The Regulatory Mix, TMI’s daily blog of regulatory activities, is a snapshot of PUC, FCC, legislative, and occasionally court, issues that our regulatory monitoring team uncovers each day. Depending on their significance, some items may be the subject of a TMI Regulatory Bulletin.
The Senate Committee on Commerce, Science, and Transportation released a majority staff report on the findings of its investigation into wireless cramming. The report entitled “Cramming on Mobile Phone Bills: A Report on Wireless Billing Practices” finds that:
- Third-party billing on wireless phone bills has been a billion dollar industry yielding “tremendous” revenues for carriers. “AT&T, Sprint, T-Mobile, and Verizon generally retained 30-40 percent of each vendor charge placed.”
- Despite industry assertions that fraudulent third-party wireless billing was a “de minimis” problem, wireless cramming has been widespread and has likely cost consumers hundreds of millions of dollars.
- The wireless industry was on notice at least as early as 2008 about significant wireless cramming concerns and problems with third-party vendor marketing tactics, yet carriers’ anti-cramming policies and sometimes lax oversight left wide gaps in consumer protection:
- Consumer billing authorization requirements known as the “double opt-in” that were touted as safeguards by industry were porous and multitudes of scammers appeared to have repeatedly skirted them.
- Some carrier policies allowed vendors to continue billing consumers even when the vendors had several months of consecutively high consumer refund rates. Documents obtained by the Committee indicate this practice occurred despite vendor refund rates that at times topped 50% of monthly revenues.
- Carriers placed questionable reliance on billing aggregators in monitoring conduct of vendors that were charging consumers on carriers’ billing platforms.
Government Accountability Office (GAO)
GAO has released the preliminary findings of its study on the use of data caps by wireless and wireline broadband service providers. The study was undertaken at the request of Congresswoman Anna G. Eshoo (D-Calif.). A final report will be issued in November 2014. The preliminary findings include: (1) seven of 13 wireline ISPs apply usage based pricing (UBP) to some extent; (2) consumers may not be fully benefiting from lower-cost options under UBP; (3) focus group participants expressed few serious concerns about wireless UBP but were concerned about wireline UBP; (4) limited choice of wireline ISPs could limit some potential benefits of UBP; and (5) confusion over data could result in mixed effects for consumers.