billing rules. Michigan rules, for instance, basically mirror the FCC's rules, while Vermont has adopted a fairly extensive Consumer Bill of Rights. New Texas legislation also contains several truth-in-billing type provisions. Gross says states also seem to be adopting rules requiring some form of confirmation requirement be sent to the customer after a preferred carrier change has been processed. "Sometimes it's a bill insert and sometimes a separate mailing, like a welcome package," she explains.
And more regulation can be expected, unfortunately. Gross says several states are looking at cramming rules, including Iowa, Montana, New Hampshire and New Mexico. Still other states, such as Missouri, New Mexico and Wyoming, have outstanding proceedings looking generally at their service standards rules, including billing requirements.
At the FCC, comments were due last month on a number of petitions filed by several carriers in the truth-in-billing docket. Ameritech Corp., Hoffman Estates, Ill.; SBC Communications Inc., San Antonio; Sprint Corp.; the United States Telephone Association, Washington; and US West Communications Inc., Denver, are among those seeking a delay beyond 2000 on certain truth-in-billing issues. According to FCC Acting Enforcement Division Chief Glenn Reynolds, this includes the suggestion by these carriers that an industry-wide protocol be adopted for standardized billing systems. Such a protocol would be used throughout the industry, Reynolds says, for them to exchange billing information on local bills.
Reynolds also says discussions between the FCC and the Office of Management and Budget (OMB) continue on truth-in-billing issues.
"We continue to talk with OMB about effective dates for the truth-in-billing order," Reynolds says, "because OMB had questions about whether the commission had taken into account various Y2K issues." He says the billing rules were to go into effect in July, but another date is being sought for sometime before the end of the year."
