Mr. President, I rise to introduce the Fair Telephone Billing Act of 2013. This legislation would protect millions of American consumers and businesses from unauthorized charges on their wireline telephone bills. In 2011, the Senate…
Mr. President, I rise to introduce the Fair Telephone Billing Act of 2013. This legislation would protect millions of American consumers and businesses from unauthorized charges on their wireline telephone bills.
In 2011, the Senate Commerce Committee, which I chair, completed a year-long investigation into unauthorized third-party charges on telephone bills, a practice commonly referred to as ``cramming.'' The investigation confirmed that third-party billing through wireline telephone bills had likely cost American consumers and businesses billions of dollars in unauthorized charges.
This legislation will put an end to cramming on wireline bills once and for all.
Unauthorized third-party charges on telephone bills have plagued consumers for years. Cramming first emerged in the 1990s. Following the breakup of AT&T and the detariffing of ``billing and collection services'' by the Federal Communications Commission, telephone companies opened their billing and collection systems to third-party companies offering a variety of services, some of which were completely unrelated to telephone services.
For the first time, telephone numbers worked like credit card numbers. Consumers could purchase services with their telephone numbers and the charges for these services would later appear on their telephone bills.
There has been much debate over the extent to which telephone companies were required to allow third parties to place charges on customers' phone bills, but the last of any Federal obligations ended in 2007. Since that time, with the exception of a few state requirements, telephone companies have been free to allow, or not allow, whatever companies they choose to place third-party charges on their customers' telephone bills. The telephone companies chose to allow all sorts of companies to place charges for all sorts of services.
Throughout the 1990s, state and federal law enforcement saw a dramatic increase in complaints about unauthorized charges on telephone bills. In response, the Federal Communications Commission and the telephone industry created voluntary guidelines to combat cramming.
Throughout this same period, Congress also convened hearings on the issue, and each time, the telephone industry used these voluntary guidelines to argue that congressional action on cramming was not needed. Several bills were introduced, but none were adopted. Now we find ourselves, over a decade later, still discussing cramming. We cannot make the same mistake again.
In 2010, I opened the Committee's investigation into cramming to better understand the scope of the cramming problem. The investigation showed that over the past decade, cramming caused extensive financial harm to all types of wireline telephone customers, from residences and small businesses, to government agencies and large companies. All the while, the largest telephone companies were making large profits, likely generating over $1 billion in revenue by placing third-party charges on their customers' telephone bills.
It was shocking to learn that many third-party vendors that were placing charges on telephone bills were illegitimate and appeared to have been created solely to exploit a broken system. Consumers reported being charged $10 to $30 a month for so-called ``services'' that they never authorized. These included weekly e-mail messages with ``celebrity gossip'' and ``fashion tips,'' and others completely unrelated to wireline telephone services--such as ``online photo storage'' and ``electronic facsimile.'' In some of the most egregious examples, unauthorized charges had been added to the bills for telephone lines dedicated to fire alarms, security systems, bank vaults, elevators, and 911 services.
The Committee investigation also determined that many of the services being charged to consumers' telephone bills seemed to serve no legitimate purpose, frequently did not function properly, and were often available elsewhere for free.
The investigation involved a review of thousands of consumer complaints and interviews with more than 500 individuals and business owners whose
telephone bills included charges from third parties. Not one of these individuals or entities believed they had authorized the charges.
Further, many of these consumers complained that when they found unauthorized charges on their telephone bills, they were unable to get the money refunded, either from the carrier or from the third-party vendor. That is unacceptable.
In response to the Committee's investigation, the three largest wireline telephone companies--AT&T, Verizon, and CenturyLink--took positive steps to eliminate cramming on wireline telephone bills, including a decision to stop allowing the placement of most third-party charges on wireline telephone bills.
The Fair Telephone Billing Act will ensure that all wireline telephone companies and providers of interconnected VoIP services are required to take the same steps so that cramming on telephone bills never happens again.
In short, the bill would prohibit any local exchange carrier or provider of interconnected VoIP services from placing any third-party charge on a customer's bill, unless the charge is for a telephone- related service or a ``bundled'' service that is jointly marketed or sold with a company's telephone service.
Under the bill, a telephone company that places prohibited charges on a customer's bill is responsible for refunding to the customer any charge for services the customer did not authorize.
The bill also includes a narrow exception for two categories of third-party billing services: telephone-related services, such as collect calls; and ``bundled'' services, such as satellite television services offered together with phone service. This bill recognizes that such legitimate types of billing offer substantial benefit to consumers.
In recent years, increasing numbers of consumers have transitioned from traditional wireline telephone service to interconnected VoIP services and more are expected. Since consumers likely do not see a distinction between traditional wireline service and interconnected VoIP services, I believe these services need to be included. It is important to ensure that all telephone customers are offered the same protections from unauthorized charges.
It also has become clear that cramming now extends to wireless bills. When I introduced a similar bill last year, I included provisions that would have directed the Federal Communications Commission to create rules to prevent cramming on wireless telephone bills. Since that time, the Senate Commerce Committee has been examining cramming on wireless bills, and I believe this issue demands additional attention. I do not want to see in a few years that cramming has simply migrated from wireline to wireless. It is important that we examine the extent to which third-party wireless billing practices raise any issues distinct from third-party wireline billing practices, so we can best determine appropriate policies for protecting against consumer abuses in this context.
Cramming has likely already cost consumers and businesses billions. The Fair Telephone Billing Act would stop practices that Congress, regulators, and consumers agree are nothing more than a cover for fraud.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.