Bill S3275-2013

Requires authorization for and verification of the validity of third-party charges for products and services billed to a customer on bills issued by telecommunication providers

Requires authorization by the customer, and verification by the telecommunications providers, of the validity of third-party charges for products and services billed to a customer on bills issued by telecommunication providers to their customers.

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  • Jan 8, 2014: REFERRED TO CONSUMER PROTECTION
  • Jan 31, 2013: REFERRED TO CONSUMER PROTECTION

Memo

BILL NUMBER:S3275

TITLE OF BILL: An act to amend the general business law, in relation to requiring authorization by the customer, and verification by the telecommunications providers, of the validity of third-party charges for products and services billed to a customer on bills issued by telecommunication providers to their customers

PURPOSE: To help reduce the incidents of cramming and to provide remedies that offer greater protection to the telecommunications customers of all providers.

SUMMARY OF PROVISIONS: This bill amends the general business law by adding a new section, 399-zzzz, which: defines "cramming" as a form of fraud in which charges are added to a bill by a third party without the knowledge or authorization of the subscriber; institutes a set of requirements for submitting charges to a customer's bill; institutes a set of requirements for third party verification of charges added to a customer's bill; institutes a set of requirements for maintaining records of disputed charges; requires that billing carriers and billing agents must have a protocol set in place for identifying unauthorized charges and, suspending or terminating contracts with billing agents or service providers that have submitted unauthorized charges; deems any unauthorized charges submitted by a third party to be void and unenforceable; requires billing carriers to provide information to their customers regarding a course of action to dispute unauthorized charges.

Authorizes the Attorney General's office to investigate complaints of cramming; authorizes the Attorney General's office to pursue civil action against third party providers and billing agents found to be engaging in cramming; authorizes the Attorney General's office to bar any service provider or billing agent who has been found to be in violation of this section or otherwise engaging in unscrupulous practices from contracting with any billing carrier in New York State.

JUSTIFICATION: "Cramming", the act of fraudulently adding unauthorized charges to a Person's bill without their knowledge or consent is one of the leading consumer complaints in New York. Often, customers are unaware that they are the victims of cramming because the charges are small enough that the customer doesn't notice. Additionally, with phone bills typically being multiple pages, many customers do not notice the unauthorized charges on their bills. This scam particularly targets senior citizens.

While the practice of "cramming" is illegal, there is a significant lack of enforcement. When a customer believes that unauthorized charges have been added to their bill, the onus is on them to resolve the issue and recoup their money. They must first call their telecommunications provider and get the charge removed. Unfortunately, simply having the service provider remove the charge does not solve the problem. The third party provider that submitted the unauthorized charge may try to add

that charge on the next bill or may pursue the money through a collection agency. The customer must find the company that put the unauthorized charge on their bill, spend hours on the phone disputing the charge, and then hope the company agrees to reimburse them and not resubmit the charge the following month. To reach a final resolution of this issue often takes months to occur and many valuable personal hours by the consumer. The state should be doing more to shift the burden of proof from the customer to the companies accused of cramming. This legislation will put mechanisms in place to ensure that customers have an easier time disputing unauthorized charges, as well as ensuring that phone service providers and the Attorney General's office are shutting down companies found to be engaging in cramming.

EFFECTIVE DATE: This act shall take effect on the 120th day after it shall have become law; provided however that effective immediately, the addition, amendment, and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized and directed to be made and completed on or before such effective date.


Text

STATE OF NEW YORK ________________________________________________________________________ 3275 2013-2014 Regular Sessions IN SENATE January 31, 2013 ___________
Introduced by Sen. KRUEGER -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection AN ACT to amend the general business law, in relation to requiring authorization by the customer, and verification by the telecommuni- cations providers, of the validity of third-party charges for products and services billed to a customer on bills issued by telecommunication providers to their customers THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative findings and purpose. The legislature finds that some third-party companies are placing unauthorized service charges on telecommunications customers' monthly bills. The practice is commonly called "cramming". Cramming is a form of fraud in which charges are added to a bill by a third party without the customer's consent or disclosure. The legislature further finds that many New Yorkers are switching to phone service provided by cable TV or Internet companies. These companies can also offer third-party billing that may inadvertent- ly result in fraud through no fault of their own actions. Accordingly, the purpose of this act is to help reduce the level of cramming and to provide remedies that offer greater protection to the telecommunications customers of all service providers. S 2. The general business law is amended by adding a new section 399- zzzz to read as follows: S 399-ZZZZ. AUTHORIZATION AND VERIFICATION FOR PRODUCT AND SERVICE CHARGES TO BE BILLED ON A CONSUMER'S BILL. 1. DEFINITIONS. FOR PURPOSES OF THIS SECTION: (A) "BILLING AGENT" MEANS ANY ENTITY THAT SUBMITS CHARGES TO THE BILL- ING CARRIER ON BEHALF OF ITSELF OR ANY SERVICE PROVIDER. (B) "BILLING CARRIER" MEANS ANY TELEPHONE CORPORATION, AS DEFINED IN SUBDIVISION SEVENTEEN OF SECTION TWO OF THE PUBLIC SERVICE LAW, AND EVERY CABLE TELEVISION COMPANY, AS DEFINED IN SUBDIVISION ONE OF SECTION
TWO HUNDRED TWELVE OF THE PUBLIC SERVICE LAW THAT PROVIDES TELEPHONE OR LIKE SERVICE TO CUSTOMERS IN THE STATE OF NEW YORK, THAT ISSUES A BILL DIRECTLY TO A CUSTOMER FOR ANY PRODUCT OR SERVICE NOT PROVIDED BY A TELECOMMUNICATIONS CARRIER, ITS AFFILIATE OR THIRD PARTY PROVIDER WITH WHOM A TELEPHONE CORPORATION OR CABLE TELEVISION COMPANY OR THEIR AFFIL- IATES JOINTLY MARKET SERVICES. (C) "CRAMMING" MEANS A FORM OF FRAUD IN WHICH CHARGES ARE ADDED TO A BILL BY A THIRD PARTY WITHOUT THE SUBSCRIBER'S AUTHORIZATION OR DISCLO- SURE. (D) "SERVICE PROVIDER" MEANS ANY ENTITY THAT OFFERS A PRODUCT OR SERVICE TO A CONSUMER AND THAT DIRECTLY OR INDIRECTLY CHARGES TO OR COLLECTS FROM A CONSUMER'S BILL RECEIVED FROM A BILLING CARRIER AN AMOUNT FOR THE PRODUCT OR SERVICE. FOR PURPOSES OF THIS SECTION, A SERVICE PROVIDER SHALL NOT INCLUDE AN AFFILIATE OF A BILLING CARRIER OR A THIRD PARTY PROVIDER WITH WHOM A BILLING CARRIER OR ITS AFFILIATES JOINTLY MARKET SERVICES. 2. REQUIREMENTS FOR SUBMITTING CHARGES. (A) A SERVICE PROVIDER OR BILLING AGENT MAY SUBMIT CHARGES FOR A PRODUCT OR SERVICE TO BE BILLED ON A CONSUMER'S BILL ONLY IF: (1) THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE HAS CLEARLY AND CONSPICUOUSLY DISCLOSED ALL MATERIAL TERMS AND CONDITIONS OF THE PRODUCT OR SERVICE BEING OFFERED, INCLUDING, BUT NOT LIMITED TO, ALL CHARGES; AND THE FACT THAT THE CHARGES FOR THE PRODUCT OR SERVICE SHALL APPEAR ON THE CONSUMER'S BILL; (2) AFTER THE CLEAR AND CONSPICUOUS DISCLOSURE OF ALL MATERIAL TERMS AND CONDITIONS BY THE SERVICE PROVIDER AS DESCRIBED IN SUBPARAGRAPH ONE OF THIS PARAGRAPH, THE CONSUMER HAS EXPRESSLY CONSENTED TO OBTAIN THE PRODUCT OR SERVICE OFFERED AND TO HAVE THE CHARGES APPEAR ON THE CONSUM- ER'S BILL AND THE CONSENT HAS BEEN VERIFIED BY THE SERVICE PROVIDER AS PROVIDED IN PARAGRAPH (B) OF THIS SUBDIVISION; (3) THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE OR ANY BILL- ING AGENT FOR THE SERVICE PROVIDER HAS PROVIDED THE CONSUMER WITH A TOLL-FREE TELEPHONE NUMBER THE CONSUMER MAY CALL AND AN ADDRESS TO WHICH THE CONSUMER MAY WRITE TO RESOLVE ANY BILLING DISPUTE AND TO ANSWER QUESTIONS; AND (4) THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE OR THE BILL- ING AGENT HAS TAKEN EFFECTIVE STEPS TO DETERMINE THAT THE CONSUMER WHO PURPORTEDLY CONSENTED TO OBTAIN THE PRODUCT OR SERVICE OFFERED IS AUTHORIZED TO INCUR CHARGES FOR THE TELEPHONE NUMBER TO BE BILLED. (B) THE CONSUMER CONSENT REQUIRED BY PARAGRAPH (A) OF THIS SUBDIVISION MUST BE VERIFIED BY THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE BEFORE ANY CHARGES ARE SUBMITTED FOR BILLING ON A CONSUMER'S BILL. A RECORD OF THE CONSUMER CONSENT AND VERIFICATION MUST BE MAINTAINED BY THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE FOR A PERIOD OF AT LEAST TWENTY-FOUR MONTHS IMMEDIATELY AFTER THE CONSENT AND VERIFICATION HAVE BEEN OBTAINED. THE METHOD OF OBTAINING CONSUMER CONSENT AND VERIFI- CATION SHALL INCLUDE ONE OR MORE OF THE FOLLOWING: (1) A WRITING, SIGNED AND DATED BY THE CONSUMER TO BE BILLED, THAT CLEARLY AND CONSPICUOUSLY DISCLOSES THE MATERIAL TERMS AND CONDITIONS OF THE PRODUCT OR SERVICE BEING OFFERED IN ACCORDANCE WITH PARAGRAPH (A) OF THIS SUBDIVISION AND WHICH CLEARLY AND CONSPICUOUSLY STATES THAT THE CONSUMER EXPRESSLY CONSENTS TO BE BILLED IN ACCORDANCE WITH THE PROVISIONS OF THIS SUBDIVISION AS FOLLOWS: (A) IF THE WRITING IS IN ELECTRONIC FORM, THEN IT SHALL CONTAIN THE CONSUMER DISCLOSURES REQUIRED BY SECTION 101(C) OF THE FEDERAL ELECTRON- IC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT; AND
(B) THE WRITING SHALL BE A SEPARATE DOCUMENT OR EASILY SEPARABLE DOCU- MENT OR LOCATED ON A SEPARATE SCREEN OR WEBPAGE CONTAINING ONLY THE DISCLOSURES AND CONSENT DESCRIBED IN THIS SUBDIVISION; (2) THIRD-PARTY VERIFICATION BY AN INDEPENDENT THIRD PARTY THAT: (A) CLEARLY AND CONSPICUOUSLY DISCLOSES TO THE CONSUMER TO BE BILLED ALL OF THE INFORMATION REQUIRED BY PARAGRAPH (A) OF THIS SUBDIVISION; (B) OPERATES FROM A FACILITY PHYSICALLY SEPARATE FROM THAT OF THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE; (C) IS NOT DIRECTLY OR INDIRECTLY MANAGED, CONTROLLED, DIRECTED, OR OWNED WHOLLY OR IN PART BY THE SERVICE PROVIDER OFFERING THE PRODUCT OR SERVICE; (D) DOES NOT DERIVE COMMISSIONS OR COMPENSATION BASED UPON THE NUMBER OF SALES CONFIRMED; (E) TAPE RECORDS THE ENTIRE VERIFICATION PROCESS, WITH PRIOR CONSENT OF THE CONSUMER TO BE BILLED; AND (F) OBTAINS CONFIRMATION FROM THE CONSUMER TO BE BILLED THAT HE OR SHE AUTHORIZED THE PURCHASE OF THE OFFERED GOOD OR SERVICE. ALL VERIFICATIONS MUST BE CONDUCTED IN THE SAME LANGUAGE THAT WAS USED IN THE UNDERLYING SALES TRANSACTION. (C) UNLESS VERIFICATION IS REQUIRED BY FEDERAL LAW OR RULES IMPLEMENT- ING FEDERAL LAW, THE PROVISIONS OF PARAGRAPH (B) OF THIS SUBDIVISION SHALL NOT APPLY TO CUSTOMER-INITIATED TRANSACTIONS WITH A CERTIFICATED TELECOMMUNICATIONS CARRIER FOR WHICH THE SERVICE PROVIDER HAS THE APPRO- PRIATE DOCUMENTATION. (D) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO COMMERCIAL MOBILE RADIO SERVICES, OR MESSAGE TELECOMMUNICATIONS SERVICE CHARGES THAT THE END-USER CUSTOMER INITIATES BY DIALING 1+, 0+, 0-, 1010XXX, OR COLLECT CALLS AND CHARGES FOR VIDEO SERVICES IF THE SERVICE PROVIDER HAS THE NECESSARY RECORDS TO ESTABLISH THE BILLING FOR THE CALL OR SERVICE. 3. RECORDS OF DISPUTED CHARGES. (A) EVERY SERVICE PROVIDER OR BILLING AGENT SHALL MAINTAIN RECORDS OF EVERY DISPUTED CHARGE FOR A PRODUCT OR SERVICE PLACED ON A CONSUMER'S BILL. (B) THE RECORD REQUIRED UNDER THIS SUBDIVISION SHALL CONTAIN FOR EVERY DISPUTED CHARGE ALL OF THE FOLLOWING: (1) ANY AFFECTED TELEPHONE NUMBERS AND, IF AVAILABLE, ADDRESSES; (2) THE DATE THE CONSUMER REQUESTED THAT THE DISPUTED CHARGE BE REMOVED FROM THE CONSUMER'S BILL; (3) THE DATE THE DISPUTED CHARGE WAS REMOVED FROM THE CONSUMER'S BILL; AND (4) THE DATE ACTION WAS TAKEN TO REFUND OR CREDIT TO THE CONSUMER ANY MONEY THAT THE CONSUMER PAID FOR THE DISPUTED CHARGES. (C) THE RECORD REQUIRED BY THIS SUBDIVISION SHALL BE MAINTAINED FOR AT LEAST TWENTY-FOUR MONTHS. 4. COMPLIANCE. BILLING AGENTS SHALL TAKE REASONABLE STEPS DESIGNED TO ENSURE THAT SERVICE PROVIDERS ON WHOSE BEHALF THEY SUBMIT CHARGES TO A BILLING CARRIER COMPLY WITH THE REQUIREMENTS OF THIS SECTION. 5. VIOLATION. ANY SERVICE PROVIDER OR BILLING AGENT WHO VIOLATES THE PROVISIONS OF THIS SECTION COMMITS AN UNLAWFUL PRACTICE. (A) IF A CUSTOMER DISPUTES A CHARGE FROM A SERVICE PROVIDER OR BILLING AGENT AND HAS IT REMOVED FROM THEIR BILL, NEITHER THE BILLING CARRIER, SERVICE PROVIDER, OR BILLING AGENT CAN PUT THE SAME CHARGE FROM THE SERVICE PROVIDER ON ANY FUTURE BILLS UNLESS THE CUSTOMER HAS EXPLICITLY GRANTED APPROVAL TO DO SO. (B) IF A CUSTOMER CONTACTS THE SERVICE PROVIDER DIRECTLY INSTEAD OF CALLING THE BILLING CARRIER REGARDING AN UNAUTHORIZED CHARGE ON THEIR TELEPHONE BILL, THE SERVICE PROVIDER MUST AGREE TO PROVIDE A CREDIT
ADJUSTMENT TO THE BILL. ANY FURTHER COLLECTION ATTEMPTS ON THE PART OF THE SERVICE PROVIDER SHOULD NOT INCLUDE THE BILL. (C) ANY UNAUTHORIZED SERVICE CHARGES ON TELECOMMUNICATIONS CUSTOMERS WILL BE DEEMED VOID AND UNENFORCEABLE. SERVICE PROVIDERS FOUND TO HAVE SUBMITTED UNAUTHORIZED SERVICE CHARGES CANNOT PURSUE SAID CHARGES THROUGH COLLECTION AGENCIES. (D) EACH BILLING CARRIER AND BILLING AGENT SHALL HAVE IN PLACE AND COMPLY WITH A PROTOCOL FOR IDENTIFYING UNAUTHORIZED CHARGES AND SUSPEND- ING OR TERMINATING BILLING SERVICES TO ANY BILLING AGENT OR SERVICE PROVIDER THAT HAS SUBMITTED UNAUTHORIZED CHARGES. (E) IF A CUSTOMER CONTACTS A BILLING CARRIER TO DISPUTE A BILLED ITEM FROM A BILLING AGENT OR SERVICE PROVIDER, THE BILLING CARRIER MUST PROMPTLY ADDRESS THE DISPUTE BEFORE REFERRING THE CUSTOMER TO THE BILL- ING AGENT OR SERVICE PROVIDER WHEN THE CUSTOMER INDICATES THE PRODUCT OR SERVICE WAS NOT AUTHORIZED. THIS INCLUDES, BUT IS NOT LIMITED TO, REMOV- ING THE UNAUTHORIZED CHARGES FROM THE CUSTOMER'S BILL, ENSURING THAT UNAUTHORIZED CHARGES FROM THE SAME SERVICE PROVIDER OR BILLING AGENT WILL NOT CONTINUE TO APPEAR ON THE CUSTOMER'S BILL, AND OFFERING THE CUSTOMER THE OPTION TO BAR ALL THIRD-PARTY BILLING ON THEIR BILL. (F) ANNUALLY, BILLING CARRIERS SHALL PROVIDE INFORMATION TO THEIR CUSTOMERS REGARDING A COURSE OF ACTION TO DISPUTE UNAUTHORIZED CHARGES FROM SERVICE PROVIDERS. THIS SHALL INCLUDE, BUT IS NOT LIMITED TO, A DEFINITION OF CRAMMING, HOW TO DISPUTE AN UNAUTHORIZED CHARGE, AND HOW TO FILE A COMPLAINT WITH THE ATTORNEY GENERAL'S OFFICE. (G) THIRD-PARTY CHARGES SHALL BE SEPARATED FROM DIRECT CHARGES IN A CLEAR MANNER. (H) BILLING CARRIERS CANNOT DISCONNECT SERVICES OVER THE FAILURE TO PAY A DISPUTED THIRD PARTY CHARGE. (I) THE ATTORNEY GENERAL'S OFFICE SHALL HAVE THE AUTHORITY TO INVESTI- GATE COMPLAINTS OF CRAMMING. (J) THE ATTORNEY GENERAL'S OFFICE SHALL HAVE THE AUTHORITY TO PURSUE CIVIL ACTION AGAINST SERVICE PROVIDERS AND BILLING AGENTS FOUND TO HAVE BEEN ENGAGING IN CRAMMING. (K) THE ATTORNEY GENERAL'S OFFICE SHALL HAVE THE AUTHORITY TO BLACK- LIST ANY SERVICE PROVIDER OR BILLING AGENT WHO HAS BEEN FOUND TO BE IN VIOLATION OF THIS SECTION OR OTHERWISE PARTICIPATING IN UNSCRUPULOUS PRACTICES FROM CONTRACTING WITH ANY BILLING CARRIER IN NEW YORK STATE. S 3. This act shall take effect on the one hundred twentieth day after it shall have become a law; provided, however that effective immediate- ly, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized and directed to be made and completed on or before such effective date.

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