A "pay-per-call
service" is any service which a consumer pays for over a special phone
line at a charge greater than the basic cost of the call. A wide
variety of products and services can be obtained over a pay-per-call
phone line. Most commonly, consumers call 900-numbers to listen to
information or entertainment programs, or to participate in group
conversations. In addition, some 800-numbers, which have traditionally
been toll-free, now charge consumers for calls. In the metropolitan New
York area, similar services are also offered on local telephone lines
beginning with 540, 550, 700, 970, 976, and 394.
The Companies Behind Pay-Per-Call Services
A number of companies are involved in delivering a pay-per-call service
program. The "information provider" is the business or individual who
created the telephone program and is responsible for its content. The
"long distance carrier" is the long distance company that the
information provider has contracted with to carry the pay-per-call
program. This will not necessarily be the long distance company which
handles your regular long distance service. Your local phone company,
known as the "local exchange carrier," is usually responsible for the
billing of 900-number services. In the Metropolitan New York area,
NYNEX also plays the role of the "carrier" for 540, 550, 970, 976, and
394 numbers.
Regulation of Pay-Per-Call Services
In November 1993, the Federal Trade Commission (FTC) adopted the
"900-Number Rule" to regulate 900-number services and to prevent
consumers from being misled about the charges and the services they
would receive. The rule covers advertising and operation of
900-numbers, as well as billing and collection procedures. (The Federal
Communications Commission (FCC) has parallel rules which govern the
carriers of such services; this report is concerned primarily with
those areas covered by the FTC.) The FTC rule also covers 800-number
pay-per-call services in an indirect way. Pay-per-call services
available through local 7-digit numbers beginning 540, 970, etc. are
regulated by the New York State Public Service Commission.
Under the FTC rule, all advertisements for a 900-number
service must contain a clear disclosure of the service's cost. If a
program is billed on the basis of time -- such as $2.95 per minute --
the ad must state that rate and any minimum charge. If the call is
billed per minute and the complete length of the program is known, the
maximum cost of the call must be disclosed. If a program is billed at a
flat rate per call -- such as $10.00 per call -- that amount must be
disclosed. If calls are billed at variable rates, or additional charges
can be incurred by selecting options within a program, the range of
additional costs must be stated, as well as the minimum charge for a
call. The FTC rule includes very precise guidelines on how disclosures
about cost or parental permission must be presented in ads. In print
ads, for example, the cost disclosure must appear adjacent to every
presentation of the 900-number, in a typeface no less than one-half the
size the 900-number itself. Basically, however, the required
disclosures should be presented in a way which would not mislead the
average reader, listener or viewer.
Advertisements which promote pay-per call sweepstakes or games
of chance require special disclosures. If the odds of winning a prize
are known, they must be stated in the ad for the 900-number. If the
odds cannot be forecasted, the factors which determine the odds must be
explained: for example, if the chances of winning a prize depend on the
number of entrants in the contest, this should be stated. An ad for a
900-number sweepstakes game must also state that it is possible to
enter the contest free of charge and instruct consumers how to do so.
The providers of 900-number sweepstakes games must also include these
disclosures about odds and cost-free participation in the preamble to
the telephone program itself.
Operating 900 Numbers: the "preamble"
Virtually every 900-number program must begin with a "preamble," which
is an introductory message for which a caller cannot be charged. The
preamble must always include the following information:
- The name of the information provider and a brief description of the service being provided.
- The cost of the call. The guidelines for cost disclosure in the preamble are the same as those listed above for advertisements.
- The disclosure that parental permission is required for callers under 18.
- When the charges will begin, and how to avoid being charged.
The
preamble must state that charges will begin at least 3 seconds after a
clearly discernible signal or tone, and it must advise callers to hang
up within 3 seconds if they do not wish to be charged. A caller who
hangs up within 3 seconds cannot be charged. If the preamble is
designed so that a consumer actively begins the program -- by pushing a
touch-tone key, or speaking a word -- the warning tone and delay are
not necessary, but it must be made clear that by beginning the program
one begins charges.
Preambles are not required when the total cost of a 900-number
service cannot be more than $2.00. Preambles are also not necessary
when a pay-per-call service contains only non-verbal information, such
as data transmissions for fax machines or computers. The same
disclosure rules, however, still apply when these two kinds of services
are advertised.
Local Pay-per-Call Numbers: 540, 970, 976, etc.
In the metropolitan New York area, local pay-per-call numbers, with
prefixes 540, 550, 700, 970, 976, and 394, also offer information,
entertainment and interactive phone programs. These local numbers are
carried and billed by NYNEX. The New York State Public Service
Commission regulates the advertising and operation of these numbers in
a manner similar to the FTC's regulation of 900-numbers discussed
above.
Advertisements
for these services must: 1) clearly disclose all potential charges for
the service, 2) inform consumers of any planned rate change at least 2
weeks prior to its taking effect, and 3) state the geographic area in
which the service is available. Whether in print, audio or video media,
disclosures of cost must be presented in a manner that would not
confuse the average reader, listener or viewer.
Just as
900-numbers require a "preamble" for most calls, most local
pay-per-call services require an introductory statement called a "kill
message." This "kill message" must clearly disclose the rate of the
call and advise consumers that they can hang up to avoid charges. Any
local program which has the potential to exceed $3.50 in cost must be
introduced by such a message. These disclosures must be made within 10
seconds of the beginning of the call. Consumers must be able to hang up
and avoid charges within 20 seconds of the beginning of the call.
800 Numbers Which Charge You
Traditionally, 800-numbers have been free. In 1993, however, the FCC
began to permit some 800-number services to charge for calls, provided
that they have a "presubscription agreement" with the caller. A
presubscription agreement is an agreement between a caller and an
information provider for future service -- and future billing. Put
simply, the providers of such a service must get callers to consent to
the charges before they use the service. This agreement can be made in
writing or during a separate phone call. Consumers are typically given
an identification number to use the pay-per-call 800 service. If a
presubscription agreement is established during a phone call, a
consumer would then hang up, call the 800-number, and use the
identification number to access the service, fully aware of the charges
would be incurred. After this initial agreement, information providers
can bill callers for using the service without making the various
disclosures and warnings, such as the preamble, that are required of a
normal 900-number.
The Better Business Bureau has received numerous complaints
from consumers who were confused or misled about what counts as a
presubscription agreement, and were billed sometimes enormous amounts
for what they assumed were toll-free calls. The FTC 900-Number Rule
includes the following guidelines on how presubscription agreements can
and must be set up:
- A presubscription agreement must be made before a call can be billed.
- A
consumer cannot be billed for the call during which a presubscription
agreement is established. A presubscription agreement can be made
during an 800-number call, but a caller could not then be transferred
directly into a pay-per-call service. Unless a presubscription
agreement already exists, a caller cannot be charged for making an
800-number call.
- While a written contract is not required, a caller must actively consent to the charge.
Additionally, in establishing a presubscription agreement with a caller, the information provider must:
- Require callers to use some form of identification, such as a number code, to prevent unauthorized use of their account.
- Clearly disclose the cost of the service, and notify consumers in advance of future rate changes.
- Provide
the name and address of the information provider, and business number
(not a 900-number) which consumers can call for information or to make
a complaint.
There is an exception to these rules which
consumers might encounter: a telephone company can charge consumers for
directory assistance services over an 800-number without setting up a
presubscription agreement. This is because directory assistance service
-- calling information to find out someone's number -- is not included
in the FCC's formal definition of a "pay-per-call service."
Accordingly, telephone companies can charge consumers for directory
assistance calls to an 800-number -- or to a local telephone number,
such as 555-1212 -- without following the various regulations outlined
in this report.
In general, consumers should be very careful not to get into a
presubscription agreement by accident or deceit. Just because a company
doesn't make the disclosures required by law, it doesn't mean they
won't try to bill you anyway. If an operator on a local or toll-free
phone line tries to give you an "activation number," or any sort of
identification code, make sure you are not being pulled into a
presubscription agreement. Likewise, if you receive an ad for a
telephone service in the mail which includes "access numbers," or any
code uniquely addressed to you, understand that this may be a
solicitation for a presubscription arrangement. Even if the ad claims
there is "no charge" for the service, it may mean there is no charge to
activate a billing relationship. If an operator offers to transfer you
to another service, or gives you another number to call, always make
sure you are clear about what, if any, charges will be incurred.
Because
this sort of pay-per-call is made with an 800-number, a 900-number
block on your phone line will not prevent a guest, an employee or a
child from establishing and billing to a presubscription account. The
individual or organization billed for a phone line is responsible for
pay-per-call calls made on it -- whether or not they were authorized --
so it is important that employees, guests and children understand that
what look like toll-free calls can end up costing large amounts of
money.
Billing Problems with a Pay-per-Call Service
What if you get your telephone bill and find you have been wrongly
billed for using a pay-per-call service -- or billed for a call that
you never made at all? In general, if you disagree with a pay-per-call
charge on your phone bill, you should follow the instructions included
with the bill for contesting charges, and contact the company billing
you. The FTC 900-Number Rule includes specific guidelines on how
900-number charges can be billed and collected, and how consumers can
contest charges which they dispute. This aspect of the FTC rule is
discussed in the section below.
These rules for billing and contesting 900-number charges also
apply to 800-number charges if the presubscription agreement through
which a consumer is billed was not valid. That is, if you are billed
for calling an 800-number and the provider of the service failed to
comply with any of the rules for establishing presubscription
agreements covered above, then the 900-Number Rule also protects you.
If, for example, you are not clearly informed of the charges when you
accept and use an identification code, or if you are billed for the
call during which you are offered the presubscription agreement, this
does not represent a legitimate presubscription agreement, and the FTC
rules would apply. If you are confused or shocked by an 800-number
charge on your bill, it is quite possible that a valid presubscription
agreement was never made. If this seems to be the case, contest the
800-number charge as you would a 900-number charge. The FTC 900-Number
Rule does not, however, cover problems with local pay-per-call number
beginning with 540, 970, 976, etc. in any way. If you believe you have
been wrongly billed for calling one of these numbers, follow the
instructions in your billing statement and contact NYNEX, which is
responsible for billing these services. In general, however, you should
be aware that a telephone company can never disconnect your regular
local or long distance service because you dispute or fail to pay a
pay-per-call charge.
Disputing 900 Number Charges
If you believe that you have been wrongly billed for a 900-number
service, you must contact the company billing you within 60 days. The
name of the company billing you, and an address or business phone
number, must be included on the bill for this purpose. (This "billing
company" could be a telephone company, an information provider, or an
independent billing agency.) The billing company can specify whether
you should direct complaints by phone or mail. In either case, when you
assert a billing error, your complaint should include the name and
telephone number to which the charge was billed, the amount and date of
the charge you are contesting, and an explanation of why you believe
this charge is mistaken.
After receiving your error notice, the billing company must either
correct a billing error, and credit your account for the disputed
amount, or conduct a "billing review," an investigation of your bill
and their records. A billing review can take no longer than 90 days.
After conducting a review, a billing company can either agree that an
error occurred, and credit your account at that point, or continue to
maintain that a certain charge is owed. If a billing company agrees
that an error was made and credits your account, either before or after
a review, it is possible that another company involved in providing the
pay-per-service -- such as a long distance carrier -- might be unaware
of the correction and still attempt to collect the charge. The billing
company must warn you of this possibility and either give you the name,
address and telephone number of any company that might try to collect
the corrected charge or give you a local or toll-free number you can
use to find out that information. If this is a possibility, be sure to
contact the company in question to head off any mistaken collection
effort.
During a billing review you have certain rights. A customer
can never be made to pay a fee in order to have a billing review
conducted. You do not have to pay the charge in question while the
review is underway, and the company may not attempt to collect it. (The
rest of your phone bill, and your obligation to pay it, is not affected
by a review of specific pay-per-call charges.) The billing company may
not report you to a credit reporting agency or bureau during the
billing review. If the billing company continues to list the contested
charge as a debit on your statements during the billing review, they
must include the disclosure that you do not have to pay the charge
during the process. If the billing company completes the billing review
and decides that you still owe them the charge you dispute, they must:
1) notify you of this conclusion, 2) give you an explanation of why
this is so, and 3) tell you when payment is now due. At your request,
the billing company must provide you with a written explanation of why
the charges are correct, and copies of any documents that support their
claim. A customer must have as much time to pay the disputed charge as
the billing company normally allows -- and in no case can this be less
than 10 days.
If you still dispute a 900-number charge after the billing
company has reviewed its records and presented you with its reasons,
you should notify the company within the revised billing period that
you refuse to pay. If you do this, the billing company cannot report
the debt as delinquent without also reporting the fact that you
continue to dispute the charge. If you have not done so already,
contact your local Better Business Bureau for mediation. If it appears
that the billing company, or any company associated with your bill for
a pay-per-call service, has violated the FTC rules for 900-number
service described here, contact the FTC or the Federal Communications
Commission (FCC). In particular, if a billing company, information
provider or common carrier violates these FTC procedures for resolving
billing errors, the company automatically forfeits its right to collect
the first $50 of a disputed charge, even if the consumer was mistaken
in asserting an error. A telephone company can block your access to
900-number pay-per-call services if, after a billing review, you still
dispute a 900-number charge. Once again, however, a telephone company
can never disconnect your regular local or long distance service
because of a failure to pay a pay-per-call charge.
Other Problems: Reaching the Right Company
Suppose you have problems with a pay-per-call service before you
receive the bill? Or suppose your billing statement, or a recorded
preamble, does not include sufficient information to reach the relevant
company for an inquiry or complaint? Don't call back a pay-per-call
number and risk or guarantee more charges. Instead, go through the
local or long distance company to file a complaint or reach the
information provider.
There are three main long distance 800 and 900-number
carriers: AT&T, MCI and Sprint. If you know that AT&T is the
long distance carrier of the 800 or 900-number in question, call
AT&T instead of your local phone company. Both MCI and Sprint
recommend that you contact your local phone company, the "local
exchange carrier," to resolve billing problems with pay-per-call
services. If your problem or question is not resolved through the local
phone company, however, go directly to the long distance carrier
involved. If you do not know the long distance carrier of the 800 or
900 number service in question, any one of these three long distance
carriers should be able to tell you which phone company carries a
particular number, and the name, address and phone number of the
information provider responsible for the service you have used.
Toll-free numbers which handle questions and complaints with
pay-per-call services are:
- AT&T: 1-800-222-0300
- MCI: 1-800-964-6242
- Sprint: 1-800-366-0707
Agencies to Contact Regarding a Pay-per-Call Problem
If you find that you cannot resolve a problem by complaining to the
correct companies with the above steps, contact your local Better
Business Bureau for mediation. If the pay-per-call service violates the
guidelines, you can contact the Federal Trade Commission (FTC), the
Federal Communications Commission (FCC), and your local Attorney
General's office. The rules outlined in this report are design to
minimize confusion about pay-per-services and improve consumers' access
to the companies that provide them, so if you are stunned by a charge,
or you are unable to reach the right people to complain, it's quite
possible that FTC guidelines have been disregarded. If you received the
solicitation for the pay-per-call service in question through the mail,
you can also contact the U.S. Postal Inspector. The Public Service
Commission is the agency which regulates and oversees the local
pay-per-call numbers carried by NYNEX which begin with the prefixes
540, 970, 976, etc.
The Better Business Bureau of Metropolitan New York
257 Park Avenue South
New York, NY 10010
(212) 533-6200
(900) 225-5222
Federal Trade Commission Regional Office (FTC)
150 William Street, Suite 1300
New York, NY 10038
(212) 264-1207
Federal Communications Commission (FCC)
90 Church St.
New York, NY 10007
(212) 264-7321
U.S. Postal Inspector
P.O. Box 555
New York, NY 10116-0555
(212) 330-3844
New York State Public Service Commission
1 Penn Plaza
New York, NY 10019
(800) 342-3377
