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Empowering Consumers to Prevent and Detect Billing for Unauthorized Charges ("Cramming')

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Released: July 12, 2011

Federal Communications Commission

FCC 11-106

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)
)

Empowering Consumers to Prevent and Detect
)
CG Docket No. 11-116
Billing for Unauthorized Charges ("Cramming")
)
)

Consumer Information and Disclosure
)
CG Docket No. 09-158
)
Truth-in-Billing and Billing Format
)
CC Docket No. 98-170

NOTICE OF PROPOSED RULEMAKING

Adopted: July 12, 2011

Released: July 12, 2011

Comment Date:

(60 days after date of publication in the Federal Register)

Reply Comment Date: (90 days after date of publication in the Federal Register)

By the Commission:
Chairman Genachowski and Commissioners Copps, McDowell, and Clyburn
issuing separate statements.

TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. BACKGROUND .................................................................................................................................... 6
A. How Cramming Occurs ................................................................................................................... 6
B. Voluntary Industry Practices.......................................................................................................... 10
C. Truth-in-Billing.............................................................................................................................. 11
D. Consumer Information and Disclosure Notice of Inquiry.............................................................. 14
III. EVIDENCE OF A CRAMMING PROBLEM ..................................................................................... 19
A. Federal and State Agencies ............................................................................................................ 19
1. Commission Inquiries and Complaints.................................................................................... 19
2. Federal Trade Commission...................................................................................................... 22
3. State Government Complaints................................................................................................. 25
B. Congressional Investigations and Inquiries ................................................................................... 35
IV. DISCUSSION....................................................................................................................................... 37
A. Measures to Assist Consumers in Preventing Cramming .............................................................. 40
1. Disclosure of Blocking of Third-Party Charges ...................................................................... 40
B. Measures to Assist Consumers in Detecting Cramming................................................................ 45
C. Disclosure of Commission Complaint Contact Information to Enhance the Ability of
Consumers to Resolve Cramming Disputes................................................................................... 50
D. Wireless Service............................................................................................................................. 52
E. Additional Questions for Comment ............................................................................................... 55
1. Disclosure of Third-Party Vendor Contact Information.......................................................... 55

Federal Communications Commission

FCC 11-106

2. Requiring Wireline Carriers to Disclose That They Do Not Offer Blocking of Third-
Party Charges........................................................................................................................... 59
3. Requiring Wireline Carriers to Block Third-Party Charges Upon Request ............................ 60
4. Prohibiting All Third-Party Charges on Wireline Telephone Bills ......................................... 62
5. Due Diligence.......................................................................................................................... 63
6. Federal-State Coordination...................................................................................................... 66
7. Accessibility ............................................................................................................................ 68
8. Interconnected VoIP Service ................................................................................................... 69
9. Definition of Service Provider or Service ............................................................................... 70
F. Effective Consumer Information Disclosure ................................................................................. 72
G. Legal Issues.................................................................................................................................... 82
1. Communications Act ............................................................................................................... 83
2. First Amendment Considerations ............................................................................................ 86
V. PROCEDURAL MATTERS................................................................................................................ 88
A. Ex Parte Presentations ................................................................................................................... 88
B. Filing of Comments and Reply Comments.................................................................................... 89
C. Initial Regulatory Flexibility Analysis........................................................................................... 92
D. Paperwork Reduction Act .............................................................................................................. 93
VI. ORDERING CLAUSES....................................................................................................................... 94
APPENDICES
APPENDIX A - Proposed Rules
APPENDIX B - List of Commenters
APPENDIX C - Initial Regulatory Flexibility Analysis

I. INTRODUCTION

1. In this Notice of Proposed Rulemaking, we seek comment on proposed rules designed to assist
consumers1 in detecting and preventing the placement of unauthorized charges on their telephone bills, an
unlawful and fraudulent practice commonly referred to as "cramming."2 The record compiled in this
proceeding to date, including the Commission's own complaint data, suggests that cramming is a
significant and ongoing problem that has affected consumers for over a decade, and has drawn the
concern of Congress, states, and other federal agencies.3 In fact, cramming is the most common billing-


1 "Consumers," as used herein, refers to all users or purchasers including residential or business of a product,
good, or service.
2 The Commission has concluded that placing unauthorized charges for or in connection with telephone service
constitutes an unjust and unreasonable practice in violation of Section 201(b) of the Communications Act of 1934,
as amended (the "Act"), 47 U.S.C. 201(b). See, e.g., Long Distance Direct, Inc., Memorandum Opinion and Order,
15 FCC Rcd 3297, 3302, para. 14 (2000) (imposing a forfeiture for a company's practices of cramming membership
and other unauthorized fees on consumer telephone bills). As discussed in greater detail below, the cramming entity
can be the customer's own telecommunications service provider or an unaffiliated third party that may or may not be
a common carrier. These third-party charges can be for additional telephone services or unrelated products and
services, such as chat lines, diet plans, and horoscopes.
3 See infra Sec. III; see also FTC Reply Comments; 25 State AGs Joint Comments. Unless otherwise noted, all
comments and reply comments referenced herein refer to submissions in response to the Commission's Consumer
Information and Disclosure; Truth-in-Billing and Billing Format; IP-Enabled Services
, CG Docket No. 09-158; CC
Docket No. 98-870; WC Docket No. 04-36, Notice of Inquiry, 24 FCC Rcd 11380 (2009) ("Consumer Information
NOI"). Those comments and reply comments were due by October 13 and 29, 2009, respectively. A complete list of
(continued . . .)
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related wireline complaint after the categories for rates and for billing credits, refunds, or adjustments that
were promised by carriers but not received.4 The substantial volume of wireline cramming complaints
that the Commission, the Federal Trade Commission ("FTC"), and states continue to receive suggests the
ineffectiveness of voluntary industry practices and highlights the need for consumer safeguards.
2. Moreover, reports of cramming likely understate the magnitude of the problem because
consumers face significant challenges in detecting and preventing unauthorized charges on their telephone
bills. Because many consumers are unaware that third parties can place charges on their telephone bills,
they fail to recognize the need to review their bills to identify charges for products or services they have
not authorized. The growing use of electronic billing and automatic payments exacerbates the difficulties
consumers face in detecting unauthorized charges on their telephone bills. In addition, those engaged in
the practice of cramming often use schemes, such as charging only small amounts or labeling the charges
in a way that makes them appear to be associated with a subscribed-to telecommunications service,5
designed to minimize the possibility of detection.6 As a result, unauthorized charges can often go
undetected for substantial periods of time, resulting in significant costs to consumers.7
3. Although, as referenced above, the Commission has determined that the practice of cramming is
an unreasonable practice in violation of Section 201(b) of the Act8 and has adopted Truth-in-Billing rules
that are designed in part to address cramming,9 the volume and type of consumer complaints show that





(continued from previous page)
commenters in that proceeding including the full commenter names associated with the abbreviations used herein,
can be found in Appendix B hereto.
4 See FCC Quarterly Reports on Informal Consumer Inquiries and Complaints:
http://transition.fcc.gov/cgb/quarter/welcome.html.
5 Crammed charges often use labels like "voicemail" or "web services," which likely make the charges look like
they are associated with services a phone company normally provides. See Press Release, Rockefeller Probe Into
Bogus Charges on Consumer Phone Bills Expands (Mar. 31, 2011) ("The services typically offered . . .include
voicemail services, electronic fax services, webhosting, online gaming, and e-mail."), available at
http://commerce.senate.gov/public/index.cfm?p=HearingsandPressReleases&ContentRecord_id=991b1bfc-f160-
48b6-883c-c38e2079ff9c&ContentType_id=77eb43da-aa94-497d-a73f-5c951ff72372&Group_id=165806cd-d931-
4605-aa86-7fafc5fd3536&MonthDisplay=3&YearDisplay=2011.
6 See, e.g., 25 State AGs Joint Comments at 9.
7 For example, a recent FTC investigation found that one company had crammed unauthorized charges on the
telephone bills of thousands of consumers and small businesses over a five year period resulting in millions of
dollars in charges for services they never agreed to buy. See FTC Halts Massive Cramming Operation That Illegally
Billed Thousands, www.ftc.gov/opa/2010/03/inc21.shtm (rel. March 1, 2010). See also FTC v. Inc21.com
Corporation
, 745 F. Supp. 2d 975 (N.D. Ca. 2010).
8 See, e.g., Long Distance Direct, Inc., supra; Main Street Telephone Company, Notice of Apparent Liability for
Forfeiture, FCC-11-89 (rel. Jun. 16, 2011) ($4.2 million proposed forfeiture); VoiceNet Telephone, LLC, Notice of
Apparent Liability for Forfeiture, FCC-11-91 (rel. Jun. 16, 2011) ($3 million proposed forfeiture); Cheap2Dial
Telephone
, LLC, Notice of Apparent Liability for Forfeiture, FCC-11-90 (rel. Jun. 16, 2011) ($3 million proposed
forfeiture); Norristown Telephone Company, LLC, Notice of Apparent Liability for Forfeiture, FCC-11-88 (rel. Jun.
16, 2011) ($1.5 million proposed forfeiture) (together, the "June 2011 NALs").
9 See Truth-in-Billing and Billing Format, First Report and Order and Further Notice of Proposed Rulemaking, CC
Docket No. 98-170, 14 FCC Rcd 7492 (1999) ("First Truth-in-Billing Order"), Order on Reconsideration, 15 FCC
Rcd 6023 (2000) ("Order on Reconsideration"); Truth-in-Billing and Billing Format, Second Report and Order,
Declaratory Ruling, and Second Further Notice of Proposed Rulemaking, CC Docket No. 98-170, 20 FCC Rcd 6448
(continued . . .)
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additional safeguards are necessary to enable consumers to protect themselves from cramming.
Therefore, we propose rules that would require wireline carriers to: (1) notify subscribers clearly and
conspicuously, at the point of sale, on each bill, and on their websites, of the option to block third-party
charges from their telephone bills, if the carrier offers that option; and (2) place charges from non-carrier
third-parties in a bill section separate from carrier charges. In addition, we propose rules that would
require both wireline and Commercial Mobile Radio Service ("CMRS") carriers to include on all
telephone bills and on their websites the Commission's contact information for the submission of
complaints.10 We also seek comment on other proposals suggested in the record, including blocking all
third-party charges.
4. In the past, cramming has been a problem associated primarily with wireline telephone bills.
More recent evidence, however, raises a similar concern with unauthorized charges on CMRS bills, such
as those of providers of wireless voice service.11 Therefore, we seek comment on whether we should
extend any of the other proposed protections discussed herein to consumers of CMRS.
5. We believe that our proposals will offer clarity to consumers and carriers regarding the
Commission's commitment to protecting consumers from cramming. By proposing these measures, we
hope to empower consumers to prevent, detect, and resolve issues relating to the long-standing consumer
problem of cramming.

II. BACKGROUND

A.

How Cramming Occurs

6. The United States Senate Committee on Commerce, Science, and Transportation, which is
investigating wireline cramming issues, describes cramming as follows:
Many U.S. telephone companies allow vendors to place third-party
charges on their customers' [wire]line telephone bills. Once a vendor
obtains a telephone company's approval to place third-party charges on





(continued from previous page)
(2005) ("Second Truth-in-Billing Order") vacated in part sub nom. Nat'l Ass'n of State Util. Consumer Advocates v.
FCC
, 457 F.3d 1238 (11th Cir. 2006) (invalidating preemption of certain state requirements for CMRS bills).
10 We emphasize that nothing on which we seek comment herein inhibits the ability of the Commission to act upon
complaints relating to unauthorized charges pursuant to its existing authority under Section 201 while this
proceeding is pending. Rather, the proposals set forth herein are intended to explore additional safeguards designed
to inform consumers about cramming and allow them to protect themselves from the practice.
11 Approximately 16 percent of cramming complaints received by the Commission from 2008-2010 relate to
wireless service. See generally FCC Quarterly Reports on Informal Consumer Inquiries and Complaints. The
cramming complaint numbers were determined by Commission staff from the set of complaint data used to produce
these reports. According to complaint data from the FTC, approximately ten percent of cramming complaints
received in 2010 concerned wireless phone bills. See Consumer Sentinel Network Data Book for January-December
2010, Appendix B3: Consumer Sentinel Network Complaint Category Details, at 80:
http://ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2010.pdf; see also July 19, 2010 announcement by
the Attorney General of Florida of a $600,000 settlement with T-Mobile concerning unauthorized billing for third-
party charges on consumers' cell phone bill including charges for "free" ringtones and other unauthorized cell phone
content and third party mobile content subscription services:
http://myfloridalegal.com/__852562220065EE67.nsf/0/436AA6C513FB479D8525776500636836?Open&Highlight
=0,t,mobile,%24600,000. The Florida AG's office has reached similar settlements with AT&T and Verizon
Wireless.
4

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FCC 11-106

its telephone bills, a consumer's telephone number works like a credit
card or debit card account number for that vendor. An approved vendor
can accept a consumer's telephone number as a means of payment and
can place a charge for a product or service on the consumer's telephone
bill. Cramming occurs when the third-party charge placed on a
consumer's telephone bill is unauthorized.12
7. Information about the practice of cramming obtained during recent investigations by the
Commission's Enforcement Bureau is somewhat more detailed. Cramming generally involves at least
three parties the customer, the carrier that generates the bill, and the crammer and usually also
involves a billing aggregator.
8. In a typical cramming case, the cramming company and billing aggregator need only an active
telephone number for the targeted consumer, which can be obtained from a telephone directory, to place
unauthorized charges on the consumer's telephone bill. Pursuant to a contract between them, the billing
aggregator supplies the carrier with the consumer's telephone number and the amount to be charged, and
requests that the charge be placed on the consumer's telephone bill. The billing aggregator generally does
not need the consumer's name or address for the cram to take place. Proof of consumer authorization is
not generally provided to or required by the carrier. The carrier may not require the aggregator to clearly
identify the good, product, or service for which the consumer is being charged. The process works
similarly if the vendor contracts directly with the carrier rather than using an intermediary billing
aggregator.
9. If the consumer pays the crammed charge, the carrier remits the payment to the aggregator or to
the vendor, depending upon whether an aggregator is involved. In addition, the vendor compensates the
billing aggregator and the carrier for their services. The carrier is compensated by the vendor or the
billing aggregator for the billing-and-collection service it has provided. The billing aggregator is
compensated by the vendor to manage transactions with the carrier.13 The carrier also may receive
additional compensation from the billing aggregator or vendor for each consumer complaint or inquiry it
handles regarding the crammed charge. Similarly, the billing aggregator may be compensated by the
vendor for handling interactions with the consumer regarding the crammed charge.

B.

Voluntary Industry Practices

10. In 1998, the Commission undertook an initiative, in conjunction with the nation's local exchange
carriers ("LECs") and providers of billing-and-collection service, to address the problem of unauthorized
charges on consumer telephone bills. The industry responded to the Commission's request with a
voluntary code of "best practices" designed to prevent such charges.14 According to these best practices:
(1) bills should be comprehensible, complete, and include information the consumer may need to discuss
and, if necessary, dispute billed charges with the carrier; (2) consumers should be provided with options


12 See http://commerce.senate.gov/public/index.cfm?p=PressReleases&ContentRecord_id=991b1bfc-f160-48b6-
883c-c38e2079ff9c&ContentType_id=77eb43da-aa94-497d-a73f-5c951ff72372&Group_id=4b968841-f3e8-49da-
a529-7b18e32fd69d&MonthDisplay=3&YearDisplay=2011.
13 See June 2011 NALs supra note 8; see also FTC v. Inc21.com, 745 F. Supp. 2d at 994-995 (describing cramming
similarly).
14 See Anti-Cramming Best Practices Guidelines,
http://www.fcc.gov/Bureaus/Common_Carrier/Other/cramming/cramming.html ("Best Practices Guidelines").
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to control whether a third party may include charges for its products and services in their telephone bills;
(3) consumer authorization of services ordered should be appropriately verified; (4) the LECs should
screen products, services, and third-party service providers prior to allowing their charges on the
telephone bills; (5) clearinghouses that aggregate billing for third-party providers and submit that billing
to LECs should ensure that only charges that have been authorized by the customer would be included;
(6) the LECs should continue to educate consumers as to their rights and the process for resolution of
disputes; and (7) each LEC should provide appropriate law enforcement and regulatory agencies, as well
as other LECs, with various categories of data to assist in controlling carrier inclusion of unauthorized
charges on a subscriber's bill.15

C.

Truth-in-Billing

11. In 1999, the Commission released the First Truth-in-Billing Order to address concerns over
growing consumer confusion related to billing for telecommunications services and an increase in the
number of entities willing to take advantage of this confusion through practices such as "slamming" and
cramming.16 The Commission concluded that Truth-in-Billing requirements were necessary to deter
carriers from engaging in unjust and unreasonable practices, including cramming, in violation of Section
201(b) of the Act.17 Citing as its authority Sections 201(b) and 258(a) of the Act,18 the Commission chose
to adopt a flexible approach by adopting "broad, binding principles" to promote truth-in-billing, rather
than mandating more detailed rules to govern the details or format of carrier billing practices.19
12. In general, those Truth-in-Billing principles, which are codified at section 64.2401 of the
Commission's rules,20 require that customer bills: (1) be clearly organized, clearly identify the service
provider, and highlight any new provider (i.e., one that did not bill the customer for service during the last
billing cycle); (2) contain full and non-misleading descriptions of the charges that appear therein; and (3)
contain clear and conspicuous disclosure of any information that the consumer may need to make
inquiries about, or to contest charges on the bill.21
13. In the 2005 Second Truth-in-Billing Order, the Commission reiterated and emphasized the
prohibition against misleading information on telephone bills and provided examples of improper line-


15 Statement of William Kennard, Chairman, Federal Communications Commission on the Release of Local
Exchange Company Best Practices to Combat "Cramming," 1998 WL 406058 (Jul. 22, 1998); see also Best
Practices Guidelines.
16 See First Truth-in-Billing Order, 14 FCC Rcd at 7494, para. 3 ("Slamming" is the unlawful practice of changing a
subscriber's selection of a provider of telephone service without that subscriber's knowledge or permission.). See
also
47 U.S.C. 258 ("Illegal changes in subscriber carrier selections").
17 See First Truth-in-Billing Order, 14 FCC Rcd at 7506, para. 24.
18 Section 201(b) requires that common carriers' "practices ... for and in connection with ... communications
service, shall be just and reasonable, and any such ... practice ... that is unjust or unreasonable is hereby declared to
be unlawful ...." 47 U.S.C. 201(b). Section 258(a) makes it unlawful for any telecommunications carrier to
"submit or execute a change in a subscriber's selection of a provider of telephone exchange service or telephone toll
service except in accordance with such verification procedures as the Commission shall prescribe." 47 U.S.C.
258(a).
19 See First Truth-in-Billing Order, 14 FCC Rcd at 7498, para. 9.
20 See 47 C.F.R. 64.2401.
21 See First Truth-in-Billing Order, 14 FCC Rcd at 7496, para 5; see also 47 C.F.R. 64.2401.
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item charges and descriptions.22 It also extended the requirements concerning charge descriptions to
CMRS carriers.23

D. Consumer Information and Disclosure Notice of Inquiry

14. On August 27, 2009, the Commission adopted the Consumer Information NOI to explore other
possible ways to protect consumers and empower them to determine their best choices among the array of
options available to them in the rapidly evolving marketplace for communications services and plans.24
In relevant part, the Consumer Information NOI noted that consumers continued to file complaints about
the inclusion of unauthorized charges on their bills,25 and questioned whether the Truth-in-Billing rules
have been effective in making telephone bills easier to understand.26 To better understand the nature and
magnitude of the problem, the Commission sought comment on the extent to which cramming remains a
problem for consumers and why.27
15. In response to the Consumer Information NOI, several state and federal regulatory and law
enforcement entities, as well as consumer organizations, filed comments stating that unauthorized charges
continue to be a substantial problem for consumers.28 For example, the FTC stated that it receives
numerous complaints relating to unauthorized charges on telephone bills.29 These commenters noted that
consumers often have difficulty detecting unauthorized charges on their bills. One reason for these
difficulties cited was that third parties often impose low dollar amounts for their crammed services in an
attempt to evade detection by consumers.30 Another was the lack of consumer awareness that third parties


22 See Second Truth-in-Billing Order, 20 FCC Rcd. at 6460-6462, paras. 25-29. For example, the Commission
indicated it is misleading to represent discretionary line item charges in any manner that suggests such line items are
taxes or charges required by the government. Id. The Commission also eliminated the prior exemption for CMRS
carriers from the requirement that billing descriptions be brief, clear, non-misleading and in plain language. Id. at
6456, para. 16.
23 See id. at 6456-6458, paras. 16 20.
24 See Consumer Information and Disclosure, Truth-in-Billing and Billing Format, IP-Enabled Services, Notice of
Inquiry, 24 FCC Rcd. 11380 (2009) ("Consumer Information NOI").
25 See id. at 11393, para. 41.
26 See id. at 11392, para. 36.
27 See id. at 11393-94, para. 41.
28 See, e.g., CPUC Comments at 2-5; CUB Comments at 5 (observed a dramatic increase in the amount of cramming
in recent years); Minn. AG Comments at 1-2 (cramming is a substantial problem for consumers in Minnesota);
NASUCA Comments at 42-56 (cramming remains a serious problem); 25 State AGs Joint Comments at 9-10
(cramming remains a problem); UCAN Comments at 2, 9-11 (cramming continues to be a problem); FTC Reply
Comments at 9 (cramming is a significant area of increasing consumer complaint).
29 See FTC Reply Comments at 9. The FTC, which has limited jurisdiction over telecommunications carriers, has
primarily targeted third-party vendors that charge for services that are not common carrier services, as well as billing
aggregators, in actions to address cramming. See id. at 10; 15 USC 45(a)(2) (limiting the FTC's jurisdiction to
prohibit unfair practices by excluding those involving "common carriers subject to the Acts to regulate
commerce....") .
30 See, e.g., 25 State AGs Joint Comments at 9.
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can even use telephone bills as a mechanism to bill for their products or services.31
16. These commenters have suggested a number of measures to address cramming. These include:
(1) requiring the telecommunications carrier to offer customers the option to block third-party billing;32
(2) requiring carriers to undertake due diligence measures to screen each third-party service provider as
well as the billing aggregator, if any, before permitting a third-party charge to be placed on the carrier's
telephone bill;33 (3) enhancing cooperation among law enforcement entities including sharing of
complaints among state and federal regulators;34 (4) clarifying that consumers may find unauthorized
charges not only on their LEC bills but also on bills for CMRS and Voice over Internet Protocol ("VoIP")
service;35 and (5) requiring that third-party billers be identified and provide their contact information on
the telephone bill.36
17. By contrast, industry commenters contend that no regulatory mandates are necessary to address
cramming.37 They argue that all carriers have incentives to protect subscribers from unauthorized charges
and take adequate measures to do so.38 These alleged safeguards include complying with all federal and
state laws, taking corrective measures against third-party billers that exceed specified complaint levels,
pre-screening and monitoring service providers, offering blocking options, and expeditiously resolving
complaints relating to disputed charges.39
18. As a follow-up to the comments received in response to the Consumer Information NOI, during
the first quarter of 2011, Commission staff met with numerous telecommunications service providers and
consumer advocacy groups to discuss the various issues consumers face, including the practice of
cramming.40


31 See, e.g., Minn. AG Comments at 6-7; 25 State AGs Joint NOI Comments at 9.
32 See, e.g., CPUC Comments at 4-5; CUB Comments at 5; Minn. AG NOI Comments at 6-7; 25 State AGs Joint
Comments at 10; UCAN Comments at 9; FTC Reply Comments at 15.
33 See, e.g., UCAN Comments at 9; FTC NOI Reply Comments at 12. Although some third-party vendors submit
charges directly to telephone companies for placement on the telephone bill, many contract with a billing
aggregator. The billing aggregator supplies information to the telephone companies about the vendor's business,
submits the third-party charges to the telephone company, and often fields any complaints and inquiries from
consumers.
34 See FTC Reply Comments at 12.
35 See NASUCA Comments at 42.
36 See, e.g., Billing Concepts Comments at 4 (recommends inclusion of a toll free number for the service provider);
CPUC Comments at 5 (in favor of inclusion of the identity and contact information for the actual third party service
provider); FTC Reply Comments at 13 (seeks inclusion of the contact information for whichever party is best able to
resolve any disputes relating to the charge).
37 See, e.g., Qwest Comments at 32-34; Verizon Comments at 54.
38 See, e.g., Verizon Comments at 48; Qwest Reply Comments at iii, 10.
39 See, e.g., AT&T Comments at 16; Sprint Comments at 20-22; Verizon Comments at 42-48; Qwest Reply
Comments at 9-14.
40 See, e.g., Letter from Olivia Wein, Staff Attorney, National Consumer Law Center, to Marlene Dortch, Secretary,
FCC (February 3, 2011) (CG Docket No. 09-158, CC Docket No. 98-170, WC Docket No. 04-36) ("NCLC Letter");
(continued . . .)
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III. EVIDENCE OF A CRAMMING PROBLEM

A.

Federal and State Agencies

1.

Commission Inquiries and Complaints

19. The Commission tracks and reports both inquiries and informal complaints that consumers file
with it. During 2008 to 2010, the Commission received between 2,000 and 3,000 cramming complaints
each year.41 As noted above, cramming consistently ranks among the top billing-related complaints
received by the Commission involving wireline telephone service.42 Of the cramming complaints
received from 2008 to 2010, 82 percent related to wireline consumers and 16 percent to wireless
consumers.43 Because the record in this proceeding suggests that consumers are often unaware such
charges can even be placed on their bills, that efforts are made by third parties to avoid drawing attention
to unauthorized charges, and that consumers are often unaware of how to file complaints disputing such
charges, the number of cramming complaints likely substantially understates the actual extent of this
problem.44
20. We note that, as a result of one recent Commission investigation regarding a seemingly erroneous
usage charge, Verizon Wireless performed an internal review and concluded that approximately 15
million of its customers were, or may have been, erroneously billed data charges of $1.99 per megabyte
("MB") dating back to November 2007 and continuing for a period of years. The Commission and
Verizon Wireless resolved the matter by entering into a Consent Decree requiring Verizon Wireless to
issue refunds to its affected customers totaling approximately $52.8 million, make a $25 million
voluntary payment to the U.S. Treasury, and implement a compliance plan, with periodic reports to the
Commission, designed to eliminate cramming.45





(continued from previous page)
Letter from John Breyault, Vice President of Public Policy, Telecommunications and Fraud, National Consumers
League, to Marlene Dortch, Secretary, FCC (February 4, 2011) (CG Docket No. 09-158) ("NCL Letter"); Letter
from Breck Blalock, Director, Government Affairs, Sprint Nextel, to Marlene H. Dortch, Secretary, FCC (February
9, 2011) (CG Docket No. 09-158, GC Docket No. 10-207) ("Sprint Feb. 9 Letter"); Letter from Chris Riley, Policy
Counsel, Free Press, to Marlene H. Dortch, Secretary, FCC (February 9, 2011) (Docket Nos. 10-207, 09-158, 98-
170, 04-36) ("Free Press Letter"); Letter from Matthew F. Wood, Media Access Project ,to Marlene Dortch, FCC
(Feb. 11, 2010) [sic] (CG Docket No. 10-207) ("MAP Letter").
41 See generally FCC Quarterly Reports on Informal Consumer Inquiries and Complaints (2008-2010). The
cramming complaint numbers were determined by Commission staff from the set of complaint data used to produce
these reports. During the years of 2008, 2009 and 2010, the Commission received 2,157; 3,181; and 2,516 annual
cramming-related complaints, respectively.
42 Id.
43 Id. The remaining two percent of complaints reflect those that do not make clear whether the carrier at issue is
wireline or wireless.
44 See, e.g., Minn. AG Comments at 4-7; 25 State AGs Joint Comments at 9; see also FTC v. Inc21.com, 745 F.
Supp. 2d 975 (Court relied upon a survey of defendant crammer's customers showing that less than 5% of them
were aware that the crammed charges were on their bills); see also FCC complaints 10-C00196562-1("charges
appear ...as a line item that is not obvious unless a customer scrolls for such detail"); 10-C00203445-1 ("[t]hese are
very small charges which can be easily overlooked"); 10-C00210315-1 (charges included in a bill for two years
before subscriber noticed and complained); 10-CO0185133-1 (subscriber did not realize charge was from a third
party because it appeared to be a valid "voice mail" charge).
45 See Verizon Wireless Data Usage Charges (Consent Decree), 25 FCC Rcd. 15105 (Enf. Bur. 2010).
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21. As noted above, on June 16, 2011, the Commission released four Notices of Apparent Liability
for Forfeiture ("NALs"), proposing an aggregate of $11.7 million in forfeitures against a number of long
distance resellers for apparent cramming violations. The actions came in response to consumer complaints
to the Commission, in which the complaining parties stated that they did not sign up for the service in
question, had no contact with the reseller prior to being billed for the service, and never used the service.
In each case, the reseller billed for its services using a billing aggregator, which provided the consumer's
telephone number to the local telephone company, which then placed the charges on the consumer's
telephone bill. The unauthorized charges appeared on thousands of telephone bills. In each NAL, the
Commission concluded that the reseller apparently operated a constructively fraudulent enterprise, in
which it billed consumers for services that they never ordered or authorized.46
2.

Trade Commission

22. The FTC has been pursuing litigation against crammers. In one case, a survey relied upon by the
court in granting the FTC's motion for summary judgment and denying the defendants' cross motion
showed that only five percent of the "customers" of the defendant affiliated group of companies knew that
the defendants' charges were on their telephone bills.47
23. In response to the 2009 Consumer Information NOI, the FTC filed Comments confirming that
cramming is a significant area of increasing consumer complaints.48 At that time, the FTC stated that it
had received more than 3,000 consumer complaints relating to unauthorized charges on telephone bills in
the previous 12 months.49 The FTC reported receiving over 7,000 complaints in 2010 relating to
unauthorized charges on telephone bills.50 It commented that placing unauthorized charges on telephone
bills harms consumers because they are likely to pay them, simply because they appear on their bills.51
The FTC also noted that, even if the individual consumer incurs only a small dollar amount in
unauthorized charges, the aggregate cost to all consumers can be substantial.52 The FTC cited one case,
FTC v. Nationwide Connections, Inc., in which a company had used a billing aggregator to place more
than $30 million of fabricated collect call charges on the phone bills of millions of consumers.53 The FTC
recently hosted a forum at which numerous state and federal officials and representatives of consumer
groups highlighted the serious and ongoing nature of this problem for consumers.54


46 See June 2011 NALs supra note 8.
47 FTC v. Inc21.com, 745 F. Supp. 2d at 996.
48 FTC Reply Comments at 9.
49 Id.
50 See Consumer Sentinel Network Data Book for January-December 2010, Appendix B3: Consumer Sentinel
Network Complaint Category Details, at 80, Federal Trade Commission, March 2011.
http://ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2010.pdf.
51 As noted above, increasing numbers of consumers use automatic payment or debit mechanisms and may pay
before noticing any unauthorized charges.
52 FTC Reply Comments at 9-10.
53 Id. at 11 (citing FTC v. Nationwide Connections, Inc., No. 06-80180).
54 See http://www.ftc.gov/opa/2011/05/cramming_info.shtm (forum held on May 11, 2011).
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24. The FTC treats cramming as both "deceptive" and "unfair" conduct under the FTC Act.55 It
reported that courts have upheld its determination that unauthorized billing constitutes an unfair act or
practice on a number of occasions.56 The FTC has primarily targeted third-party vendors that are not
common carriers, and billing aggregators that coordinate such third-party charges, in enforcement actions
to stop cramming.57 It has pursued a number of such actions, and has suggested that additional safeguards
addressing the role of common carriers, which are subject to the Commission's jurisdiction, are necessary
to protect consumers.58
3.

State Government Complaints

25. Although the Consumer Information NOI did not specifically seek cramming complaint data from
state and local governments, several such entities, as well as consumer groups, noted in their comments
and ex parte filings that, in recent years, they each have received a growing number of cramming
complaints from consumers. As discussed below, additional actions taken by some state governments
since the NOI was released show that the states are continuing to address cramming as a significant
problem.
26. Twenty-Five State Attorneys General. In their Joint Comments, 25 State Attorneys General
stressed the extent and seriousness of the cramming problem.59 They noted that, "despite both the success
of state-federal regulatory cooperation in fighting cramming and Attorney General lawsuits against
crammers for violations of consumer protection laws, cramming remains a problem. The profitability of
cramming and the ease with which crammers can submit unauthorized charges continues to make it an
attractive business model, and complaints are once again on the rise."60
27. National Association of State Utility Consumer Advocates. NASUCA reported "a steady stream
of complaints of frauds and abuses as well as negligent practices, all resulting in unauthorized charges for
such telephone services as long distance calls, directory assistance, 800 calls, 900 calls, calling card calls
and repair services... voice mail services...[and] internet services of various types, including web hosting
or web page services, e-mail services, and online yellow page services."61
28. California. Under its rules, the California Public Utilities Commission ("CPUC") requires
reports of cramming complaints from wireline carriers and billing aggregators.62 Wireline carriers and


55 15 U.S.C. 45(a).
56 See FTC Reply Comments at 10.
57 See, e.g., FTC v. Inc21.com, 745 F.Supp.2d 975 (judgment for over $37,970,000 in unauthorized charges); FTC v.
Nationwide Connections, Inc., Stipulated Final Judgment Against Willoughby Farr, Case No. 06-80180-CIV-
RYYSKAMP/VITUNAC (S.D. Fla. Feb. 13, 2008) (judgment for over $34,400,000 in unauthorized charges).
58 FTC Reply Comments at 9-15.
59 These include Attorneys General of Arizona, Arkansas, Connecticut, Delaware, Florida, Illinois, Iowa, Maine,
Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, Ohio, Oregon, Rhode
Island, Tennessee, Utah, Vermont, Washington, West Virginia, Wyoming, and American Samoa.
60 See 25 State Attorneys General Joint Comments at 9.
61 See NASUCA Comments at 44-45, 50, 52.
62 See Letter from Phillip Enis, Program Manager, California Public Utilities Commission, to Stephen Klitzman,
Deputy Chief, Office of Intergovernmental Affairs, Consumer & Governmental Affairs Bureau, FCC (April 5, 2011)
("CPUC Letter"). Prior to 2011, the CPUC did not receive wireless cramming complaint data from wireless carriers
(continued . . .)
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billing aggregators reported to the CPUC that, in 2009, they had received 132,398 cramming complaints
from consumers.63 They reported that they had received 120,554 cramming complaints from consumers
in 2010.64
29. In addition to tracking complaints received by carriers and aggregators, the CPUC tracks and
handles complaints that come to it directly. The CPUC reported that, in 2009, it received 2,420 cramming
complaints directly from consumers consisting of 2,298 complaints regarding wireline bills, 116
regarding wireless bills, and six complaints regarding VoIP bills.65 In 2010, the CPUC received 2,782
cramming complaints directly from consumers: 2,630 regarding wireline bills, 126 regarding wireless
bills, and 26 regarding VoIP bills.66
30. In another analysis, the CPUC separated cramming cases into two categories: those involving
unauthorized charges from the billing carrier itself and those involving charges from a third party. The
CPUC stated in its Comments that it had received 3,876 cramming complaints from November 1, 2008 to
October 5, 2009 and that 3,002 of these complaints concerned third-party billing.67 The CPUC also noted
that it had "successfully prosecuted twelve formal cramming cases under [California's] anti-cramming
statutes and rules, resulting in total fines of more than $60 million and total restitution of more than $13
million for California consumers."68
31. Illinois. The Office of the Attorney General in the State of Illinois reported an increase "in
cramming complaints every year from 2003 to 2008, with complaints remaining at an elevated level from
2008 to the present. These complaints primarily involved wireline subscribers, but the Office has noticed
cramming on wireless telephone bills as well in recent years."69 The State of Illinois also has filed 30





(continued from previous page)
and their billing aggregators, Beginning in January 2011, however, the CPUC required wireless carriers to submit as
a proxy for complaints quarterly reports to the CPUC of the total number and amount of wireless refunds they issued
to California consumers, including those for cramming. For just a three month period of Jan. 1, 2011-March 31,
2011, about half of wireless carriers and third party billing aggregators required to report informed the CPUC they
had issued 724,491 refunds to California consumers totaling $7,148,692. See Letter from Jeannette Lo, Program
Manager, Utilities Enforcement Branch, California Public Utilities Commission, to Stephen Klitzman, Deputy
Chief, Office of Intergovernmental Affairs, Consumer & Governmental Affairs Bureau, FCC (June 8, 2011).
63 See CPUC Letter.
64 Id.
65 Id.
66 Id. According to the CPUC, there are several reasons for the discrepancies between the number of cramming
complaints the CPUC received directly from consumers and the much larger number of cramming complaints
reported to the CPUC by wireline carriers and billing aggregators. These include: (1) a CPUC requirement that
directs consumers to complain first to the carrier before filing a complaint with the CPUC; (2) a liberal refund policy
of many carriers which obviates the need for consumers to complain to the CPUC; (3) consumers may be more
familiar with the carriers than with the CPUC complaint process. See CPUC Letter (citing Final Decision Adopting
California Telephone Corporation Billing Rules
, Decision (D.) 10-10-034, adopted Oct. 28, 2010 at 40).
67 See CPUC Comments at 4.
68 Id. at 2-3.
69 Letter from Lisa Madigan, Illinois Attorney General, Elizabeth Blackston, Chief, Consumer Fraud Bureau,
Southern Region, and Philip Heimlich, Assistant Attorney General, Consumer Fraud Bureau, to Stephen Klitzman,
Deputy Chief, Office of Intergovernmental Affairs, Consumer & Governmental Affairs Bureau, FCC (May 20,
(continued . . .)
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cramming-related lawsuits since 199670 "alleging that the defendants had billed Illinois consumers for
products and services that the consumers did not request or agree to purchase."71 For example, in
September 2010, the Illinois Attorney General sued a company alleging that the company had crammed
unauthorized charges onto thousands of Illinois residents' telephone bills for "identity protection
assistance."72 The Attorney General also has described in detail the "deceptive" solicitations cramming
entities direct at telephone consumers.73
32. Minnesota. In its Comments, the Minnesota Office of the Attorney General stated that "cramming
is a substantial problem for consumers in Minnesota," largely on wireline bills but also on wireless bills.74
In December 2010, for example, the Federal Bureau of Investigation conducted a raid on an alleged





(continued from previous page)
2011) ("Madigan Letter"). According to the Consumer Fraud Bureau of the Illinois Attorney General's Office,
Illinois has "vigorously pursued enforcement actions against entities we allege have engaged in phone bill
cramming. While we have had success prosecuting individual entities, a comprehensive regulatory solution would
be helpful in ending this practice once and for all." Id.
70 See 25 State Attorneys General Joint NOI Comments at 9.
71 Madigan Letter.
72 See "Attorney General Madigan Sues Company for Fake Charges on Illinois Phone Bills," Press Release,
September 2, 2010, http://www.illinoisattorneygeneral.gov/pressroom/2010_09/20100902.html. On January 5,
2011, the court entered a Final Consent Decree under which the court enjoined the defendant from doing business in
Illinois for five years, ordered the defendant to cancel all current contracts with Illinois consumers and grant refunds
to all consumers requesting them, and make a payment to the state of Illinois. See People of the State of Illinois v.
ID Lifeguards, Inc,
Final Consent Decree entered in the State of Illinois Circuit Court of the Seventh Judicial
Circuit, Sangamon County, Ill. (January 5, 2011).
73 "In our experience gained throughout the course of dozens of law enforcement investigations, the solicitations
directed at consumers are deceptive. Material facts, such as the fact that the consumer is being asked to make a
purchasing decision, and that he will be billed on his telephone bill, often are not disclosed clearly and
conspicuously if at all. In some cases, telemarketing scripts lead consumers to believe they are agreeing to receive
written information or a free trial and decide later whether to accept the offer. In reality, their silence will be
construed as acceptance of the offer, and they will be billed on their telephone bills unless they take affirmative
action to cancel the order. In other cases, consumers are duped into providing their information to claim a prize they
allegedly won, or to obtain free recipes or coupons. This process, called co-registration, also is construed as
authority to bill them on their telephone bills for products and services, but complaining consumers have no
knowledge of such authorization." Madigan Letter.
74 See Minn. AG Comments at 1. In its Comments on the NOI, the Minnesota Attorney General's Office presented a
detailed description of the nature and practices of both wireline and wireless crammers. With regard to wireline
cramming, the Office noted that complaints identified the billing agent as the sole culprit or a co-culprit responsible
for the unauthorized charge in almost two-thirds of the complaints. "When nearly two-thirds of cramming victims
are unsure of the company responsible for third-party charges appearing in their telephone bill, this overwhelmingly
indicates that more concrete standards are needed governing the formatting of telephone bills including a rule
remedying the current practice of prominently listing the billing agent at the top of a bill instead of the actual service
provider." "Moreover, consumer confusion in identifying the actual third-party service provider responsible for the
unauthorized charge frequently results in the consumer naming the wrong company in any complaint filed with the
relevant governmental enforcement agency. This misidentification, in turn, allows the actual crammer to escape
detection for a longer period of time, and makes it more difficult for regulatory agencies to track the source of
cramming complaints and focus their enforcement efforts accordingly." Id. at 2.
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cramming entity's operations in Forest Lake, Minnesota.75 The Minnesota Attorney General's Office
concluded its Comments by noting that "the current protections against cramming, while a good first step,
are failing to stem the problem. Accordingly, it encouraged the Commission to enact additional measures
to combat cramming."76
33. Vermont. In 2010, the Vermont Attorney General's Office commenced an investigation of a
billing aggregator and cramming complaints involving wireline phone bills. As a result of this
investigation, the Vermont AG concluded that these "complaints appeared to be the very tip of the
iceberg" and "that large numbers of consumers who have been charged on their phone bills are not aware
of the charges, and that many third-party sellers who bill this way may be engaging in deceptive
soliciting."77 This investigation prompted the Vermont State Legislature in May 2011 to enact legislation
banning most third-party charges on wireline telephone bills with three very limited exceptions.78
34. Virginia. In its Comments, the Virginia State Corporation Commission noted that it continues to
receive cramming complaints and they are increasing in frequency.79 In 2010, the Virginia General
Assembly enacted legislation regarding unauthorized charges on wireline telephone bills that became
effective on July 1, 2010. The legislation provided "that a billing agent or service provider may not
charge for any products, goods or services without the customer's authorization. Further, a telephone
company may not enter into a billing agreement with a billing agent or service provider unless the billing
agent or service provider receives customer authorization prior to placing charges on the telephone bill."80

B.

Congressional Investigations and Inquiries

35. In December 2010, the Senate Commerce Committee launched an investigation into cramming
after preliminarily finding that a significant percentage of companies placing third-party charges on


75 See Minneapolis Star-Tribune, Dec. 16, 2010:
http://www.startribune.com/local/112011079.html?elr=KArksLckD8EQDUoaEyqyP4O:DWUiD3aPc:_Yyc:aUvck
D8EQDUZ and the FBI's homepage, Dec. 16, 2010, http://www.fbi.gov/news/pressrel/press-
releases/billing_121610.
76 See Minn. AG Comments at 2. In 2011 the Minnesota Attorney General's Office also filed a cramming lawsuit
entitled State of Minnesota, by its Attorney General, Lori Swanson vs. Cheap2Dial Telephone, LLC, 27-cv-11-457
(4th Jud. Dist.). The suit alleges that Cheap2Dial placed unauthorized charges for "dial around" long distance
service on Minnesota consumers' landline telephone bills.
77 See Letter from Sandra W. Everitt, Assistant Attorney General and Director, Consumer Assistance Program,
Office of the Attorney General, Public Protection Division, State of Vermont, to Stephen Klitzman, FCC (May 24,
2011).
78 Vermont's new anti-cramming legislation was signed into law as "Act 52" on May 27, 2011 as part of the 2011
Vermont jobs bill and became effective immediately. The statutory citation is 9 V.S.A. 2466 (as amended). The
text of the law can be found at http://www.leg.state.vt.us/docs/2012/bills/Passed/H-287.pdf, starting on page 105.
The three very limited exceptions to Vermont's outright prohibition of third-party billing are: "(A) billing for goods
or services marketed or sold by persons[e.g., telecommunications carriers or companies] subject to the jurisdiction
of the Vermont Public Service Board, (B) billing for direct-dial or dial-around services initiated from the consumer's
telephone, or (C) operator-assisted telephone calls, collect calls, or telephone services provided to facilitate
communication to or from correctional center inmates." See 9 V.S.A. 2466(f)(1)-(A)-(C).
79 See Virginia State Corporation Commission Comments at 4.
80 See Letter from Paulette Edmonds, Senior Telecommunications Specialist, Division of Communications,, Virginia
State Corporation Commission, to Stephen Klitzman, FCC (May 27, 2011).
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telephone bills had been the subject of cramming complaints.81 Prior to launching the investigation, in
June 2010, the Committee sent letters to three carriers, AT&T, Verizon, and Qwest, requesting
information about their awareness of cramming and the steps they had taken to address it.82 The
Committee, having learned that many of the services for which third-party vendors charge are not
legitimate, expanded its probe by sending letters on December 17, 2010 to three companies, daData, Inc.,
My Service and Support, and MORE International, that appeared to have relationships with multiple
companies that were the subject of cramming complaints.83 It also sent letters to five additional telephone
carriers on March 31, 2011,84 and stated that over 250 third-party billers that were the subject of
cramming complaints had received a grade of "D" or "F" from the Better Business Bureau.85 According
to Senator Jay Rockefeller, the Chairman of the Committee, "Cramming is a widespread problem. It is
likely harming millions of consumers. . . Telephone companies have allowed these unauthorized third-
party charges to be placed on their customers' telephone bills for far too long."86
36. The Commission has also received correspondence from various Members of Congress, whose
constituents either sought assistance or otherwise made their representatives aware of certain business
practices of telecommunications providers. The cramming complaints forwarded to the Commission
describe instances of unauthorized charges being placed on both wireline and CMRS carrier bills. The
issues raised in the complaints include the difficulty of getting charges removed or credited; the failure of
the telephone company to assist subscribers in resolving disputes;87 and the difficulty consumers face in
uncovering unauthorized charges from third-party vendors when reviewing dense and voluminous phone
bills.88


81 See http://commerce.senate.gov/public/index.cfm?p=PressReleases&ContentRecord_id=32ce91be-1841-4cd4-
8fc4-1f8388df7942&ContentType_id=77eb43da-aa94-497d-a73f-5c951ff72372&Group_id=4b968841-f3e8-49da-
a529-7b18e32fd69d&MonthDisplay=12&YearDisplay=2010.
82 See id.
83 See id.
84 See http://commerce.senate.gov/public/index.cfm?p=HearingsandPressReleases&ContentRecord_id=991b1bfc-
f160-48b6-883c-c38e2079ff9c&ContentType_id=77eb43da-aa94-497d-a73f-5c951ff72372&Group_id=165806cd-
d931-4605-aa86-7fafc5fd3536 (the additional letters were sent to CenturyLink, Windstream, Frontier
Communications, FairPoint Communications, and Cincinnati Bell).
85 See http://commerce.senate.gov/public/index.cfm?p=PressReleases&ContentRecord_id=991b1bfc-f160-48b6-
883c-c38e2079ff9c&ContentType_id=77eb43da-aa94-497d-a73f-5c951ff72372&Group_id=505cc3fa-a767-40f4-
8ac2-4b8326b44e94&MonthDisplay=3&YearDisplay=2011.
86 See http://commerce.senate.gov/public/index.cfm?p=HearingsandPressReleases&ContentRecord_id=991b1bfc-
f160-48b6-883c-c38e2079ff9c&ContentType_id=77eb43da-aa94-497d-a73f-5c951ff72372&Group_id=165806cd-
d931-4605-aa86-7fafc5fd3536 (quoting Senator Jay Rockefeller).
87 See, e.g., Rep. Dent on behalf of constituent; Sen. Roberts on behalf of constituent (carrier referred her to the
third-party vendor who referred her back to the carrier).
88 See, e.g., Rep. Israel on behalf of constituent (difficult to understand his bill; subscriber had been charged for one
year before he realized it); Sen. Leahy on behalf of constituent ("bills are confusing and dense"); Rep. Bishop on
behalf of constituent (her bill is 11 pages); Sen. Nelson on behalf of constituent (discovered charge buried in last
pages of bill after 18 months).
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IV. DISCUSSION

37. Despite the Commission's efforts and the voluntary industry practices described above, the
number of complaints received by the Commission involving cramming has remained high in recent
years.89 As noted, the FTC and various state agencies also receive numerous complaints in this area.90 As
also discussed above, there is also strong evidence that suggests that the number of complaints received
by government agencies is not indicative of the full extent of this problem because many unauthorized
charges are overlooked by consumers.91
38. The complaints received by the Commission and the record developed in response to the
Consumer Information NOI suggest that cramming appears to be an ongoing and persistent problem that
results in significant expenditures of money for American consumers each year. Investigations by the
Commission and the FTC confirm that even small unauthorized charges can result in tens of millions
dollars in total costs to consumers.92 Although those who file complaints with their carriers or a state or
federal regulator may eventually be refunded or credited for the unauthorized charges, many others who
failed to notice these difficult-to-detect charges will not be reimbursed and will continue to be billed and
pay the crammed charges. In some cases, this process can continue for an extended period of time. Even
those consumers who are eventually refunded or credited for the amount of unauthorized charges may be
subject to substantial expenditures of time and effort before resolving such charges on their bills.
39. For these reasons, we seek comment below on each of the rules that we propose to safeguard
wireline consumers and that we propose to protect both wireline and CMRS consumers. We further seek
comment below on whether certain additional protections should be put in place for the benefit of
wireline or CMRS consumers. We also seek comment on whether current industry practices or voluntary
industry guidelines can address any cramming issues successfully, and, if not, what additions or
modifications could make them an effective alternative to expanded Commission regulation.

A.

Measures to Assist Consumers in Preventing Cramming

1. Disclosure of Blocking of Third-Party Charges
40. We propose that wireline carriers that offer subscribers the option to block third-party charges
from their telephone bills must clearly and conspicuously notify subscribers of this option at the point of
sale, on each bill, and on their websites. While many carriers claim to offer this option, the record
indicates that they may inform consumers of this protection only after consumers dispute unauthorized


89 See supra note 41. The Commission continues to receive numerous complaints regarding the appearance of
unauthorized charges on both wireless and wireline telephone bills.
90 See, e.g., FTC Reply Comments at 9; Minn. AG NOI Comments at 1; Virginia SCC Comments at 4; 25 State AGs
Joint Comments at 9. See also supra paras. 22-34.
91 See 25 State AGs Joint Comments at 9; NASUCA Reply Comments at 20-21. In the FTC's judicial proceeding
against Inc21.com, a survey of consumers who were billed for the defendant crammers charges relied upon by the
court revealed that only five percent were aware that they had been billed the charges. See FTC v. Inc21.com, 745
F. Supp. 2d at 996.
92 See, e.g., FTC Halts Massive Cramming Operation That Illegally Billed Thousands
http://www.ftc.gov/opa/2010/03/inc21.shtm (rel. March 1, 2010); see also FCC Verizon Data Usage Charges
Consent Decree (a single $1.99 per MB charge over a period of years resulted in over $50 million in cumulative
charges imposed on consumers).
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charges on their bills.93 Further, despite carriers' representations that they offer a third-party charge
block, many consumer complaints reflect carrier refusals to initiate such a block.94 We believe that
requiring carriers that offer blocking to inform consumers of it at the point of sale, on each bill, and on
their websites would allow consumers to proactively prevent cramming before it occurs and remove any
confusion that may exist regarding the availability of this option.
41. The record reflects that many consumers are unaware that third-party charges can even be placed
on their telephone bills. As a result, educating consumers of the protections offered by blocking of third-
party charges is vital to ensure that consumers exercise their option to request such safeguards.
Therefore, we seek comment on whether wireline carriers should be required to clearly and conspicuously
explain to consumers that their bills may include charges from third-party providers when they provide
consumers with information on the blocking option at the point of sale, on each bill, and on the carrier's
website.
42. In the context of our Truth-in-Billing rules, "clear and conspicuous" is defined as "notice that
would be apparent to the reasonable consumer."95 We seek comment on the wording, placement, font
size, and other relevant factors, at the point of sale, on bills, and on websites, that would be necessary for
such notification to satisfy this requirement. We seek comment on whether the disclosure should include
identification of the specific kinds or categories of charges that would be blocked, and how those kinds or
categories of charges should be described, as well as whether and how the disclosure should advise
consumers of the charge, if any, for the blocking service. We also seek comment on the need to modify
such notifications to ensure that they are clear and conspicuous, and otherwise informative, to specific
population groups, such as people with disabilities, people with limited English proficiency, and those
living in Native Nations on Tribal lands, and in Native communities, such as Hawaiian Home Lands.96
What is the most effective manner to ensure that the availability of this option is made apparent to
consumers in a cost effective manner for carriers?
43. To the extent that third-party blocking is currently available to consumers upon request, we seek
comment on how current carrier practices could be improved other than by requiring the disclosure
discussed above. Are there additional reasons that consumers are not fully taking advantage of such
protections? For example, are customer service representatives adequately trained to ensure that
consumers understand the possibility that they may be billed for third-party charges and are made aware
of the blocking option? We note, for example, that some complaints indicate that customer service
representatives have erroneously informed consumers that they are prohibited from blocking third-party


93 See, e.g., Letter from Toni R. Acton, AT&T, to Marlene Dortch, FCC, (Feb. 28, 2011) (indicating that AT&T
provides third-party blocking to any customer that reports a cramming complaint or requests a block); Verizon
Comments at 48 (offer consumers the option to block third-party charges after a complaint is made); Qwest Reply
Comments at 11 (does not offer a consumer opt-out from third-party billed services).
94 See, e.g., FCC Complaints 10-C00186917-1 (AT&T customer service representative told a subscriber it had to
allow third-party charges); 10-C0188713-1 (Verizon customer service representative told subscriber there was
nothing Verizon could do); Rep. DeGette on behalf of constituent (Qwest told subscriber they must honor third-
party billing).
95 See 47 C.F.R. 64.2401(e).
96 The term "Native Nations" refers to federally recognized American Indian Tribes and Alaska Native Villages.
This means any American Indian Tribe or Alaska Native Village, Nation, Band, Pueblo, or Community which is
acknowledged by the federal government to have a government-to-government relationship with the United States
and is eligible for the programs and services established by the United States for Indians. We recognize the
importance of also including Native Hawaiian Home Lands in our Notice of Proposed Rulemaking.
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charges on their telephone bills.97 Should we impose an obligation on carriers to properly train their
customer service representatives to prevent the dissemination of such misinformation? We seek comment
on possible other effective improvements.
44. We also seek comment on whether wireline carriers that offer blocking should be prohibited from
charging an additional fee for doing so. The fact that many wireline carriers already offer blocking
options at no additional charge suggests that the cost of offering blocking options is not sufficiently high
to warrant additional charges beyond the monthly recurring charge for telephone service.

B.

Measures to Assist Consumers in Detecting Cramming

45. The Commission's Truth-in-Billing rules already require that, where charges for two or more
carriers appear on the same telephone bill, the charges must be listed by service provider.98 The
Commission adopted this requirement to "enhance consumers' ability to review individual charges
contained in their telephone bills and detect unwarranted charges or unauthorized changes in their service
arrangements."99 For similar reasons, we also propose that charges from third-party vendors that are not
carriers be placed in a section separate from charges assessed by carriers and their affiliates on wireline
telephone bills.
46. We also note that several commenters have supported requiring separate billing sections for
charges from third-party vendors.100 These commenters maintain that the lack of separation on telephone
bills between charges from the carrier generating the bill and from third-party vendors makes it even more
difficult for consumers to recognize that charges from third party-vendors are contained in the bill.101
These commenters ask that the Commission make clear that simply listing charges from a third-party
vendor as one of many line items is not sufficient separation.102 As already discussed, many crammed
charges appear to be for a communications-related service. We believe that requiring charges from third-
parties to be placed in a separate section will reduce the likelihood that consumers will be misled into
thinking that a charge from a third-party is a charge from their carrier for a service provided by their
carrier.
47. The Truth-in-Billing rules permit a carrier offering a bundle to treat the bundle as a single service
offering of the carrier, even though the bundle may contain services provided by others.103 We do not
propose or intend to change the manner in which charges for bundles may be billed under our rules. We
seek comment on whether our proposed rules change the manner in which charges for bundles may be
billed under our rules, and whether any change is necessary to protect consumers from cramming.


97 See FCC Complaints 10-C00186917-1; 10-C00263078-1; 10-C00188349-1 (AT&T customer service
representative told subscribers that FCC regulations require it to allow third-party billing); 10-C00187285-1 (Qwest
told subscriber that it was required to accept third-party billing by the FCC). In fact, no such requirement exists.
98 See 47 C.F.R. 64.2401(a)(2) (emphasis added).
99 See First Truth-in-Billing Order, 14 FCC Rcd at 7510, para. 28.
100 See, e.g., Billing Concepts Comments at 4; CPUC Comments at 2; Minn. AG Comments at 2-3.
101 See Minn. AG Comments at 2-3.
102 See id.; see also CPUC Comments at 2 (under California law, a billing telephone company must clearly identify,
and use a separate billing section for, each person, corporation, or billing agent that generates a charge).
103 See Order on Reconsideration, 15 FCC Rcd at 6027, para. 9.
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48. We seek comment on this proposed requirement and whether more specific requirements are
needed. For example, would it be useful to consumers to have charges from third-party vendors
separately listed or highlighted on the first page of the telephone bill or to have these charges highlighted
in some other fashion? We note that some consumers have complained to the Commission that third-
party charges appear at the end of a bill, and may even be listed after what appears to be the bill's final
page, making it easy for consumers to miss them.104 At the same time, the court in FTC v. Inc21.com
stated that having third-party charges included in the total amount due on a telephone bill without any
differentiation between carrier charges and third-party charges in that total was one reason why
consumers had difficulty detecting unauthorized charges assessed by the defendant group of affiliated
companies.105 Is there any need to require identification of the third-party vendor associated each charge
in a manner different from or in addition to the requirement in the Truth-in-Billing rules for clear-and-
conspicuous identification of the biller associated with each charge?106
49. We recognize that changes to existing billing formats may necessitate some cost and an
implementation period on behalf of carriers. Therefore, we seek comment on ways to minimize such
burdens, particularly on smaller carriers, and on the timeframe that carriers would require to modify their
existing billing systems to comply with this requirement.

C.

Disclosure of Commission Complaint Contact Information to Enhance the Ability of
Consumers to Resolve Cramming Disputes

50. In the Consumer Information NOI, we noted a recent GAO survey suggesting that many
consumers do not know that they can submit complaints to the Commission or understand how they can
do so.107 In particular, we sought comment on whether there are measures we might take to improve
consumer awareness of the complaint process, such as requiring service providers to include on their bills
information about how to contact the Commission to file a complaint.108 State and consumer groups
submitted responses suggesting that telephone bills should include contact information for filing informal
complaints with the Commission.109 A number of these commenters indicated that consumers are often
unaware that they may file a complaint or do not know how to file such complaints.110 Mandating the
inclusion of Commission contact information on telephone bills and carrier websites would provide
consumers with greater knowledge of and access to dispute resolution mechanisms while imposing
minimal costs on service providers. It also would enable the Commission to more effectively monitor and
track emerging problems affecting consumers as well as improve public awareness of the Commission's
complaint process.


104 See, e.g., Sen. Nelson on behalf of constituent (discovered charge buried in last pages of bill after 18 months);
Rep. Bishop on behalf of constituent (subscriber did not notice crammed charges because they were on an 11-page
bill); FCC complaint 10-C00189285-1 (third-party charge details on two pages attached to end of local telephone
company's bill).
105 FTC v. Inc21.com, 745 F.Supp.2d at 994-995, 1000-1001.
106 See 47 C.F.R. 64.2401(a)(1).
107 Consumer Information NOI, 24 FCC Rcd at 11397, para. 51.
108 See id.
109 See, e.g., DC PSC Comments at 7; NASUCA Comments at 9; UCAN Comments at 13.
110 See, e.g., Minn. AG Comments at 6; NASUCA Comments at 8-9.
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51. We therefore propose and seek comment on a requirement that each wireline telephone bill, as
well as the customer service section of each wireline carrier's website, also include a clear and
conspicuous statement indicating that consumer inquiries and complaints may be submitted to the
Commission.111 This statement should include the Commission's telephone number for complaints,
website address for filing complaints, and, if located on the provider's website, a direct link to the
Commission's webpage for filing complaints. To the extent that this requires modification to existing
telephone bills and websites, we seek comment on the costs involved and the timeframe that carriers
would need to make such modifications to comply with this requirement. The record suggests that the
inclusion of such contact information will assist consumers in addressing cramming, while enhancing
their ability to address other telecommunications-related issues by ensuring they have access to the
information necessary to submit complaints to the Commission.

D.

Wireless Service

52. Because of record evidence that CMRS consumers also have been the target of cramming, 112 we
propose that CMRS carriers should be subject to the requirement, discussed above, that telephone bills
and carriers' websites include a clear and conspicuous statement indicating that consumer inquiries and
complaints may be submitted to the Commission and provide the Commission's contact information for
the submission of complaints.113 We note that a recent survey by the GAO found that 34 percent of adult
wireless users do not know where they can complain about issues with wireless service,114 and that GAO
recommends that the Commission clearly inform consumers that they may complain to the Commission
about problems with wireless phone service.115 We seek comment on this proposal.
53. In addition, we seek comment on whether any of the other proposed rules for wireline carriers or
other requirements discussed in this NPRM116 should also be applied to CMRS carriers, whether they are
inapplicable or unnecessary in the CMRS context, and why. If the record supports applying the wireline
cramming rules to CMRS, how should the language of the rules in Appendix A be amended to apply them
to CMRS carriers? As noted above, the majority of the cramming complaints filed with the Commission
and the FTC relate to wireline, rather than wireless, service 82 percent of Commission cramming
complaints from 2008 to 2010,117 and 90 percent of FTC cramming complaints in 2010.118 We seek


111 Some states also require the inclusion on customer bills of the contact information of their state utilities
commissions. See Letter and Informal Survey from James Bradford Ramsay, NARUC, to Marlene H. Dortch, FCC
(April 8, 2011). In these states, carriers would be required to list both the state and FCC contact information.
112 See, e.g., supra para. 19.
113 See supra Sec. IV.C (this disclosure includes the telephone number, website address, and, if located on the
provider's website, a direct link to the Commission's webpage for filing complaints).
114 See FCC Needs to Improve Oversight of Wireless Phone Service, GAO Report 10-34 to Congressional
Requesters at 18 (Nov. 2009) ("many consumers that experience problems with their wireless phone service may not
know to contact FCC for assistance or may not know at all whom they could contact for help") (GAO Report):
http://www.gao.gov/new.items/d1034.pdf.
115 Id. at 40.
116 See infra Section IV.E.
117 See FCC Quarterly Reports on Informal Consumer Inquiries and Complaints.
118 See Consumer Sentinel Network Data Book for January-December 2010, Appendix B3: Consumer Sentinel
Network Complaint Category Details, at 80: http://ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-
(continued . . .)
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comment on the nature and magnitude of cramming issues for CMRS consumers. For example, to what
extent do CMRS consumers encounter unauthorized charges by third-party vendors as compared to
unauthorized charges by their carriers? Do such unauthorized charges occur more frequently with
particular types of wireless service plans or features? Does cramming affect CMRS consumers in
different ways than it affects wireline consumers? If so, how? Are there differences between wireless
and wireline billing platforms and industry practices that are relevant in assessing the propriety and
effectiveness of potential regulatory solutions? If so, what are those differences and what is their impact?
For example, to what extent are unauthorized charges from third-party vendors triggered by or from
within apps, games, or other software or features downloaded to a mobile phone, and must such
unauthorized charges be addressed differently? Further, we note that several states identified instances of
wireless cramming in response to the Consumer Information NOI,119 and that less than half of the states
regulate wireless service.120 We seek to update the record on states' experiences with this issue and
comments on how differences in state authority impact the necessity for federal oversight of CMRS
cramming.
54. We also seek comment on whether current industry practices or voluntary industry guidelines can
address any cramming issues successfully, and, if not, what additions or modifications could make them
an effective alternative to expanded Commission regulation.121 To what extent and how are industry





(continued from previous page)
cy2010.pdf. Concerns about unauthorized charges on wireless bills, however, may well increase as more and more
American consumers use their "smartphones" to pay their phone as well as many other bills. See, e.g.,
http://www.mastercard.us/google-
wallet.html?cmp=psc.wallet.ggle;http://www.ucan.org/telecommunications/wireless/phone_bill_cramming_phony_c
harges_rampant; http://www.heatherclancy.com/2011/02/would-you-pay-bills-with-your-mobile-phone.html.
119 See, e.g., Minn. AG Comments at 2; see also infra Sec. III.A.3.
120 See GAO Report at 28-29. A significant reason why reports of wireline cramming complaints greatly exceed
wireless cramming complaints, especially on the state level, is the fact that fewer than 20 states have asserted any
jurisdiction over the "terms and conditions" of wireless telephone service and fewer than 10 states are active with
regard to receiving and acting upon wireless telephone complaints. See National Association of Regulatory Utility
Commissioners, Resolution on "Communications Policy Statement" adopted by the NARUC Board of Directors,
July 23, 2008, http://www.naruc.org/Resolutions/CA%20Communications%20Policy.pdf (citing "State Regulatory
Authority Over Terms & Conditions for Wireless Services," a 2008 survey of all 50 state public service or utility
commissions plus those of the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands conducted by
the California Public Utilities Commission and the Public Service Commission of the District of Columbia.) The
cited survey found that 9 states with wireless regulatory authority do regulate through their state PSC/PUC:
California, Guam, Hawaii, Iowa, Kentucky, Louisiana, Mississippi, New Mexico and South Dakota; 9 state
PSCs/PUCs have regulatory authority but do not regulate: Alaska, Arizona, Connecticut, Illinois, Massachusetts,
New Jersey, Rhode Island, Utah and Vermont; and the remaining 35 state PSCs/PUCs have no regulatory authority
over the terms and conditions of wireless service. These states include Florida, Minnesota, and Virginia, which as
noted above, nonetheless receive, tabulate, and litigate both wireline and wireless cramming complaints usually
under other consumer protection and anti-fraud legislative authority through their Attorney General Offices. These
states also work to resolve cramming complaints through informal processes or through the "eligible
telecommunications carrier" ("ETC") designation process. See "FCC Needs to Improve Oversight of Wireless Phone
Service," GAO Report to Congressional Requesters, 10-34, at 29, 34 (November 2009) ("While fewer than half of
the [state PSC/PUC] commissions have wireless rules, most designate wireless carriers as eligible
telecommunications carriers (ETC) to receive universal service funds for serving high-cost areas;" they also "impose
consumer protection requirements on wireless carriers as a condition for ETC designation," including the processing
of wireless consumer billing complaints such as unauthorized charges).
121 For a discussion of current wireless industry practices, see for example, Transcript of Federal Trade Commission
(continued . . .)
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guidelines and practices evolving to address new issues, such as in-application marketing?122 We note
that CTIA's "Consumer Code for Wireless Service" and its recently announced "Checklist for Choosing
Your Service and Device" and "General Wireless FAQ" address a variety of issues related to informed
consumer choice and use of wireless services. With the exception of three questions in the FAQ that
consumers can ask on how they can block third-party charges from their bills, however, these guidelines
do not appear to address the specific practices that are the subject of the rules proposed above (i.e., notify
subscribers clearly and conspicuously, at the point of sale, on each bill, and on their websites, of the
option to block third-party charges from their telephone bills, if the carrier offers that option, separating
charges from carriers and from third-party vendors on bills, and listing contact information for the
Commission on telephone bills and carriers' websites).123 In addition, the Mobile Marketing
Association's "U.S. Consumer Best Practices" establish procedures for acquiring consumer consent to be
charged for additional services including through "opt-in" or "double opt-in" mechanisms in the
context of short codes for text messaging.124 We also note that several CMRS carriers have practices that
are consistent with some of the rules proposed above for example, offering consumers, without
additional charge, blocking of third-party charges125 though such practices do not appear uniform
throughout the industry. We also seek comment on whether such blocking options are clearly and
conspicuously disclosed to CMRS consumers.

E.

Additional Questions for Comment

1. Disclosure of Third-Party Vendor Contact Information
55. In the interest of ensuring that consumers are able to contest, in an expeditious manner,
unauthorized charges from third-party vendors, we seek comment on requiring the carrier generating the
telephone bill to clearly and conspicuously provide the contact information for each third-party vendor in
association with that entity's charges. We also seek comment on the specific contact information, such as
the name of the third-party vendor and its toll-free customer service telephone number, that should be
provided.
56. The record to date suggests that the current rule with respect to the disclosure of inquiry contacts





(continued from previous page)
Forum, Examining Phone Bill Cramming, May 11, 2011, available at
http://www.ftc.gov/bcp/workshops/cramming/10511phoneworkshop.pdf, at 126 - 136 (providing testimony of
Michael Altschul, Senior Vice President and General Counsel, CTIA The Wireless Association) ("FTC Forum
Transcript").
122 See, e.g., FTC Forum Transcript at 152-153 (description by Michael Altschul of CTIA's initiative for wireless
application developers).
123 See CTIA, Consumer Code for Wireless Service, http://files.ctia.org/pdf/ConsumerCode.pdf; CTIA, Checklist for
Choosing Your Service and Device, http://files.ctia.org/pdf/Checklist.pdf; CTIA, General Wireless FAQ,
http://files.ctia.org/pdf/WirelessFAQ.pdf.
124 See Mobile Marketing Association, U.S. Consumer Best Practices, Version 6.1,
http://mmaglobal.com/Consumer_Best%20Practices_6.1%20Update-02May2011FINAL_MMA.pdf.
125 See, e.g., Letter from Scott R. Freiermuth, Counsel, Government Affairs, Sprint Nextel Corporation, to Marlene
H. Dortch, Secretary, FCC (April 29, 2011) at 4; Letter from Ann D. Berkowitz, Director, Federal Regulatory
Affairs, Verizon, to Marlene H. Dortch, Secretary, FCC (April 18, 2011) at 2; Letter from Grant B. Spellmeyer,
Senior Director, Legislative and Regulatory Affairs, U.S. Cellular Corporation, to Marlene H. Dortch, Secretary,
FCC (April 15, 2011) at 1.
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on telephone bills has not been sufficiently helpful with respect to charges from third-party vendors.126
Specifically, the Commission's Truth-in-Billing rules require that bills must contain "any information that
the subscriber may need to make inquiries about, or contest charges on the bill."127 To accomplish this,
carriers may, but are not required to, include a toll-free number for a "billing agent, clearinghouse, or
other third party, provided such party possesses sufficient information to answer questions concerning the
subscriber's account and is fully authorized to resolve the consumer's complaints on the carrier's
behalf."128 In imposing this requirement, the Commission observed that providing such information "will
enable customers to avoid feeling that they are `getting the run around'"129 and is "an essential lynchpin to
consumers' exercise of the rights we seek to protect...."130
57. The record indicates, however, that many consumers remain confused about whom to contact in
order to resolve issues with charges from third-party vendors or have difficulty in resolving such charges
through the general contact number for their carrier listed on their telephone bill. As a result, several
commenters have advocated requiring the contact information for each third-party vendor to be included
in the bill.131 The Minnesota AG stated that, according to its complaint data, nearly two-thirds of
cramming victims are unsure of the company responsible for charges from third-parties appearing in their
telephone bills, and that the billing agent or carrier listed on the bill as the contact point is often unable to
sufficiently answer consumer questions or resolve issues regarding charges from third-party vendors.132
The CPUC and Billing Concepts suggested that the Commission require that all third-party billings
include the name, toll-free number, and address of the actual third-party vendor, as opposed to just the
billing aggregator.133 Billing Concepts averred that this would alleviate many escalations in the dispute
resolution process. At the same time, we recognize that carriers may have a financial disincentive to
provide contact information for third parties if the carrier is compensated by third parties to handle
consumer inquiries and complaints about their charges.134 We seek comment on the nature of the
financial arrangements among carriers, billing aggregators, and third-party vendors. We also seek
comment on whether these proposals will aid consumers by directing them to the appropriate party that
can address any issues relating to charges from third-party vendors on their telephone bills.
58. In addition, we seek comment on requiring the carrier generating the telephone bill initially and
periodically thereafter to verify that the contact information for third-party vendors on its telephone bills
is correct. If so, what should the nature and scope of the verification be? As noted above, the Truth-in-
Billing rules allow a carrier to list contact information for a third-party vendor or billing aggregator only


126 See 47 C.F.R. 64.2401(d).
127 See id.
128 Id.
129 First Truth-in-Billing Order at 7534, para. 65.
130 Id. at 7534, para. 66.
131 See Billing Concepts Comments at 4; CPUC Comments at 4-5; Billing Concepts Reply Comments at 3.
132 See Minn. AG Comments at 3-4.
133 See CPUC Comments at 4-5; Billing Concepts Reply at 3.
134 Cf. FTC v. Inc21.com, 745 F. Supp. 2d at 994-995 (telephone company was compensated for services provided
to billing aggregators and third-party vendors).
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if the party at the number provided can answer consumer questions and is authorized to resolve consumer
complaints. Implicit in this proviso is the obligation of the carrier to verify that contact information, such
as telephone numbers and electronic mail addresses, actually provide a means to connect to a customer
service representative with the authority to resolve disputes regarding charges from the third-party
vendor. To what extent do carriers already verify the accuracy of such contact information and verify that
the persons who answer consumer calls have the authority to resolve disputes? What would be the
incremental burden on carriers to do so? How and to what extent would imposing such a requirement
benefit consumers, carriers, or both? Should any particular form of verification, such as test calls, be used
or required? At what intervals should carriers be required to engage in such verification?
2. Requiring Wireline Carriers to Disclose That They Do Not Offer Blocking of Third-

Party Charges

59. We seek comment on whether wireline carriers that do not offer consumers the option to block
third-party charges from their telephone bills should be required to disclose the fact that they do not offer
it. We also seek comment on how, where, and when the disclosures should be made. Should the
disclosure be clear and conspicuous? Should it, like the disclosures by carriers that do offer blocking, be
made at the point of sale, on each bill, and on carrier websites? Should disclosures include information
about the extent to which third-party charges may appear on telephone bills? Should anything else be
included in the disclosure, such as the potential cost of cramming to subscribers?
3. Requiring Wireline Carriers to Block Third-Party Charges Upon Request
60. We seek comment on whether wireline carriers should be required to block third-party charges
from subscribers' telephone bills upon request and, if so, whether carriers should be prohibited from
charging an additional fee for doing so. As noted above, the fact that many wireline carriers already offer
blocking options at no additional charge suggests that there is no technical or cost barrier to making such
options available, or that the cost of offering blocking options is not sufficiently high to warrant
additional charges beyond the monthly recurring charge for wireline telephone service. We seek
comment on any technical, cost, or other barriers that exist, as well as on which carriers offer blocking,
what specific types or categories of charges are blocked (e.g. charges from non-carriers, from
presubscribed carriers, from carriers other than presubscribed carriers, for vertical services), whether an
additional charge applies for blocking, the amount of the charge, if any, and how the amount of the charge
was determined.
61. We also seek comment on what kind or types of charges should be subject to blocking if wireline
carriers were required to block them. For example, should the block prevent inclusion on a telephone bill
of all charges other than those from the carrier generating the bill? Should charges from presubscribed
carriers be permitted, but not charges from carriers to which the billed consumer does not presubscribe?
Should only charges from non-carriers be blocked? Should charges from non-carrier affiliates, such as
Internet Service Providers, be blocked? Should bundles be treated differently and, if so, how?
4. Prohibiting All Third-Party Charges on Wireline Telephone Bills
62. One commenter has recommended that the Commission go further than the proposed rules
described above, and absolutely prohibit wireline carriers from including charges from third-party
vendors on their bills. The Virginia SCC averred that the only way to stop the practice of cramming is to
require companies to cease billing for others.135 As noted above, the Vermont state legislature recently
passed a bill generally banning third-party charges on wireline telephone bills with three very limited


135 See Virginia SCC Comments at 4.
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exceptions.136 We seek comment on the impact, both positive and negative, that prohibiting third-party
charges on wireline telephone bills, unless the consumer opts in, may have on wireline carriers,
consumers, and third parties. To what extent would adoption of the proposed rules set forth above impact
this analysis by providing consumers with additional safeguards from cramming? We also seek comment
on the scope of the Commission's authority to impose such a ban, and whether and how our proposed
definition of "third-party charge" should be modified if we were to adopt such a ban. We also seek
comment on the kinds or types of charges that should be prohibited if third-party charges were prohibited
from telephone bills.137
5.

Due Diligence

63. In their comments, some communication service providers have noted the efforts that they
undertake to ensure that third parties and the charges that they submit are legitimate.138 Notwithstanding
the foregoing, the record, as well as complaints the Commission has received regarding cramming,139
raise questions concerning the effectiveness of those efforts, as well as the current voluntary industry
guidelines140 to ensure that the third-party billers, the products and services offered, and the related
charges included on telephone bills are authorized by customers.141
64. We seek comment on whether we should require carriers, before contracting or agreeing with a
third-party vendor to place its charges on customer telephone bills, to screen each such vendor to ensure
that it has operated and will continue to operate in compliance with all relevant state and federal laws.142
We seek comment on the nature and adequacy of current practices in this regard. We also seek comment
on how carriers are currently monitoring and tracking customer complaints with respect to cramming.
We further seek comment on how such vendors could change or improve their efforts to effectively
monitor and track customer complaints with respect to cramming. In addition, we seek comment on
what, if any, thresholds exist with respect to customer complaints of this nature, as a trigger to adverse
action against a third party. Should such thresholds be required? If so, what should the threshold limit
be? For example, should it be associated with the number of complaints received or otherwise related to
the aggregate dollar value of the claims in the complaints received? Do carriers monitor the percentage of
refunds, unbillable charges,143 or uncollectible charges associated with third-party vendors as a means of


136 See supra para. 33 and note 78.
137 See supra para. 61.
138 See Billing Concepts Comments at 2; Verizon Comments at 42; AT&T Reply Comments at 22.
139 See FCC Complaints 10-C00185009-1 (party purportedly authorizing the charge does not work for the company);
10-CO0185280-1 (person who had not lived at the home for three years purportedly ordered the service in question);
10-C00185536-1 (wrong name and date of birth given to establish authorization); 10-C00185758-1 (recording of
call altered to establish authorization).
140 See Best Practices Guidelines at 3-5, 8-10.
141 See NASUCA Comments at 53-57.
142 Many complaints received call into question the due diligence efforts taken by carriers. See, e.g., FCC
Complaints 10-C00184992-1 (internet research regarding third-party vendor shows "hundreds of complaints"); 10-
C002560-1 (online research shows many complaints of fraud).
143 "Unbillable charges" include any charge submitted to a carrier for billing that the carrier is unable to bill to the
customer, such as because the telephone number provided is not being used by any customer, or is assigned to or has
been ported to a different carrier.
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identifying vendors that may be engaged in cramming or for which the carrier otherwise may seek to
cease billing? What percentage of charges from third-party vendors are refunded annually? What
percentage is uncollectible? What percentage is unbillable? What are the reasons a charge from a third
party might be unbillable?
65. In some cases, fraudulent third-party vendors incorporate a number of affiliated or otherwise
intertwined companies that engage in the same or similar fraudulent practices among each other, such as a
person or family operating multiple companies.144 This may allow what effectively is a single third-party
vendor to continue to submit fraudulent charges for billing by a carrier even after the carrier has ceased
billing for one or more of these companies for bad behavior, such as by continuing the same practice
using a different company. To what extent do carriers attempt to identify these kinds of arrangements?
How successful have carriers been at identifying them and ceasing to bill for them? Can carriers
effectively discover whether an entity is part of such an arrangement, especially given that the owners or
operators likely will attempt to conceal such arrangements from carriers?145 Are there similarities among
these companies or other characteristics that may make such arrangements easily or readily discoverable
by billing aggregators or carriers? We seek comment regarding penalties or other measures that carriers
and billing aggregators employ to deter third-party vendors from engaging in cramming or generating
consumer complaints. How could these be improved? Are there more effective measures, and what are
they? We also seek comment regarding the number of third-party vendors and billing aggregators that
submit charges to carriers for billing on telephone bills? We further seek comment on the kinds of
business (such as by line of business or type of product) in which third-party vendors actually or
purportedly engage and the number of third-party vendors engaged in each kind of business. How many
real parties in interest are there owning or operating these third-party vendors? How could this
information be obtained and updated?
6.

Federal-State Coordination

66. We recognize that a coordinated effort among the various regulatory entities that monitor and
enforce federal and state laws on cramming is a critical component in protecting consumers from
unauthorized charges. As the FTC has noted, there may be consumer confusion about which federal or
state agency to contact to complain about the various entities that engage in cramming.146 Therefore, we
seek comment on how to better coordinate the sharing of cramming complaints and information with our
federal and state regulatory partners. For example, the FTC has observed that it maintains a secure
database in which complaints can be shared among law enforcement entities regardless of which agency
received the consumer complaint in the first instance. Are there ways to use that system to improve
regulatory efforts? Are there additional ways to encourage voluntary industry cooperation to assist in this
process? For example, should wireline and CMRS carriers report trends or spikes in complaints they
receive relating to specific third-party vendors to the appropriate federal or state regulatory agency? We
seek comment on these and any other specific proposals that will better assist us in identifying and taking
enforcement action against parties who engage in the practice of cramming.
67. Building on the substantial record of state and local government cramming complaint data, state
enforcement actions and legislation already in the record and discussed herein, we also seek updated
information from the state and local regulatory entities that already have provided information as well as
current information from other state and local regulatory entities in each state that processes cramming


144 See, e.g., FTC v. Inc21.com, 745 F. Supp. 2d at 983-986.
145 See, e.g., id. at 997-999.
146 See FTC Reply Comments at 12.
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complaints. Specifically, we seek comment on the nature and extent of the cramming problem in the
various states, the number of wireline and wireless cramming complaints or trends in the last few years
with regard to unauthorized charges on bills, what enforcement and/or legislative actions states have
taken with regard to cramming, and what regulatory or other actions they recommend the Commission
implement to assist in addressing the cramming problem.
7.

Accessibility

68. We also seek comment on how our proposed rules will affect, or could be improved to better
assist, people with disabilities, people living in Native Nations on Tribal lands and in Native
communities, and people with limited English proficiency. In addition, we seek input on what measures
common carriers should take to ensure that the following information they provide to their customers is
made accessible to such individuals.
8.

Interconnected VoIP Service

69. We seek comment on whether any of our proposed rules or other requirements discussed herein,
or similar requirements, should apply to providers of interconnected VoIP service.147 We seek comment
on whether bills for interconnected VoIP service raise the same risks of cramming as wireline service or
CMRS and whether there are differences in interconnected VoIP service that necessitate a different
regulatory approach. We also seek identification of and comment on any other factors affecting whether,
to what extent, and what kind of safeguards are needed to protect and would be effective in protecting
consumers of interconnected VoIP service from cramming on their bills for such service.
9.

Definition of Service Provider or Service

70. We seek comment on the need to define "service provider" or "service" in Subpart Y of Part 64 to
better address charges that arguably may not be for a service. Making clear that all charges that appear on
a telephone bill, regardless of what the charge description says, are subject to the Truth-in-Billing rules
likely would help to ensure that consumers enjoy the full protection of our rules despite how a crammer
describes a charge. We do not believe that anyone intent on defrauding consumers would feel constrained
to identify a charge as being for a service if it were possible to avoid the consumer protections provided
by our rules simply by altering the charge description. We seek comment on specific definitions of
"service provider" and "service" that may be effective in preventing cramming. These definitions would
apply only in the context of the Truth-in-Billing rules and would not apply in any other context.
71. We also seek comment on alternatives, such as changing the Truth-in-Billing rules, including as
modified by our proposed rules, to refer to more than services and service providers. We seek comment
on which rules would need to be changed and the specific changes that would be needed.

F.

Effective Consumer Information Disclosure

72. In proposing rules to improve transparency on cramming or any other consumer issue, the
Commission intends to look at the many factors involved in effective consumer information disclosure.
This will ensure that the rules serve their intended purpose without posing an undue burden on industry.
There are two key criteria for the success of such an approach.
73. First, acknowledging the potential difficulty of quantifying benefits and burdens, we need to
determine whether the proposed disclosure rules will significantly benefit consumers and, in fact, clarify
important issues for them for example, by helping them detect hidden charges, making contractual
terms more transparent, or clarifying rates and fees. Research on consumer disclosure in many areas,


147 We note that we also seek comment on whether these rules and other requirements should apply to CMRS
carriers. See supra Section IV.D.
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including credit card disclosures, mortgage disclosures, and mileage labels on automobiles, has shown
that the form and presentation of disclosure can have a significant impact on its usefulness to consumers.
148
74. Second, we seek to maximize the benefits to consumers from our proposed rules while taking into
consideration the burden of compliance to carriers. These costs and benefits can have many dimensions,
including cost and revenue implications for industry, financial benefits to consumers, and other, less
tangible benefits, such as the value of increasing consumer choice or preventing fraud.
75. To address the first criterion in the case of cramming, we seek comment on the best ways to
ensure that the forms of disclosure required by our proposed rules will actually benefit consumers. We
seek comment on the extent to which consumers may be expected to utilize the additional information
called for by these proposed rules. Further, we seek comment on any considerations regarding the manner
by which the proposed rules are implemented that would increase the number of consumers who will
benefit and the nature of the benefits. In particular, we seek comment on the best ways to ensure that
disclosure of third-party charges on bills is clear and conspicuous; that third-party blocking options are
clearly disclosed; and that FCC contact information is provided in ways that consumers will see it and
know how to use it. We also seek comment on best-practices models of consumer disclosure in other
areas, best-practices means of assessing the effectiveness of disclosures (such as online tests or focus
groups), or other examples, research, and recommendations that would be applicable here.
76. To address the second criterion in the case of cramming, we seek comment on the nature and
magnitude of the costs and benefits of our proposed rules to consumers and carriers. We recognize that
these may vary by carrier and seek comment on possible differential impacts on carriers and their
customers by type (e.g. wireline, CMRS) and size of carrier, as well as any specific concerns for those
carriers serving rural areas, Native Nations on Tribal lands and Native communities and their customers.
We seek specific information about whether, how, and by how much such carriers and their customers
may be impacted differently in terms of the costs and benefits of our proposed rules. We also seek
comment on the most cost-effective approach for modifying existing policies and practices to achieve the
goals of our proposed rules in light of existing policies and practices.
77. To the extent possible, we request comment on a wide range of questions that will enable us to
weigh the costs and benefits associated with these proposed disclosure rules. We request that commenters
provide specific data and information, such as actual or estimated dollar figures for each specific cost or
benefit addressed, including a description of how the data or information was calculated or obtained and
any supporting documentation or other evidentiary support. All comments will be considered and given
appropriate weight. Vague or unsupported assertions regarding costs or benefits generally can be
expected to receive less weight and be less persuasive than more specific and supported statements.
78. We seek comment on the extent of cramming,149 the total of all charges and all unauthorized


148 See, e.g., Credit Card Accountability Responsibility and Disclosure Act of 2009, Pub. L. 111-24 (2009);
Mortgage Disclosure Improvement Act of 2008 (contained in Sections 2501 and 2503 of the Housing and Economic
Recovery Act of 2008 , Public Law 110-29, enacted on July 30, 2008, and amended by the Emergency Economic
Stabilization Act of 2008, Public Law 110-343, enacted on October 3, 2008); Thaler, Richard H. and Sunstein Cass.
R., Nudge: Improving Decisions About Health, Wealth, and Happiness 193-195 (2008) (discussing automobile
emissions stickers); Environmental Protection Agency, Fact Sheet: New Fuel Economy and Environmental Labels
for a New Generation of Vehicles, EPA-420-F-11-017 (May 2011),
http://www.epa.gov/otaq/carlabel/420f11017.htm.
149 We note that the survey of consumer awareness of cramming cited in note 44 and the California data discussed in
(continued . . .)
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charges from third-party vendors, and the total amount of unauthorized charges wireline and CMRS
consumers are billed or pay annually, as well as amounts credited annually to consumers for allegedly
unauthorized charges and amounts of uncollectible charges. Because unauthorized charges can and often
do go undetected for long periods of time, we seek comment on methodologies to extrapolate or
otherwise quantify the total amount of unauthorized charges accurately. We seek comment on how and
by how much our proposed rules may reduce these charges and credits. We seek comment on other costs
of cramming to consumers, too, such as costs of monitoring bills to guard against cramming, costs of
obtaining services to block third-party charges, and costs associated with resolving disputes over
unauthorized charges. These costs may include out-of-pocket costs and less tangible costs, such as time.
We seek comment on the amount of such costs, as well as how and by how much our proposed rules may
reduce them. We invite comments regarding consumers' experiences with unauthorized charges,
including how long it took to discover unauthorized charges, how long it took to resolve them, and details
of how the issue was resolved, such as by contacting the carrier or third party or by requesting a block to
prevent third-party charges from appearing on the bills.
79. We also seek comment on the estimated loss of consumer confidence, if any, that has resulted
from cramming, and how much our proposed rules may increase consumer confidence. We further seek
comment on whether and to what extent consumers have avoided purchasing particular kinds of goods or
services in order to avoid or to reduce the risk of cramming, and how much our proposed rules may lead
to increased consumer purchasing. We seek comment on the potential costs of cramming to third-party
vendors that do not engage in cramming, such as costs associated with reduced demand for their products
due to a loss of consumer confidence in the marketplace, and reduced innovation and investment due to
lower demand for their products. We also seek comment on the potential cost that our proposed rules and
other requirements discussed herein may impose on third-party vendors, such as lost revenue from
legitimate transactions. We also seek comment on any other potential costs and/or benefits to third-party
vendors that may result from our proposed rules.
80. Additionally, we seek comment on the specific kinds and amounts of costs that carriers are likely
to incur to comply with our proposed rules. Some possible costs include development and
implementation of policies and procedures, training call center staff, and billing system modifications. To
the extent that billing or other system modifications may be required, we seek comment on the exact
nature of those modifications, the time required to implement them, and their cost. We also seek comment
on the amount of annual revenue carriers receive from providing billing-and-collection services to third
parties, especially for third parties that are not carriers, and the anticipated reduction, if any, in revenue
from such services, if we adopt the proposed rules or other requirements. We seek comment on how





(continued from previous page)
paragraph 28 support a rough estimate that 15 to 20 million American households a year may experience cramming
on their telephone bills. This is derived as follows: The survey showed that, in the instance studied, only 1 in 20
cramming victims was aware of the unauthorized charge on their bills. California data show that 120,000 consumers
a year complain to their carriers about cramming; that equals 1 percent of the 12 million wireline households in the
state. See
ftp://ftp.cpuc.ca.gov/OGA/reports/Universal%20Lifeline%20Telephone%20Program%20Workload%20Report,%20
2007%20Budget%20Act-Item%208660-001-0471%20(090227).pdf. If these numbers accurately reflect other cases
of cramming and other states, they would suggest that at least 20 percent of wireline households in the U.S.
experience cramming. That equates to 15 to 20 million out of a total of 86 million wireline households. See Trends
in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry Analysis and
Technology Division, at Table 7.4 (Sept. 2010) ("Trends in Telephone Service"). We invite comment on the
accuracy and usefulness of this estimate, and whether there are better or other supporting data to use in estimating
the extent of cramming.
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these revenue figures may be different depending upon which third-party charges are blocked,, such as
whether charges for common carrier services provided by a non-presubscribed carrier or charges from
non-carrier third parties are blocked,. We also seek comment on carriers' costs to offer consumers the
ability to block all third-party charges, authorized or unauthorized.
81. We also seek comment on the nature and magnitude of costs that carriers might avoid or reduce
by complying with the proposed rules. Some possible forms of cost savings might be reductions in the
number of calls to carrier call centers related to disputed third-party charges, reduced data processing or
other costs to process refunds, reduced costs to investigate disputed charges, reduced uncollectible
charges, or other reduced transaction costs. Similarly, carriers currently may incur costs to monitor
billing activities by third parties, even to the extent of auditing third parties or developing, imposing, and
monitoring compliance with performance improvement plans.150 We seek comment on the specific nature
and magnitude of such costs as well as potential reductions in these costs that may occur if we were to
adopt the proposed rules or other requirements discussed herein. Finally, we seek comment on and
quantification of any other costs and benefits that we should consider.

G.

Legal Issues

82. As discussed in more detail below, we seek comment on our legal authority to adopt the rules we
propose, as well as comments on our legal authority regarding other proposals and issues raised herein.
We note that our proposed rules apply the basic Truth-in-Billing concepts of clear, conspicuous, and
unambiguous billing in a somewhat different manner. While the existing Truth-in-Billing rules are
intended, in part, to provide consumers with the information that they require to detect unauthorized
charges on their telephone bills, it has become evident from consumer complaints that additional
safeguards may be necessary. Rather than restricting the ability of carriers to put third-party charges on
telephone bills, our proposed rules take the more moderate approach of addressing the confusion and
frustration that consumers experience from the manner in which carriers currently include both carrier
charges and third-party charges on telephone bills, and by ensuring that consumers are aware of blocking
options that carriers offer. At the same time, we also seek comment on the stronger approaches of
requiring carriers to offer blocking options and of prohibiting carriers from placing third-party charges on
telephone bills. To be clear, we do not propose generally to regulate the billing-and-collection services
that carriers provide to third parties. Instead, we seek only to ensure that bills for common carrier
services are presented to consumers in a way that best satisfies the requirements of the Act.
1.

Communications Act

83. We seek comment on the nature and scope of our authority to adopt the proposed rules, as well as
to adopt other requirements discussed herein. We note in this regard that the bill format and labeling
requirements in the Truth-in-Billing rules are based, in whole or part, on the Commission's authority
under Section 201(b) of the Act151 to enact rules to implement the requirement that all charges, practices,
classifications, and regulations for and in connection with interstate communications service be just and
reasonable.152 We believe that we have authority under Section 201(b) to adopt these rules. As discussed


150 See, e.g., Letter from Anne D. Berkowitz, Verizon, to Marlene H. Dortch, Secretary, FCC (Mar. 8, 2011); Letter
from Toni R. Action, AT&T, to Marlene H. Dortch, Secretary, FCC (Feb. 28, 2011); Letter from Scott R.
Freiermuth, Sprint, to Marlene H. Dortch, Secretary, FCC (Apr. 29, 2011).
151 First Truth-in-Billing Order, 14 FCC Rcd at 7503-04, para. 21; 47 CFR 64.2400 -64.2401. The Commission did
not rely on its Section 258 authority over cramming to adopt the labeling requirements contained in the Truth-in-
Billing rules.
152 47 U.S.C. 201(b).
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earlier, Section 201(b) requires that all "practices . . . in connection with" common carrier services be
"just and reasonable." As the Commission has explained before, "the telephone bill is an integral part of
the relationship between a carrier and its customer."153 Third-party charges appear on a telephone bill
only because the carrier generating the bill has permitted them to be placed there by the third-party or its
agent. Furthermore, if it is not clear on the bill specifically what the charge is for and who the service
provider is, a consumer may believe that the charge is related to the common carrier service.154 As
explained above, the problem of crammed third-party charges depends on and arises from the relationship
between the common carrier and the consumer. We seek comment on our assertion that we have
authority under Section 201(b) to adopt these rules. We also seek comment on whether our authority
extends to the other requirements discussed herein, such as prohibiting carriers from including third-party
charges on their telephone bills, and to require carriers to provide and periodically verify contact
information for third-party vendors.155
84. CMRS carriers are subject to our Section 201(b) authority for their common carrier services,156
and they largely are subject to the Truth-in-Billing rules promulgated thereunder to the same extent as
wireline carriers.157 Thus, we believe our authority to extend our proposed rules and other requirements
to CMRS carriers is co-extensive with our authority to promulgate them for wireline carriers. We seek
comment on this analysis.
85. Finally, we seek comment on whether the Commission needs to invoke its Title I authority to
adopt requirements to address cramming.158 The Commission "may exercise ancillary jurisdiction only
when two conditions are satisfied: (1) the Commission's general jurisdictional grant under Title I [of the
Communications Act] covers the regulated subject and (2) the regulations are reasonably ancillary to the
Commission's effective performance of its statutorily mandated responsibilities.'"159 An exercise of such
authority under Title I may be necessary here because entities that are not classified as common carriers
nonetheless may, like common carriers, provide billing-and-collection services for third parties or submit
charges for inclusion on a telephone bill. In light of the legal standards noted above, can and should we
exercise our Title I authority to apply our proposed cramming rules to any non-carriers? Are there
particular entities, including but not limited to interconnected VoIP providers, that we should designate as
subject to our proposed cramming rules?160 The Commission has previously asserted that its Title I


153 First Truth-in-Billing Order, 14 FCC Rcd at 7503, para. 20.
154 See supra note 44 (noting that some crammed charges appear to be for communications-related services provided
by a telephone company even when they are not).
155 See supra Section IV.E.
156 47 U.S.C. 332(c)(1)(A) (stating that CMRS providers are treated as common carriers under Title II, and
specifically Section 201, insofar as they are engaged in providing common carrier services).
157 Second Truth-in-Billing Order, 20 FCC Rcd at 6455-58, paras. 15-20.
158 See 47 U.S.C. 151-154.
159 Comcast Corp. v. FCC, 600 F.3d 642, 646 (D.C. Cir. 2010) (quoting American Library Ass'n v. FCC, 406 F.3d
689, 691-92 (D.C. Cir. 2005)).
160 We note that the Commission has previously asserted ancillary jurisdiction over VoIP providers in other contexts.
See, e.g., IP-Enabled Services; E911 Requirements for IP-Enabled Service Providers, 20 FCC Rcd 10245, 10261-
66, paras. 26-35 (2005) (rules requiring VoIP providers to supply enhanced 911 capabilities to their customers),
aff'd sub nom. Nuvio Corp. v. FCC, 473 F.3d 302 (D.C. Cir. 2007).
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authority extends to a carrier's provision of billing-and-collection services to third parties that are not
carriers.161 We seek comment on whether that authority would extend to the proposals we make above.
2.

First Amendment Considerations

86. A regulation of commercial speech will be found compatible with the First Amendment if: (1)
there is a substantial government interest; (2) the regulation directly advances the substantial government
interest; and (3) the proposed regulation is not more extensive than necessary to serve that interest.162
Moreover, "regulations that compel `purely factual and uncontroversial' commercial speech are subject to
more lenient review than regulations that restrict accurate commercial speech."163
87. As noted above, the Commission's statutory obligations include protecting consumers from
unjust or unreasonable charges and practices.164 Despite voluntary industry efforts, the record in this
proceeding suggests that consumers continue to incur substantial costs each year from the inclusion of
unauthorized charges on their telephone bills. Our proposed regulations are designed to advance the
government's interest by providing consumers with basic tools necessary to protect themselves from these
unauthorized charges. We seek comment on whether our proposed rules and the other requirements upon
which we seek comment are consistent with these and any other First Amendment considerations.

V. PROCEDURAL MATTERS

A.

Ex Parte Presentations

88. The proceeding that this Notice initiates shall be treated as a "permit-but-disclose" proceeding in
accordance with the Commission's ex parte rules.165 Persons making ex parte presentations must file a
copy of any written presentation or a memorandum summarizing any oral presentation within two
business days after the presentation (unless a different deadline applicable to the Sunshine period applies).
Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation
must: (1) list all persons attending or otherwise participating in the meeting at which the ex parte
presentation was made; and (2) summarize all data presented and arguments made during the
presentation. If the presentation consisted in whole or in part of the presentation of data or arguments
already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the
presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or
other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be
found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission
staff during ex parte meetings are deemed to be written ex parte presentations and must be filed
consistent with section 1.1206(b) of the Commission's rules. In proceedings governed by section 1.49(f)
or for which the Commission has made available a method of electronic filing, written ex parte
presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must


161 See Detariffing of Billing and Collection Services, Report and Order, 102 F.C.C.2d 1150, paras. 35-38 (1986).
162 Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 566 (1980).
163 See, e.g., New York State Restaurant Association v. New York City Board of Health, 556 F.3d 114, 132 (2nd Cir.
2009) (upholding New York City health code requiring restaurants to post calorie content information on their
menus and menu boards) (Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 637 (1985)); National Elec.
Mfrs. Ass'n v. Sorrell,
272 F.3d 104, 113 (2nd Cir. 2001) (upholding Vermont statute prescribing labeling
requirements on mercury-containing lamps).
164 See 47 U.S.C. 201(b).
165 See 47 C.F.R. 1.1200 et seq.
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be filed through the electronic comment filing system available for that proceeding, and must be filed in
their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should
familiarize themselves with the Commission's ex parte rules.

B.

Filing of Comments and Reply Comments

89. Pursuant to sections 1.415 and 1.419 of the Commission's rules,166 interested parties may file
comments and reply comments on or before the respective dates indicated on the first page of this Notice.
Comments may be filed using: (1) the Commission's Electronic Comment Filing System ("ECFS"); or
(2) by filing paper copies. All filings should reference CG Docket No. 11- 116.

Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://fjallfoss.fcc.gov/ecfs2/. Filers should follow the instructions provided on the
website for submitting comments. In completing the transmittal screen, ECFS filers should
include their full name, U.S. Postal Service mailing address, and CG Docket No. 11-116.

Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by
first-class or overnight U.S. Postal Service mail. All filings must be addressed to the
Commission's Secretary, Office of the Secretary, Federal Communications Commission.

All hand-delivered or messenger-delivered paper filings for the Commission's Secretary
must be delivered to Commission Headquarters at 445 12th St., SW, Room TW-A325,
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes must be disposed of
before entering the building.

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington DC 20554.
90. The comments and reply comments filed in response to this Notice will be available via ECFS at:
http://fjallfoss.fcc.gov/ecfs2/. You may search by docket number (Docket No. CG-11-116). Comments
are also available for public inspection and copying during business hours in the FCC Reference
Information Center, Portals II, 445 12th Street S.W., Room CY-A257, Washington, D.C. 20554. Copies
may also be purchased from Best Copy and Printing, Inc., telephone (800) 378-3160, facsimile (301) 816-
0169, e-mail FCC@BCPIWEB.com.
91. Accessibility Information. To request materials in accessible formats for people with disabilities
(Braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice) or 202-418-0432 (TTY). This Notice
of Proposed Rulemaking
also can be downloaded in Word and Portable Document Formats ("PDF") at
http://www.fcc.gov/guides/cramming-unauthorized-misleading-or-deceptive-charges-placed-your-
telephone-bill. Contact the FCC to request reasonable accommodations for filing comments (accessible
format documents, sign language interpreters, CART, etc.) by e-mail at: FCC504@fcc.gov; phone: 202-
418-0530 or TTY: 202-418-0432.


166 Id. 1.415, 1.419.
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C.

Initial Regulatory Flexibility Analysis

92. As required by the Regulatory Flexibility Act of 1980, as amended, the Commission has prepared
an Initial Regulatory Flexibility Analysis of the possible significant economic impact on small entities of
the policies and rules addressed in this document.167 The IRFA is set forth in Appendix C. Written public
comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must
be filed by the deadlines for comments on the Notice provided on or before the dates indicated on the first
page of this Notice.

D.

Paperwork Reduction Act

93. This document contains proposed new information collection requirements. The Commission, as
part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of
Management and Budget ("OMB") to comment on the information collection requirements contained in
this document, as required by the Paperwork Reduction Act of 1995.168 In addition, pursuant to the Small
Business Paperwork Relief Act of 2002,169 we seek specific comment on how we might "further reduce
the information collection burden for small business concerns with fewer than 25 employees."170

VI. ORDERING CLAUSES

94. Accordingly, IT IS ORDERED that, pursuant to the authority contained in Sections 1-2, 4, 201,
258, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-152, 154, 201, 258, and
403, this Notice of Proposed Rulemaking IS ADOPTED.
95. IT IS FURTHER ORDERED that the Commission's Consumer and Governmental Affairs
Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking,
including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary


167 See 5 U.S.C. 601 et seq.
168 Pub. L. No. 104-13.
169 Pub. L. No. 107-198.
170 44 U.S.C. 3506(c)(4).
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Appendix A

Proposed Rules

The Federal Communications Commission proposes to amend Part 64 of Title 47 of the Code of
Federal Regulations as follows:

1. The heading for Subpart Y is revised to read as follows:

Subpart Y Truth-in-Billing Requirements for Common Carriers; Billing for Unauthorized
Charges

2. Section 64.2400 is amended by revising paragraph (b) to read as follows:
(b) These rules shall apply to all telecommunications common carriers, except that
64.2401(a)(2), 64.2401(c), and 64.2401(f) shall not apply to providers of Commercial Mobile Radio
Service as defined in 20.9 of this chapter, or to other providers of mobile service as defined in 20.7 of
this chapter, unless the Commission determines otherwise in a future rulemaking.
3. Section 64.2401 is amended by adding new paragraph (f), and revising paragraphs (a)(2) and (d) to
read as follows:
64.2401 Truth-in-Billing Requirements.
(a) Bill Organization. Telephone bills shall be clearly organized, and must comply with the
following requirements:
* * * * *
(2) Where charges for two or more carriers appear on the same telephone bill, the charges must
be separated by service provider. Where charges for one or more service providers that are
not carriers appear on a telephone bill, the charges must be placed in a distinct section
separate from all carrier charges.
* * * * *
(d) Clear and conspicuous disclosure of inquiry and complaint contacts.
(1) Telephone bills must contain clear and conspicuous disclosure of any information that the
subscriber may need to make inquiries about or contest charges on the bill. Common carriers
must prominently display on each bill a toll-free number or numbers by which subscribers
may inquire or dispute any charges on the bill. A carrier may list a toll-free number for a
billing agent, clearinghouse, or other third party, provided such party possesses sufficient
information to answer questions concerning the subscriber's account and is fully authorized
to resolve the consumer's complaints on the carrier's behalf.
(2) Where the subscriber does not receive a paper copy of his or her telephone bill, but instead
accesses that bill only by e-mail or the Internet, the common carrier may comply with these
billing disclosure requirements by providing on the bill an e-mail or website address. Each
carrier must make a business address available upon request from a consumer.
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(3) Telephone bills and carrier websites must clearly and conspicuously state that the subscriber
may submit inquiries and complaints to the Federal Communications Commission, and
provide the telephone number, website address, and, on the carrier's website, a direct link to
the webpage for filing such complaints. That information must be updated as necessary to
ensure that it remains current and accurate.
* * * * *
(f) Blocking of third-party charges.
(1) Common carriers that offer subscribers the option to block third-party charges from
appearing on telephone bills must clearly and conspicuously notify subscribers of this option
at the point of sale, on each telephone bill, and on each carrier's website.
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Appendix B

Consumer Information and Disclosure Notice of Inquiry

List of Commenters

I.

List of Parties

The following parties have filed comments and/or reply comments in response to the August 28, 2009
Notice of Inquiry (we note that not all of the parties filing in this proceeding addressed cramming):
Commenter
Abbreviation
American Association of People with Disabilities
AAPD*

American Council of the Blind

American Council

AT&T Inc.
AT&T*
David Austin
David Austin
Billing Concepts, Inc.
Billing Concepts*
BillShrink.com
BillShrink
California Public Utilities Commission
CPUC
Citizens Utility Board
CUB
City of Chicago Dept. of Business Affairs
Chicago
Comcast Corporation
Comcast*
Consumer Federation of America, Free Press et al.
Consumer Federation*
CTIA The Wireless Association
CTIA
DirectTV, Inc.
DirectTV
Dish Network L.L.C.
Dish Network*
District of Columbia Public Service Commission
D.C. PSC

Federal Trade Commission

FTC

Senator Al Franken

Senator Franken

Independent Telephone & Telecommunications Alliance
ITTA
Individual Consumer
Consumer (name)
Iowa City
Iowa City
Massachusetts Department of Telecommunications and Cable
Mass. DTC
MetroPCS Communications, Inc.
MetroPCS
Minnesota Office of the Attorney General
Minn. AG
Mobile Marketing Association
MMA
Montgomery County Office of Consumer Protection
Montgomery County
National Association of State Utility Consumer Advocates
NASUCA*
National Cable & Telecommunications Association
NCTA*

National Telecommunications Cooperative Association

NTCA

Open Technology Initiative/New America Foundation
Open Technology

Oregon Public Utilities Commission

Oregon PUC

Organization for Promotion and Advancement of Small
OPASTCO
Telecommunications Companies
Qwest Communications International, Inc.
Qwest*
Rural Cellular Association
RCA

Speech Communications Assistance by Telephone

Speech Com

Southern Communications Services, Inc.
SouthernLINC Wireless
Sprint Nextel Corporation
Sprint
State Attorneys General
25 State AGs
STi Prepaid
STi*

T-Mobile USA, Inc.

T-Mobile

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Telecommunications for the Deaf and Hard of Hearing et al.
Telecom for Deaf
Telogical Systems
Telogical
Texas Office of Public Utility Counsel
Texas PUC
Time Warner Cable, Inc.
Time Warner*
United States Telecom Association
USTA
Utility Consumers' Action Network
UCAN
Validas
Validas
Verizon and Verizon Wireless
Verizon*
Virginia State Corporation Commission
Virginia SCC
Voice on the Net Coalition
VON
Wireless Communications Association International
WCAI
* Party filed both comments and reply comments; bold party filed only reply comments.
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Appendix C

Initial Regulatory Flexibility Analysis

1. As required by the Regulatory Flexibility Act of 1980, as amended, ("RFA"),1 the Commission has
prepared this Initial Regulatory Flexibility Analysis ("IRFA") of the possible significant economic impact
on a substantial number of small entities by the policies and rules proposed in this Notice of Proposed
Rule Making ("NPRM"). Written public comments are requested on this IRFA. Comments must be
identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM
provided on the first page of this document. The Commission will send a copy of the NPRM, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration.2 In addition, the
NPRM and IRFA (or summaries thereof) will be published in the Federal Register.3

A. Need for, and Objectives of, the Proposed Rules

2. The record compiled in this proceeding, including the Commission's own complaint data, confirms
that cramming is a significant and ongoing problem that has affected wireline consumers for over a
decade, and drawn the notice of Congress, states, and other federal agencies. The substantial volume of
wireline cramming complaints that the Commission, FTC, and states continue to receive underscores the
ineffectiveness of voluntary industry practices and highlights the need for additional safeguards. Recent
evidence, such as the volume of wireless cramming complaints and wireless carriers' settlement of
litigation regarding unauthorized charges, raises a similar concern with unauthorized charges on
Commercial Mobile Radio Service ("CMRS") bills, such as those of providers of wireless voice service.
3. Although the Commission has addressed cramming as an unreasonable practice under Section 201(b)
of the Act,4 there are currently no rules that specifically address unauthorized charges on wireline
telephone bills. We believe that adopting such requirements will provide consumers with the safeguards
they need to protect themselves from this risk.

B. Legal Basis

4. The legal basis for any action that may be taken pursuant to this NPRM is contained in Sections 1-2, 4,
201, 258, and 403 of the Communications Act of 1934, as amended 47 U.S.C. 151-152, 154, 201, 258,
and 403.

C. Description and Estimate of the Number of Small Entities to Which the

Proposed Rules Will Apply

5. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of
small entities that will be affected by the proposed rules, if adopted.5 The RFA generally defines the term


1 See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 ("SBREFA"), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 See 5 U.S.C. 603(a).
3 See id.
4 See, e.g., Long Distance Direct, Inc., File No. ENF-99-01, Memorandum Opinion and Order, 15 FCC Rcd 3297
(2000) (assessing a forfeiture for slamming and cramming violations pursuant to sections 201(b) and 258.
"Slamming" is the unlawful practice of changing a subscriber's selection of a provider of telephone service without
that subscriber's knowledge or permission.
5 5 U.S.C. 603(b)(3).
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"small entity" as having the same meaning as the terms "small business," "small organization," and
"small governmental jurisdiction."6 In addition, the term "small business" has the same meaning as the
term "small business concern" under the Small Business Act.7 Under the Small Business Act, a "small
business concern" is one that: 1) is independently owned and operated; 2) is not dominant in its field of
operation; and 3) meets any additional criteria established by the Small Business Administration
("SBA").8 Nationwide, there are a total of approximately 29.6 million small businesses, according to the
SBA.9 The NPRM seeks comment generally on mobile providers of voice, text and data services.
However, as noted in Section IV of the NPRM, we are seeking comment on the scope of entities that
should be covered by the proposals contained therein.10
6. Incumbent Local Exchange Carriers ("Incumbent LECs"). Neither the Commission nor the SBA has
developed a small business size standard specifically for incumbent local exchange services. The
appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.11 Census Bureau data for
2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category
that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had
had employment of 1000 or more. According to Commission data, 1,307 carriers reported that they were
incumbent local exchange service providers.12 Of these 1,307 carriers, an estimated 1,006 have 1,500 or
fewer employees and 301 have more than 1,500 employees.13 Consequently, the Commission estimates
that most providers of local exchange service are small entities that may be affected by the rules and
policies proposed in the Notice. Thus under this category and the associated small business size standard,
the majority of these incumbent local exchange service providers can be considered small.14
7. Competitive Local Exchange Carriers ("Competitive LECs"), Competitive Access Providers
("CAPs"), Shared-Tenant Service Providers, and Other Local Service Providers.
Neither the
Commission nor the SBA has developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications


6 5 U.S.C. 601(6).
7 5 U.S.C. 601(3) (incorporating by reference the definition of "small business concern" in the Small Business Act,
5 U.S.C. 632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies "unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register."
8 15 U.S.C. 632.
9 See SBA, Office of Advocacy, "Frequently Asked Questions," http://web.sba.gov/faqs/faqindex.cfm?areaID=24
(revised Sept. 2009).
10 See supra Sec. IV.
11 13 C.F.R. 121.201, NAICS code 517110.
12 See Trends in Telephone Service at Table 5.3.
13 See id.
14 See http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&;-
ds_name=EC0751SSSZ5&-_lang=en.
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Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.15 . Census
Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms
in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer,
and 44 firms had had employment of 1,000 employees or more. Thus under this category and the
associated small business size standard, the majority of these Competitive LECs, CAPs, Shared-Tenant
Service Providers, and Other Local Service Providers can be considered small entities.16. According to
Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive
local exchange services or competitive access provider services.17 Of these 1,442 carriers, an estimated
1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.18 In addition, 17 carriers
have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or
fewer employees.19 In addition, 72 carriers have reported that they are Other Local Service Providers.20
Of the 72, seventy have 1,500 or fewer employees and two have more than 1,500 employees.21
Consequently, the Commission estimates that most providers of competitive local exchange service,
competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are
small entities that may be affected by rules adopted pursuant to the Notice.
8. Interexchange Carriers. Neither the Commission nor the SBA has developed a small business size
standard specifically for providers of interexchange services. The appropriate size standard under SBA
rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is
small if it has 1,500 or fewer employees.22 Census Bureau data for 2007, which now supersede data from
the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of
this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees
or more. Thus under this category and the associated small business size standard, the majority of these
Interexchange carriers can be considered small entities.23. According to Commission data, 359 companies
reported that their primary telecommunications service activity was the provision of interexchange
services.24 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more
than 1,500 employees.25 Consequently, the Commission estimates that the majority of interexchange


15 13 C.F.R. 121.201, NAICS code 517110.
16 See http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&;-
ds_name=EC0751SSSZ5&-_lang=en.
17 See Trends in Telephone Service at Table 5.3.
18 See id.
19 See id.
20 See id.
21 See id.
22 13 C.F.R. 121.201, NAICS code 517110.
23 See http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&;-
ds_name=EC0751SSSZ5&-_lang=en.
24 See Trends in Telephone Service at Table 5.3.
25 See id.
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service providers are small entities that may be affected by rules adopted pursuant to the Notice.
9. Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census Bureau has placed
wireless firms within this new, broad, economic census category.26 Prior to that time, such firms were
within the now-superseded categories of "Paging" and "Cellular and Other Wireless
Telecommunications."27 Under the present and prior categories, the SBA has deemed a wireless business
to be small if it has 1,500 or fewer employees.28 For the category of Wireless Telecommunications
Carriers (except Satellite), Census data for 2007 show that there were 1,383 firms that operated that
year.29 Of those, 1,368 firms had fewer than 100 employees, and 15 firms had more than 100 employees.
Thus, under this category and the associated small business size standard, the majority of firms can be
considered small. Similarly, according to Commission data, 413 carriers reported that they were engaged
in the provision of wireless telephony, including cellular service, Personal Communications Service
("PCS"), and Specialized Mobile Radio ("SMR") telephony services.30 An estimated 261 of these firms
have 1,500 or fewer employees and 152 firms have more than 1,500 employees.31 Consequently, we
estimate that approximately half or more of these firms can be considered small. Thus, using available
data, we estimate that the majority of wireless firms are small.
10. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and
specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size
standard for Wireless Telecommunications Carriers (except Satellite).32 Under the SBA small business
size standard, a business is small if it has 1,500 or fewer employees.33 According to Commission data,
434 carriers report that they are engaged in wireless telephony.34 Of these, an estimated 222 have 1,500
or fewer employees, and 212 have more than 1,500 employees.35 Therefore, we estimate that 222 of these
entities can be considered small.


26 U.S. Census Bureau, 2007 NAICS Definitions, "517210 Wireless Telecommunications Categories (Except
Satellite)"; http://www.census.gov/naics/2007/def/ND517210.HTM#N517210.
27 U.S. Census Bureau, 2002 NAICS Definitions, "517211 Paging";
http://www.census.gov/epcd/naics02/def/NDEF517.HTM.; U.S. Census Bureau, 2002 NAICS Definitions, "517212
Cellular and Other Wireless Telecommunications"; http://www.census.gov/epcd/naics02/def/NDEF517.HTM.
28 13 C.F.R. 121.201, NAICS code 517210 ("2007 NAICS"). The now-superseded, pre-2007 C.F.R. citations
were 13 C.F.R. 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
29 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009),
http://factfinder.census.gov/servlet/IBQTable?--bm=y&-geo--id=&-fds--name=EC0700A1&---skip=700&-ds--
name=EC0751SSSZ5&---lang=en.
30 See Trends in Telephone Service at Table 5.3.
31 See id.
32 13 C.F.R. 121.201, NAICS code 517210.
33 Id.
34 Trends in Telephone Service at Table 5.3.
35 Id.
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D. Description of Projected Reporting, Recordkeeping, and Other Compliance

Requirements

11. We propose rules herein that: (1) require wireline carriers to notify subscribers clearly and
conspicuously, at the point of sale, on each bill, and on their websites, of the option to block third-party
charges from their telephone bills, if the carrier offers that option; (2) require wireline carriers to place
charges from non-carrier third-parties in a bill section separate from carrier charges; and (3) require
wireline and CMRS carriers to include on all telephone bills and on their websites the Commission's
contact information for the submission of complaints. The record reflects that cramming primarily has
been an issue for wireline telephone customers. However, there is evidence of a concern with
unauthorized charges on wireless bills. Therefore, we also seek comment on whether we should extend
any similar protections to wireless consumers.
12. These proposed rules may necessitate that some common carriers make changes to their existing
billing formats and/or disclosure materials. For example, to provide the required contact information on
their bills may necessitate changes to billing formats. However, some carriers may be in compliance with
many of these requirements and require no additional compliance efforts.

E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and

Significant Alternatives Considered

13. The RFA requires an agency to describe any significant alternatives that it has considered in reaching
its proposed approach, which may include the following four alternatives (among others): (1) the
establishment of differing compliance or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.36
14. In this NPRM, we seek comment on ways to minimize the economic impact on carriers to comply
with our proposed rules. For example, we seek comment on establishing timeframes that will allow
carriers sufficient opportunity to make any necessary changes to comply with any rules that we adopt in a
cost efficient manner. We also seek comment on how to alleviate burdens on small carriers. And we
seek guidance on whether our proposed rules should be limited to wireline service or whether there are
justifications to extend those safeguards to wireless service. Finally, we seek comment on an extensive
cost and benefit analysis to determine the overall impact on consumers and industry of our proposed
rules.

F. Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

15. None.


36 5 U.S.C. 603(c).
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STATEMENT OF

CHAIRMAN JULIUS GENACHOWSKI

Re:
Empowering Consumers to Prevent and Detect Billing for Unauthorized Charges ("Cramming"),
Consumer Information and Disclosure, Truth-in-Billing and Billing Format; CG Docket Nos. 11-
116 and 09-158, CC Docket No. 98-170
We tackle today the problem of unauthorized charges on phone bills, or "cramming."
Cramming is fraudulent and illegal. It happens when a company places charges on a telephone
bill for products or services that the consumer never requested. These charges can be for anything from
long-distance service to horoscopes to diet plans.
It is unfortunately a continuing problem for wireline telephone customers and an emerging one
for wireless customers as well.
The complaints that we receive here at the FCC, and similar complaints to the FTC, state
authorities, and the carriers themselves, all show that cramming is a widespread problem, especially for
wireline service. And we believe the complaints greatly understate the extent of the problem. One expert
survey found that only five percent one in twenty of consumers who had received charges from a
particular cramming company were even aware that the charges were on their bills. Now that more and
more consumers use electronic billing and automatic payment, it is a serious risk that these unauthorized
charges will go undetected for months or even years.
In all, we estimate that cramming may affect 15-20 million Americans a year. And anyone can
be a victim of cramming:


One consumer complained to the North Carolina Attorney General's office about a company that
claimed he had ordered its long-distance service over the Internet. As he told the AG's office, that
was impossible because he doesn't own a computer.

A consumer in Washington, D.C. victimized by cramming was told by the cramming company
that he had authorized the charge. When the consumer asked for proof, the company gave him an
"authorization" record with someone else's name, a non-working email address, and a street
address in Berkeley Springs, West Virginia that turned out to be the address of the Berkeley
Springs Chamber of Commerce.
These are just a couple of the numerous cramming complaints that consumers have filed with us.
The Commission has been aggressively pursuing reports of cramming. Several months ago, we
approved a settlement with Verizon Wireless over unauthorized "mystery fees" charged to approximately
15 million customers. That included a refund of about $53 million to customers and a $25 million
voluntary payment to the U.S. Treasury. And just last month, also thanks to the hard work of our
Enforcement Bureau, we issued four Notices of Apparent Liability for Forfeiture proposing $11.7 million
in forfeitures against four telecommunications carriers that appear to have engaged in widespread
cramming.
The FCC is turning up the heat on companies that rip off customers with unauthorized fees. We
are sending a clear message: if you charge consumers unauthorized fees, you will be discovered and you
will be punished. The rules we propose today are common-sense measures to empower consumers to
44

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identify fraudulent charges and take corrective action to protect themselves, while minimizing the
compliance burden on carriers.
I am pleased that other parties are looking into cramming, including the Senate Commerce
Committee, the FTC, and a number of states. In particular, I welcome Senator Rockefeller's call for a
hearing on this issue, which is scheduled for tomorrow. I look forward to working with our partners in
government and all stakeholders to crack down on this illegal practice.
I thank the staff from the many Bureaus involved in this item for their diligent efforts, particularly
our Wireline Bureau, our Wireless Bureau, our Consumer Bureau, and our Enforcement Bureau and for
their great work in general to empower and protect consumers.
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STATEMENT OF

COMMISSIONER MICHAEL J. COPPS

Re: Empowering Consumers to Prevent and Detect Billing for Unauthorized Charges ("Cramming"),
CG Docket No. 11-116; Consumer Information and Disclosure, CG Docket No. 09-158; Truth-
in-Billing and Billing Format,
CC Docket No. 98-170
It's always a good day at the Commission when our agenda includes a consumer friendly item
like today's Notice of Proposed Rulemaking on cramming. It's a good meeting when we can breathe life
into our mandate as a consumer protection agency. This is a particularly timely item that brings the
promise of much-needed relief for the thousands of consumers who complain to the FCC every year about
unauthorized charges on their wireline--and their wireless--phone bills. It becomes clearer each day that
wireless consumers are indeed encountering these kinds of problems, too, and we will need effective
solutions in the wireless world as well as the wireline.
Because cramming can be difficult to identify and detect from a bill--a problem this notice seeks
to correct--the true number of Americans who fall victim to cramming is likely well above those who
have complained directly to the Commission. The NPRM identifies common-sense solutions, so that
consumers will know what they are being billed for and how to take action against any fraudulent
charges. An item like this would be welcome at any time but is especially important in these difficult
economic times when so many families are struggling to balance their household budgets.
I look forward to the record responses to our notice, to moving forward on this critical consumer
issue, and to working with the Chairman and all my colleagues on this and other proceedings on our
Consumer Empowerment Agenda. And many thanks to everyone in the Consumer and Governmental
Affairs Bureau whose hard work brought us this item.
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STATEMENT OF

COMMISSIONER ROBERT M. McDOWELL

Re:
Empowering Consumers to Prevent and Detect Billing for Unauthorized Charges ("Cramming"),
Consumer Information and Disclosure, Truth-in-Billing and Billing Format; CG Docket Nos. 11-
116 and 09-158, CC Docket No. 98-170
I vote to approve today's notice of proposed rulemaking ("NPRM") designed to alert consumers
to the practice of what has become known as "cramming" unauthorized charges on their telephone bills.
As the record develops, I will be interested in learning more about the scope of the practice of
"cramming" and ways to empower consumers through potential amendments to the FCC's truth-in-billing
rules. This NPRM explores whether these potential new requirements should be extended to both
wireline and commercial mobile radio service ("CMRS") carriers, and I look forward to learning more on
this particular topic. I also appreciate that the NPRM seeks comment on the Commission's legal
authority and asks whether the proposed rules would be compatible with the First Amendment.
Finally, we must always remember that there are economic effects of new rules. As such, I will
look for any innovative programs that may already exist in the marketplace that have the purpose of
alerting consumers to "cramming" charges and notifying them of opportunities to request that charges be
blocked from their carrier bills. If the record contains compelling evidence that marketplace solutions are
not adequate, I will encourage my colleagues to craft potential rules in a manner that is narrowly-targeted
to our stated goals.
I thank the Chairman for his leadership and appreciate the hard work of the Consumer and
Governmental Affairs Bureau. As we move forward, I look forward to reviewing the record and working
with interested parties and my colleagues on this topic.
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STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re:
In the Matter of Empowering Consumers to Prevent and Detect Billing for Unauthorized Charges
("Cramming") Consumer Information and Disclosure; Truth-in-Billing and Billing Format, CG
Docket No. 11-116, CG Docket No. 09-158, and CC Docket No. 98-170.

This Notice proposes rules that will give consumers better tools to detect and prevent
unauthorized charges or "mystery fees," which may appear on their telephone bills. Evidence to date
indicates that this action is necessary, because the Commission continues to receive between two and
three thousand complaints a year from consumers about unwanted and unrequested charges from their
telephone companies. It is our responsibility at the FCC to protect telephone consumers when the
marketplace is not functioning appropriately. Consumers should be informed of the choices they can
make with respect to blocking third-party charges on their phone bills, and they need clear and
conspicuous notice of third-party charges, and where they can call to request further information about
those charges. As such, I support our inquiry into the appropriate rules that will better inform and notify
consumers, and am particularly interested in whether these rules should apply across the board to both
wireline and wireless companies. While the complaints about unauthorized charges on cell phone bills
are not as prevalent as on wireline bills, I am interested in hearing about whether cell phone consumers
should receive the same protections as wireline customers. In particular, do consumers expect that the
Commission's rules will help inform and protect them no matter the technology they use to complete their
calls? And does the evidence warrant the implementation of rules for wireless at this time? I look forward
to hearing from consumers and industry about these issues.
I wish to thank the Consumer and Governmental Affairs Bureau, along with the Enforcement
Bureau for their work on this item.
48

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