Bill S1832A-2011

Prohibits the imposition of any charge or fee on the telephone bill of a consumer when such fee is imposed by a third party, without the consent of the consumer

Prohibits the imposition of any charge or fee on the telephone bill of a consumer when such fee or charge is imposed by a third party, unless the consumer explicitly agrees to the nature and amount of such fee or charge; makes the unauthorized imposition of such a fee void and unenforceable; directs the public service commission to enforce such provisions.

Details

Actions

  • Jan 4, 2012: REFERRED TO ENERGY AND TELECOMMUNICATIONS
  • Apr 5, 2011: PRINT NUMBER 1832A
  • Apr 5, 2011: AMEND (T) AND RECOMMIT TO ENERGY AND TELECOMMUNICATIONS
  • Jan 13, 2011: REFERRED TO ENERGY AND TELECOMMUNICATIONS

Memo

BILL NUMBER:S1832A

TITLE OF BILL: An act to amend the public service law and the general business law, in relation to consumer protections against cramming

PURPOSE OR GENERAL IDEA OF BILL: This bill will prohibit the practice of "cramming" - that is, the addition of charges on a telephone bill by a third party without the informed consent of the consumer.

SUMMARY OF SPECIFIC PROVISIONS: Section 1 amends §92-d of the Public Service Law (PSL) to add consumer protections against cramming to the list of PSL consumer safeguards that customers must be informed of by local exchange telephone companies.

Section 2 adds a new PSL §92-g prohibiting telephone corporations from permitting or facilitating the practice of cramming. "Cramming" is defined as the inclusion or imposition of charges on a telephone bill at the request of a third party that were not authorized by the customer or, if authorized, were obtained through misleading or deceptive means. Charges for goods or services (other than those provided by the telephone company or its affiliates) may be billed only if the customer explicitly consented to the nature and amount of such charges after having received clear and conspicuous disclosure of all terms and conditions. In addition, the third party or its agent must provide the customer with a toll-free number and address for resolution of any billing dispute. Any charges imposed without the consumer's consent having been obtained as provided above are declared void and unenforceable, and the telephone corporation is required to remove them upon notice from the customer that such charges were not authorized. The Public Service Commission shall supervise and ensure full compliance with §92-g, and may adopt any necessary rules and regulations, which may include additional requirements for verification of customer orders and standards third parties must meet to be authorized to request inclusion of charges on telephone bills. Any failure to comply by a telephone corporation may be addressed through the complaint process in PSL §96(3) or by any other legal means.

Section 3 amends the General Business Law by adding a new section 390-bb applying the same prohibitions found in Section 2 to television companies, many of which operate telephone services. This section gives enforcement powers to the New York State Attorney General.

Section 4 sets forth the effective date.

SUMMARY OF SPECIFIC AMENDMENTS:

The bill as originally introduced contained the same basic provisions, which have been augmented by additional protections that other states have enacted (in particular, in recent amendments to the Illinois Consumer Fraud and Deceptive Business Practices Act at 815 ILCS 505/2HHH). These include the requirement for upfront provision of clear and conspicuous disclosure to the customer and information on how the third party vendor can be contacted to resolve any billing dispute. In addition, §92-g is integrated with other PSL provisions (§§92-d, 96) and a requirement for PSC reporting on the implementation of §92-g is deleted in light of the agency's ability to require each company to report on the same (§95). The original bill has been amended to apply to all telephone carriers, including cable corporations which are governed by the General Business Law.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: There is currently no statutory prohibition of cramming in New York State law. As discussed below, voluntary efforts and agreements have not been sufficiently effective in curtailing this fraudulent practice.

JUSTIFICATION: New York and other states have recently seen a resurgence of "cramming" complaints. Cramming refers to the inclusion on a telephone bill of unauthorized, deceptive or misleading third-party fees or charges. These charges are often added indirectly through a billing warehouse and can be described in vague terms such as "enhanced services," "access," "activation," or "minimum usage fees." Consumers can become cramming victims through sweepstakes or contest entry forms, calling "900" numbers, answering advertisements for information or entertainment services that are available, and accepting free offers that trigger an automatic sign-up for a service such as "voice mail," along with a monthly service fee. Company telemarketers may offer a free trial without explaining the steps the consumer would have to take to avoid future charges, or may even doctor tape recordings to make it appear that consumers had agreed to pay for services when in actuality they did not. Because their monthly bills are often larger and many pages longer than residential customers, small businesses are frequent targets of crammers.

Since the 1990s, Federal and state agencies have tried to address this issue by working with the telecommunications industry to enact voluntary guidelines to combat the practice. The New York Attorney General's office has also negotiated settlement agreements with some of the larger telephone companies to address consumer complaints. However, these guidelines and agreements have only been partially effective, and require constant vigilance and substantial effort by consumers to guard against fraud. For every telephone customer who detects and successfully fights an unauthorized charge, there are many others who pay for them month after month without being aware of the scam.

This bill is a proactive effort to prevent the addition of fraudulent charges to consumers' bills in the first place, to provide consumers with the needed tools to contest instances of cramming, and to ensure that the burden of proof is on the company seeking to add fees and charges, and not on individual consumers.

PRIOR LEGISLATIVE HISTORY: 2010: S.7082-B; Finance; A.10464 Ways and Means

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.

EFFECTIVE DATE: 180th day after enactment.


Text

STATE OF NEW YORK ________________________________________________________________________ 1832--A 2011-2012 Regular Sessions IN SENATE January 13, 2011 ___________
Introduced by Sen. FLANAGAN -- read twice and ordered printed, and when printed to be committed to the Committee on Energy and Telecommuni- cations -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the public service law and the general business law, in relation to consumer protections against cramming THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The opening paragraph of section 92-d of the public service law, as separately amended by chapters 546 and 547 of the laws of 2000, is amended to read as follows: Each local exchange telephone company shall inform its customers of the provisions of SECTION NINETY-TWO-G OF THIS ARTICLE, sections three hundred ninety-nine-p [and], three hundred ninety-nine-z and three hundred ninety-nine-pp of the general business law, and article ten-B of the personal property law, as such provisions relate to the rights of consumers with respect to CRAMMING, telemarketers, sellers, the no tele- marketing sales call statewide registry and automatic dialing-announcing devices, by means of: S 2. The public service law is amended by adding a new section 92-g to read as follows: S 92-G. CRAMMING PROHIBITED. 1. FOR THE PURPOSES OF THIS SECTION, "CRAMMING" MEANS THE INCLUSION AND IMPOSITION OF CHARGES ON THE INVOICE OR BILL OF A CUSTOMER FROM A TELEPHONE CORPORATION AT THE REQUEST OF A THIRD PARTY OR BILLING AGGREGATOR THAT (A) WERE NOT AUTHORIZED BY THE CUSTOMER, OR (B) IF AUTHORIZED, WERE OBTAINED THROUGH MISLEADING OR DECEPTIVE MEANS. 2. A CUSTOMER SHALL NOT BE LIABLE FOR CHARGES APPEARING ON THE INVOICE OR BILL OF A TELEPHONE CORPORATION THAT ARE THE RESULT OF CRAMMING. NO CHARGES FOR ANY PRODUCTS OR SERVICES, OTHER THAN THOSE PROVIDED BY THE TELEPHONE CORPORATION, ITS AFFILIATES, A THIRD PARTY VIDEO PROVIDER WITH
WHOM A TELEPHONE CORPORATION OR ITS AFFILIATE JOINTLY MARKET SERVICES, OR OTHERWISE PERMITTED BY LAW, SHALL BE INCLUDED ON ANY BILL OR INVOICE OF A CUSTOMER, UNLESS THE THIRD PARTY REQUESTING THE PAYMENT OF SUCH CHARGES RETAINS AND PROVIDES UPON REQUEST VALID PROOF THAT: (A) THE CUSTOMER WAS PROVIDED WITH CLEAR AND CONSPICUOUS DISCLOSURE OF ALL MATERIAL TERMS AND CONDITIONS OF THE PRODUCT OR SERVICE BEING OFFERED, INCLUDING BUT NOT LIMITED TO ALL INITIAL AND RECURRING CHARGES AND THE FACT THAT SUCH CHARGES SHALL APPEAR ON THE CUSTOMER'S TELEPHONE BILL; (B) AFTER RECEIVING CLEAR AND CONSPICUOUS DISCLOSURE AS PROVIDED IN PARAGRAPH (A) OF THIS SUBDIVISION, THE CUSTOMER EXPLICITLY CONSENTED TO THE NATURE AND AMOUNT OF SUCH CHARGES; AND (C) THE THIRD PARTY OFFERING THE PRODUCT OR SERVICE OR AN AGENT OF SUCH THIRD PARTY PROVIDED THE CUSTOMER WITH A TOLL-FREE TELEPHONE NUMBER THE CUSTOMER MAY CALL AND AN ADDRESS TO WHICH THE CUSTOMER MAY WRITE TO RESOLVE ANY BILLING DISPUTE. 3. ANY CHARGES FOR THIRD PARTY PRODUCTS OR SERVICES THAT ARE INCLUDED ON A BILL OR INVOICE BY A TELEPHONE CORPORATION WITHOUT THE CONSENT OF THE CUSTOMER HAVING BEEN OBTAINED AS PROVIDED IN SUBDIVISION TWO OF THIS SECTION SHALL BE VOID AND UNENFORCEABLE, AND SHALL BE REMOVED FROM THE BILL OR INVOICE UPON NOTICE FROM SUCH CUSTOMER. 4. THE COMMISSION SHALL SUPERVISE AND ENSURE COMPLIANCE WITH THE PROVISIONS OF THIS SECTION, AND MAY PROMULGATE ANY RULES AND REGULATIONS IT DEEMS NECESSARY OR DESIRABLE TO ENSURE SUCH COMPLIANCE, INCLUDING BUT NOT LIMITED TO ANY ADDITIONAL REQUIREMENTS FOR VERIFICATION OF CUSTOMER ORDERS AND ANY ADDITIONAL STANDARDS THAT THIRD PARTIES OR AGENTS MUST MEET TO BE AUTHORIZED TO RECEIVE PAYMENT THROUGH THE INCLUSION OF CHARG- ES ON BILLS OR INVOICES OF TELEPHONE CORPORATIONS. ANY FAILURE BY A TELEPHONE CORPORATION TO COMPLY WITH THE PROVISIONS OF THIS SECTION MAY BE REDRESSED AS PROVIDED IN SUBDIVISION THREE OF SECTION NINETY-SIX OF THIS ARTICLE OR AS OTHERWISE AUTHORIZED BY LAW. S 3. The general business law is amended by adding a new section 390- bb to read as follows: S 390-BB. CRAMMING PROHIBITED. 1. FOR THE PURPOSES OF THIS SECTION, "CRAMMING" MEANS THE INCLUSION AND IMPOSITION OF CHARGES ON THE INVOICE OR BILL OF A CUSTOMER FROM A CABLE TELEVISION COMPANY, AS DEFINED IN SECTION TWO HUNDRED TWELVE OF THE PUBLIC SERVICE LAW, AND THEIR SUBSID- IARIES FURNISHING TELEPHONE SERVICE TO CUSTOMERS IN NEW YORK, AT THE REQUEST OF A THIRD PARTY OR BILLING AGGREGATOR THAT (A) WERE NOT AUTHOR- IZED BY THE CUSTOMER, OR (B) IF AUTHORIZED, WERE OBTAINED THROUGH MISLEADING OR DECEPTIVE MEANS. 2. A CUSTOMER SHALL NOT BE LIABLE FOR CHARGES APPEARING ON THE INVOICE OR BILL OF A CABLE TELEVISION COMPANY THAT ARE THE RESULT OF CRAMMING. NO CHARGES FOR ANY PRODUCTS OR SERVICES, OTHER THAN THOSE PROVIDED BY THE CABLE TELEVISION COMPANY, ITS AFFILIATES, A THIRD PARTY VIDEO PROVIDER WITH WHO A CABLE CORPORATION OR ITS AFFILIATE JOINTLY MARKET SERVICES, OR OTHERWISE PERMITTED BY LAW, SHALL BE INCLUDED ON ANY BILL OR INVOICE OF A CUSTOMER, UNLESS THE THIRD PARTY REQUESTING THE PAYMENT OF SUCH CHARGES RETAINS AND PROVIDES UPON REQUEST VALID PROOF THAT: (A) THE CUSTOMER WAS PROVIDED WITH CLEAR AND CONSPICUOUS DISCLOSURE OF ALL MATERIAL TERMS AND CONDITIONS OF THE PRODUCT OR SERVICE BEING OFFERED, INCLUDING BUT NOT LIMITED TO ALL INITIAL AND RECURRING CHARGES AND THE FACT THAT SUCH CHARGES SHALL APPEAR ON THE CUSTOMER'S CABLE TELEVISION BILL;
(B) AFTER RECEIVING CLEAR AND CONSPICUOUS DISCLOSURE AS PROVIDED IN PARAGRAPH (A) OF THIS SUBDIVISION, THE CUSTOMER EXPLICITLY CONSENTED TO THE NATURE AND AMOUNT OF SUCH CHARGES; AND (C) THE THIRD PARTY OFFERING THE PRODUCT OR SERVICE OR AN AGENT OF SUCH THIRD PARTY PROVIDED THE CUSTOMER WITH A TOLL-FREE TELEPHONE NUMBER THE CUSTOMER MAY CALL AND AN ADDRESS TO WHICH THE CUSTOMER MAY WRITE TO RESOLVE ANY BILLING DISPUTE. 3. ANY CHARGES FOR THIRD PARTY PRODUCTS OR SERVICES THAT ARE INCLUDED ON A BILL OR INVOICE BY A CABLE TELEVISION COMPANY WITHOUT THE CONSENT OF THE CUSTOMER HAVING BEEN OBTAINED AS PROVIDED IN SUBDIVISION TWO OF THIS SECTION SHALL BE VOID AND UNENFORCEABLE, AND SHALL BE REMOVED FROM THE BILL OR INVOICE UPON NOTICE FROM SUCH CUSTOMER. 4. THE DEPARTMENT OF LAW SHALL SUPERVISE AND ENSURE COMPLIANCE WITH THE PROVISIONS OF THIS SECTION, AND MAY PROMULGATE ANY RULES AND REGU- LATIONS IT DEEMS NECESSARY OR DESIRABLE TO ENSURE SUCH COMPLIANCE, INCLUDING BUT NOT LIMITED TO ANY ADDITIONAL REQUIREMENTS FOR VERIFICA- TION OF CUSTOMER ORDERS AND ANY ADDITIONAL STANDARDS THAT THIRD PARTIES OR AGENTS MUST MEET TO BE AUTHORIZED TO RECEIVE PAYMENT THROUGH THE INCLUSION OF CHARGES ON BILLS OR INVOICES OF CABLE TELEVISION COMPANIES. ANY FAILURE BY A CABLE TELEVISION COMPANY TO COMPLY WITH THE PROVISIONS OF THIS SECTION MAY BE REDRESSED AS OTHERWISE AUTHORIZED BY LAW. S 4. This act shall take effect on the one hundred eightieth day after it shall have become a law.

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