UCAN

UCAN's reply comments regarding proposed cramming reporting requirements in proceeding 00-02-004 at the California Public Utilities Commission.

Reply Comments of the Utility Consumers' Action Network

regarding proposed cramming reporting requirements

Art Neill
Michael Shames
Utility Consumers' Action Network (UCAN)
3100 5th Ave. Suite B
San Diego, CA 92103
(619) 696-6966
Fax: 696-7477
art [at] ucan [dot] org

Introduction

The comments to the Commission's ACR were largely to be expected. Wireless and wireline carriers generally minimize the prevalence of cramming complaints, and point to the market as the solution to any existing problems with cramming. They present an alternative proposal to report on carrier action against "bad actors," rather than specific customer complaints. Consumer advocates have highlighted the importance of thorough cramming reporting requirements to the Commission's regulatory and enforcement responsibilities. Fortunately we do not have to make policy in a vacuum and guess at the results. The developments in telecommunications in this decade, particularly in the wireless industry, coupled with deregulation efforts, have led to a tremendous variety and amount of cramming. The cramming problem is real, yet there is severe lack of systematic data collection to understand the complete impact that cramming has on the consumer, and the primary culprits and causes of cramming.

I. Costs and Benefits of Reporting Requirements.

Commentators recognize that reporting all cramming complaints over 30 days would cost at least as much as reporting all cramming complaints and would be an addition burden to distinguish between all cramming complaints and those cramming complaints unresolved after 30 days. Because of the burden, costs, and uselessness associated with the reporting of all cramming complaints unresolved after 30 days, and the benefits of reporting all cramming complaints as discussed herein, all references to reporting in this section (unless otherwise indicated), refer to reporting all cramming complaints. The wireless carriers and CTIA generally discuss the costs associated with reporting. According to CTIA, the four major wireless carriers would only incur up front cost of $39,000,000 and annual reporting and tracking costs around $85,000,000. Those unsupported estimates are to "track all complaints related to the placement of an allegedly unauthorized charge on the customer's bill (including the date received), produce associated reports, as well as undertake the three-year record retention processes." Carriers, such as Cricket Wireless, indicate the initial setup and continuation costs would be significantly less for their company. None of the carriers discuss the potential or likelihood of these costs being passed directly to the consumer as most carriers already charge customers to help defray costs of associated with complying with federal, state, and local regulations. The carriers also do not discuss any of the potential savings that could result from the reduction of cramming that should result from the identification of bad actors and action by the carriers and the Commission to prevent those bad actors from attempting to steal from subscribers.

The DRA would reject any argument of an administrative burden on the carriers and suggested that it may request an opportunity to obtain discovery and a hearing facilitating a Commission ruling based on the evidence should a factual dispute arise. UCAN supports the position of the DRA as it appears evident from the DRA's findings and the filings of the major wireless carriers and CTIA that the carriers do or should already have the capability of tracking cramming complaints. For instance, Verizon Wireless acknowledges that part of its agreements with third-party service providers includes a provision that Verizon Wireless may suspend or terminate the provider if "Verizon receives fifteen (15) or more escalated complaints during any calendar month from end-users stating that they have been crammed." In order for Verizon Wireless to enforce the provisions of its contract it must have some minimal system in place where either the Customer Service Representative or the individual to whom the complaint is escalated is acknowledging the complaint as cramming and is tracking the number of complaints being received. In addition, under the current customer service resolution system of one call resolution it would seem that the majority of complaints that the carrier receives would not be escalated. While some individuals may be credited individually the actual cramming will continue until a customer seeks a resolution beyond calling every month for a credit for the unauthorized charge.

The carriers also use the fact that customer service representatives are trained to resolve a customer call in a one and done fashion as a justification for the representatives not being able to distinguish between a cramming complaint and an inquiry. UCAN views such a statement as a blatant admission that the carriers are not in compliance with the requirements of G.O. 168 and the California Public Utilities Code §2890. Under the statute and regulations, the carrier is under an obligation to validate the authorization for the product or service or credit the customer. In order for a customer service representative to know to show validation for the charge or credit the customer, the representative would need to be able to distinguish a cramming dispute from an inquiry. Further, the carrier, and particularly the customer service representative, is unlikely to have the proof of validation, such as an acceptance text message, immediately available for validation and would likely have to contact other departments or the third party service provider to receive the required proof of validation. This means that a cramming dispute is not always well served by a "one and done" type policy, and often requires a reasonable investigation that may take more than a few minute phone call to provide full resolution.

The carrier's argument that the subscriber would be burdened by having to spend more time on the phone with customer service in order for the representative to record all of the required information for tracking is also unconvincing. First, in order to understand the nature of the subscriber's call the representative would need to receive much of the information being tracked in reports such as the name of the service the customer is disputing. Second, it has been UCAN's experience that a subscriber would rather spend a longer period on phone call with customer service than continually call month after month to receive the appropriate credit for a service that a third party service provider or the carrier themselves will not properly stop charging the subscriber. Third, tracking cramming complainants will allow the carriers to better determine which third party subscribers are "bad actors" in a timely fashion and discontinue affiliation with those organizations. In doing so, the carriers would potentially reduce the overall amount of cramming and reduce the number of calls a subscriber must make to customer service.

Lastly, though the Commission's objective is to identify bad actors through these reporting requirements, the Commission's goal is to stop cramming. The carriers control what charges are placed on a subscriber's bill and receive the complaints of subscribers for charges that should not appear on their bill. The carriers are in the best position to track cramming complaints to allow the Commission to review the information and determine the continued prevalence of cramming. The carriers reporting requirements are intrinsically tied to the amount of cramming the carrier allows to occur, if the carrier does not cram and acts to stop third party service providers who cram than there will be less to report and fewer costs to the carrier.

II. The cramming data requested must be useful to the Commission.

As UCAN highlighted in its initial comments, the main purposes of a cramming reporting requirement, to help inform the Commission's regulatory and enforcement efforts, is not met by the cramming reporting requirement suggested in the ACR. This is true with regards to a complaint reporting requirement that 1) includes only complaints unresolved after 30 days, and 2) does not include enough complaint specific data. The initial comments of parties suggest a broad consensus that the Commission should simply abandon consideration of the proposal to only include complaints unresolved after 30 days. As far as the data to be included in reports, initial comments affirm a need for a more detailed report, which would serve to meet the needs of the Commission's enforcement efforts as well as the statutory requirement for cramming reports.

The ACR largely centered discussion around a proposal that only requires companies to submit reports regarding complaints unresolved after 30 days. As UCAN highlighted in its initial comments to this ACR, Part 4 of General Order 168 requires companies to either 1) verify the complaint or 2) credit the customer, in less than 30 days. Carriers themselves suggest in their comments that compliance with current requirements regarding complaint resolution mean that little information would be reported under the proposed cramming requirement.

In AT&T's section entitled "The 30-Day Reporting Requirement Should Be Rejected," AT&T states that

"AT&T's practice in accordance with G.O. 168 is to resolve cramming complaints on the first call. Accordingly, AT&T anticipates that there would not be a significant number of over 30-day complaints to report, if any."

Verizon's initial comments also address the usefulness of reports of complaints unresolved after 30 days, stating that

"for third-party related charges no complaints remain unresolved after 30 days from a billing telephone company perspective."

UCAN agrees with AT&T and Verizon that little if no data would be reported by AT&T and Verizon under the proposed requirements. The lack of reporting would be true at other carriers as well. UCAN agrees limiting reported complaints to those unresolved after 30 days makes reporting virtually useless. Where we differ is on alternatives. UCAN prefers a reporting requirement that includes all complaints, as well as more detailed reporting on complaints. The carriers prefer another insufficient option which leaves the regulation of cramming under their control, rather than that of the Commission.

As far as the detail of information requested in reports, UCAN finds itself in agreement with many carriers that the requested information is insufficient. In its initial comments, UCAN summarized the flaws in the details requested in the proposed reporting requirement, stating that

"[w]hile information regarding total complaints and names of companies involved is reported, the critical information in an individual complaint, that is, what the customer's specific dispute was, is not included."

UCAN is glad to note that CTIA agrees with UCAN on the insufficiency of the reported data, stating that

"data about the number of complaints received is not really meaningful without an understanding of the factual context of each complaint"

CTIA also acknowledges that the difference in cost between tracking and reporting all cramming complaints and cramming complaints unresolved after 30 days would be minimal, stating that

"The ACR sets forth two reporting proposals, the primary differential being whether the monthly reporting requirement would be for all cramming complaints or for cramming complaints that are not resolved in 30 days. This difference, however, does not have a significant impact on the magnitude of the system and operational changes which a wireless carrier would need to undertake to track the information."

This is why UCAN proposes in its initial comments that reports should "include specific details of the cramming issue or dispute." Without these details cramming reports become useless for even understanding the cramming landscape, let alone as enforcement tools.

Further, there is a significant danger that definitions and examples appearing in the ACR unwittingly eliminate large pieces of the cramming puzzle. In its initial comments UCAN offered observations on avoiding undermining key definitions, and with regards to examples cited in the ACR, UCAN stated that

"The Commission also cites the Staff report on the reporting workshop for examples of what would not be considered a cramming complaint for reporting purposes. Some of the examples show a serious lack of understanding regarding the reality of consumer cramming complaints, and would allow for wholesale manipulation. These include 1) ‘Complaints about errors or billing mistakes'; 2) ‘Complaints about government-mandated charges or taxes'; 3) ‘Complaints about charges incurred by another authorized user of the phone'; 4) ‘Charges incurred through a stolen or lost phone.' These examples should not be used as examples of what is not cramming for any purposes, including reporting."

UCAN's fears regarding carriers' willingness to exploit these weaknesses in the proposed reporting requirement appear validated by parties' initial comments. For example, Verizon's comments particularly expose the carrier's intent to use definitions and examples to limit the amount of information reported. Verizon states that

"At a minimum, the Commission's definition of authorization should include
Section 2890's "prima facie" language. But even if it does, there are many scenarios under which a subscriber will raise a billing dispute that, if reported, will not provide Commission staff with information useful to identify bad actors. Staff recognized this and in its workshop report listed ten such scenarios that would not be deemed cramming for reporting purposes. See ACR, Appendix C at C-8 and C-9 (reproducing the "Final Staff Workshop Report on Proposed Cramming Reporting Requirements" dated October 13, 2006). While the Commission could include the list of ten in its final decision, that solution is incomplete because other scenarios may arise now and in the future that may require reporting but are nothing more than run-of-the-mill billing disputes.

Verizon's comments regarding the "prima facie" language regarding direct dialed calls in current cramming law suggests a limitation on its reporting with regards to disputes regarding direct dialed phone calls. UCAN's experience is that direct dialed phone calls are a commonly the subject of consumer cramming complaints. Verizon's comments suggest the potential for elimination of these types of complaints from cramming reports is significant. Verizon then points directly to the examples cited in the ACR as "scenarios that would not be deemed cramming for reporting purposes." UCAN again suggests that the examples in the ACR, taken from the workshop, be carefully reviewed before they are included in any decision. In particular, the four examples cited above in UCAN's initial comments, 1) ‘Complaints about errors or billing mistakes'; 2) ‘Complaints about government-mandated charges or taxes'; 3) ‘Complaints about charges incurred by another authorized user of the phone'; 4) ‘Charges incurred through a stolen or lost phone' must be eliminated from any decision to avoid severely limiting the data received by the Commission from cramming reports.

UCAN supports the adoption of DRA's suggest that cramming complaints should be provided from all telephone companies and billing aggregators, agents, and third-party vendors that bill directly through a telephone company in a monthly cramming complaint report and that the information should be provided in the following format.

The billing telephone company would compile information from these complaints in an Excel spreadsheet containing the following information:
1. A record of each cramming complaint received. Each record would equate to a single row in the Excel spreadsheet and include the following information
 Date received
 Billed telephone number
 Service provider's business name
 Service provider contact information
 Type(s) of service billed
2. The total number of cramming complaints related to each service provider.
3. Either (a) the total number of telephone numbers billed for each month OR (b) the total dollars billed and total dollars refunded for each month (also commonly referred to as a "refund rate").

Lastly, carriers suggest by their comments that they will have the ability to engage in similar manipulation of the proposed requirements with regards to record retention. For example CTIA states

"Moreover, with respect to the proposed three year record retention requirements, both the Staff Workshop Report (at p. 28), and the ACR (at p. 20) make clear that carriers would be required to retain only certain information for the three year period, and only to the extent that information already exists. In other words, carriers are not required to create new records, or modify their systems to retain information they do not already record. With that understanding, CTIA submits that such three year record retention requirement is not objectionable and should allow wireless carriers to provide the Commission with additional information, when requested, to aid in any investigation or enforcement action the Commission may be undertaking.

UCAN believes that approach again places too much of the power to control regulation in the hands of carriers. The concern is that this approach will lead to carriers endeavoring to eliminate and severely limiting the information that is retained, thereby reducing the usefulness of the records to the Commission's enforcement efforts. In order to alleviate this concern UCAN supports the adoption of DRA's recommendation for stored data. DRA stated that

Given the exponentially increased electronic storage capabilities available to businesses today, it is not unreasonable to request that these entities retain for three years all relevant supporting documentation developed in the normal course of their business, including but not limited to:
1. The subscriber telephone number and the unique subscriber identifier, if any;
2. The name of the service provider responsible for the alleged unauthorized charge;
3. The name of the billing agent or billing agents, if any;
4. The amount of the alleged unauthorized charge and the date the charge was incurred and billed;
5. A description of the product or service billed;
6. The disposition of the dispute; and
7. A record of the original subscriber authorization for the charge, if any.

Requiring carriers to retain specific information would allow the Commission to sufficiently enforce the cramming rules and regulations through the availability of specific and useful knowledge and information regarding cramming.

III. The carriers' alternative, to report termination of third party vendor/service provider or billing aggregator for cramming related activities is insufficient

The carriers suggest rather than tracking cramming complaints that they be allowed to report to the Commission when a third party service provider is terminated for cramming related activities. Though this data would be useful to the Commission, it is insufficient and too easily manipulated for the records to provide data useful for achieving the Commission's objective of tracking cramming to allow it to perform its enforcement and investigation responsibilities, and thereby meeting the Commission's goal of reducing cramming.

First, how and when a carrier terminates their relationship with a third party is a matter of contract between the third party and the carrier. It is information to which the public is not currently privileged. However, it is likely that each carrier would have somewhat different standards for terminating a carrier and the decision to terminate would ultimately depend on a carrier's decision maker to determine that the third party provider is beyond suspension, out of opportunities to cure, and the decision to terminate was for the third parties cramming activities and not for another business decision. The subjective nature of such a decision could lead to similar opportunities for manipulation as exist in the ACR proposed reporting requirement. The result would likely be that the Commission would receive few to no reports, but numerous consumers would still burdened with crammed charges, of which they may or may not be aware.

Second, reporting the termination of only third parties ignores the fact that the carriers supply products and services to subscribers themselves, and may be guilty of cramming if the service or product was not authorized by the subscriber. The failure of carriers to acknowledge their own cramming violations is perhaps the "elephant in the room" of this regulatory proceeding. The carriers' proposal completely ignores the concept of cramming by carriers. Carriers offer services such as text messaging, data services, picture mail, and appear to be offering ring tones and answer tones directly. Wireline carriers also directly offer an extensive number of services such as caller id, wire maintenance, and voicemail. These services may be placed on a subscriber's phone bill without his or her authorization, just as services from third party providers may be placed on a subscriber's phone bill. If carriers are allowed to only report the termination of third party service providers a number of cramming issues would go unacknowledged, and carriers and the Commission would be deprived a mechanism to ensure that none of their employees representatives, or services are improperly engaged in cramming activities.

Lastly, the carriers method of determining whether a third party service provider should be terminated for cramming would inherently require some level of tracking and reporting by the carriers. The carriers should disclose the tracking they engage in to determine if a third party service provider should be terminated. The Commission would then be in a better position to determine if the information tracked currently by the carriers would be sufficient for the cramming reporting requirements. If the information tracked is sufficient then the carriers would only need to additionally track cramming disputes concerning products or services the carrier offers. The information could likely be tracked in the same manner as the third party service providers' information is tracked. If the Commission was to determine that the manner for tracking complaints to terminate third parties was insufficient than the report of terminated third party service providers would likely be insufficient for the Commission to properly gauge the level of cramming occurring and enforce the cramming rules and regulations.

Respectfully submitted, Dated: April 28, 2008

___/s/______________________
Art Neill
Michael Shames
Utility Consumers' Action Network (UCAN)
3100 5th Ave. Suite B
San Diego, CA 92103
(619) 696-6966
Fax: 696-7477
art [at] ucan [dot] org