Cramming - Wi-Fi "Just When You Thought You’d Figured Out Your Phone” NARUC Winter Meetings February 15, 2015 Lenora M. Best Pennsylvania Public Utility Commission

How Cramming Happens Scams Free services advertised via sweepstakes/contest entry forms or internet Product or services sales initiated via "negative option" plans Deceptive infomercials or print ads with toll free numbers for free services Billing Charges Toll calls not made by the customer Products or services such as paging, voic , calling plans or calling cards Toll calls that were placed to so called “toll free numbers” Unknown reoccurring monthly fees 2

Deceptive Practices In a lawsuit filed in U.S. District Court in Ft. Lauderdale, Fla., the Federal Trade Commission accused two telemarketing firms of using deceptive tactics to lure callers to the hotline, which actually provides psychic readings at a cost of $4.99 a minute. The Ft. Lauderdale-based firms, Psychic Readers Network Inc. and Access Resources Services Inc., used the pseudonymous Miss Cleo in their nationwide TV ads, infomercials and mailings. "Considering the laundry list of unfair and deceptive practices in this case, it's a mystery to us why Miss Cleo and her employers haven't seen this coming," quipped J. Howard Beales III, director of the FTC's bureau of consumer protection. Beales said the hotline in recent years has been the subject of about 2,000 consumer complaints. February 15, 2002|MYRON LEVIN | TIMES STAFF WRITERFebruary 15,

Deceptive Practices Miss Cleo hot line cancels client bills Psychic network settles FTC suit by dropping $500 million in charges November 15, 2002|By Terri Somers | Terri Somers, SPECIAL TO THE SUN WASHINGTON - The operators of Miss Cleo's psychic hot line agreed yesterday to cancel $500 million in customer bills to settle federal charges that the service fleeced callers while promising mystical insights into love and money. The settlement requires Fort Lauderdale-based Access Resource Services Inc. and Psychic Readers Network Inc. to stop using pay-per-call numbers to sell their soothsaying services, the Federal Trade Commission said. The companies, which promoted a national network of "psychic readers" on television and the Internet, also must pay the FTC a $5 million fine. 4

Who’s involved  Local exchange carrier(LEC) or local phone company that renders the bill to the end-user customer  Service Provider that offers the product or service to the end-user customer and directly or indirectly sends the billable charges/credits to the telephone company for billing to the end-user customer  Billing clearinghouse that aggregates billing for their service provider customers and submits that billing to the local phone company 5

Pennsylvania Rules § Standardizing LEC responses to customer contacts alleging unauthorized charges added to the customer’s bill (cramming)… (a) Cramming. Upon contact from a customer alleging that cramming has occurred on the bill rendered to the customer by the LEC, the LEC shall do the following: (1) Identify the charges, and clarify that the customer’s complaint is that the customer did not authorize the charges or order or use the services or products associated with the charges. (2) Inform the customer that the charges will be removed from the LEC bill and that basic local service cannot be disconnected for failure to pay cramming charges. 6

Pennsylvania Rules § Standardizing LEC responses to customer contacts alleging unauthorized charges added to the customer’s bill (cramming) … (3) Inform the customer that the LEC will instruct the billing agent or service provider, or both, to take the steps necessary to prevent further billing of those charges or types of charges to the customer’s account. (4) Inform the customer that removal of the charges from the LEC bill does not guarantee that the service provider or its billing agent will not use other collection remedies, including direct billing of the removed charges or use of a collection agency. 7

Pennsylvania Rules § Standardizing LEC responses to customer contacts alleging unauthorized charges added to the customer’s bill (cramming)… (5) Provide notice of a customer’s right to pursue a complaint. To customers who indicate a desire to receive complaint disclosure information, the LEC shall provide information about how to pursue the complaint against the service provider or billing agent by contacting the Bureau of Consumer Protection, (800) , of the Pennsylvania Office of Attorney General, the Federal Communications Commission (FCC), and the Federal Trade Commission. (6) Maintain for a minimum of 3 years records of all customer complaints of cramming in order to monitor adherence to the terms of the billing contract the LEC has with the service provider or billing agent, or both, relating to cancellation of the contract for excessive cramming complaints. 8

State Anti-Cramming Statutes and Rules Some states have given their respective public utilities commission statutory authority to regulate and prohibit cramming activities Where the statutory language of cramming statutes is not codified and state legislatures may use phrasing such as “unauthorized charges or changes” or “unauthorized third party billings” to describe cramming Some states without specific cramming statutes or administrative rules may still prosecute slamming and cramming activities under their various state fraud statutes Source: National Conference of State Legislatures August technology/state-anti-cramming-statutes.aspxhttp:// technology/state-anti-cramming-statutes.aspx 9

State Anti-Cramming Statutes and Rules StatesRules and Statues CaliforniaCa. Public Utilities Code -see Section 2890 Colorado C.R.S (2014)* IdahoIdaho Code A IowaIowa Administrative Code 199–22.23(1-2) KentuckyKRS § (h) MaineME. Rev. Stat. 35-A §7109 MinnesotaMinn. Stat § New HampshireNH 34 RSA 378:46 Pennsylvania52 Pa. Code § Vermont 30 V.S.A. § 208b 9 V.S.A. § V.S.A. § 2466/HB 254 (2011)HB 254 (2011) WyomingW.S. § (e) Source: National Conference of State Legislatures August 2012 * Updated technology/state-anti-cramming-statutes.aspx 10

Informal Cramming Survey Results  cramming rules are generally for wireline service  limited enforcement activity related cramming  very few wireline or wireless cramming complaints  wireless cramming complaints would be referred to the State Attorney General, FCC, or FTC 11