Congressional Bill to Regulate the Practice of Cramming

On June 13, 2012, Senator John D. Rockefeller introduced a bill in the United States Senate that, if passed, would be called the Fair Telephone Billing Act of 2012. The bill's official title is "a bill to prohibit unauthorized third-party charges on wireline telephone bills, and for other purposes." Contrary to the bill's name, it would regulate the placement of third-party charges on both wireline and wireless telephone bills. The bill is still in its infancy and has been referred to the Committee on Commerce, Science, and Transportation for further consideration.

Section two of the bill explains its necessity, noting that the placement of unauthorized third-party charges on telephone bills -- a practice known as "cramming" -- is a problem of "massive proportions" that, over the past decade, has affected "millions of telephone users, costing them billions of dollars in unauthorized third-party charges." Moreover, third-party billing on telephone bills is not a reliable method of payment for consumers or businesses to conduct legitimate commerce.

Section three is the bill's operative provision. It would prohibit a local exchange carrier ("LEC") or provider of interconnected VoIP service from placing on a customer's bill a third-party charge not directly related to the provision of telephone services. However, an exception exists if the third-party charge meets the following four qualifications: (1) the charge is from a party with a contractual right to receive billing and collection services from a LEC or interconnected VoIP provider; (2) the charge is for a product or service that the LEC or interconnected VoIP provider jointly markets or sells with its own service; (3) the customer affirmatively consented to the placement of the charge on his bill; and (4) the LEC or interconnected VoIP provider has a good faith reason to believe that the charge is for a product or service requested by the customer. While the bill does not define "affirmative consent," presumably that hole would be filled by subsequent rulemaking by the FCC.

Finally, section four directs the FCC, in consultation with the FTC, to promulgate rules to protect consumers from unauthorized third-party charges on wireless bills. The rules must: (1) ensure that wireless service providers give customers the means to avoid receiving third-party charges on their bills and clearly and ensure that providers conspicuously disclose this option to customers; (2) establish procedures for wireless service providers to follow to ensure that third-party charges placed on customers' bills have been authorized by the customers; and (3) establish procedures to enable customers to seek and receive, directly from their wireless service providers, reimbursement for any unauthorized third-party charges in a timely manner.

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