senate Bill S1832A

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

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 13 / Jan / 2011
    • REFERRED TO ENERGY AND TELECOMMUNICATIONS
  • 05 / Apr / 2011
    • AMEND (T) AND RECOMMIT TO ENERGY AND TELECOMMUNICATIONS
  • 05 / Apr / 2011
    • PRINT NUMBER 1832A
  • 04 / Jan / 2012
    • REFERRED TO ENERGY AND TELECOMMUNICATIONS

Summary

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.

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Bill Details

Versions:
S1832
S1832A
Legislative Cycle:
2011-2012
Current Committee:
Senate Energy And Telecommunications
Law Section:
Public Service Law
Laws Affected:
Amd §92-d, add §92-g, Pub Serv L; add §390-bb, Gen Bus L
Versions Introduced in 2009-2010 Legislative Cycle:
S7082B

Sponsor 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.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1832--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04127-06-1

S. 1832--A                          2

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;

S. 1832--A                          3

  (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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