WSR 98-24-124
PROPOSED RULES
UTILITIES AND TRANSPORTATION
COMMISSION
[Commission Docket No. UT-971469--Filed December 2, 1998, 11:14 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 98-05-055.
Title of Rule: Prepaid calling services, establishes a separate section to set minimum service and consumer information and protection standards relating to prepaid calling services.
Purpose: Formalize commission policies relating to debit card companies. Defines prepaid calling services; establishes pre- and post-sale disclosure requirements for prepaid calling service; and establishes performance standards for prepaid calling services. Allows relaxation of financial requirements for companies meeting specified financial standards.
Statutory Authority for Adoption: RCW 80.01.040(4), 80.36.520, and 80.04.160.
Summary: The proposed rules would require companies that are accepting customer advance payments to post a bond, or establish a trust account, or demonstrate the standards for waiver of the bond/trust requirement. The rule would establish reporting criteria and calculation levels on the bond/trust account. The proposed rule would establish written pre-sale and verbal pre-call disclosure requirements; establish technical and billing standards; and require notification when a company ceases operations in Washington state.
Reasons Supporting Proposal: Competition in the telecommunications industry has resulted in a number of new telecommunications services, such as debit cards. Many of these services require the customer to make payment prior to provision of service. The commission does not have rules specific to these services. The current practice is to put conditions in companies' registration orders to address disclosure and technical issues. The proposed rule would formalize these requirements in rule and assure their consistent application, and would set criteria to decide when the bond or trust is not needed.
No other commission rule focuses specifically on prepaid calling services. This type of service is growing in popularity and, because it involves payment prior to receipt of services, requires special attention to assure that consumers get the services that they pay for.
Name of Agency Personnel Responsible for Drafting: Mary Taylor, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, (360) 664-1102; Implementation and Enforcement: Carole Washburn, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, (360) 664-1174.
Name of Proponent: Washington Utilities and Transportation Commission, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: This proposed rule defines prepaid calling services; establishes disclosure requirements for prepaid calling service; and establishes performance standards for prepaid calling services; and add flexibility to existing commission requirements related to protection of customer advanced payments by setting criteria for waiving security.
The effect will be that consumers of prepaid calling services will receive uniform, consistent information among various service providers to assist consumers in making informed decisions regarding prepaid calling services. Consumers will see consistent practices among different companies in how cards operate and how consumers can receive assistance. In addition, companies will have flexibility that does not currently exist in meeting the requirements of establishing a bond or trust account to protect consumer prepayments.
Proposal Changes the Following Existing Rules: No existing rules are amended. Additional requirements are imposed on prepaid telecommunications services beyond those required of other companies.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Small Business Economic Impact Statement
The Washington Utilities and Transportation Commission (commission) is proposing rules relating to prepaid telecommunication services. The purpose of the proposed rule making is to codify disclosure requirements, technical requirements, billing requirements for companies providing prepaid telecommunications services and to allow more flexibility relating to protection of customer prepayments.
The commission requested involvement from small and large telecommunication companies to analyze the economic impact of the proposed rule making. Staff held a stakeholders meeting with industry, consumer interest groups, and the media to discuss the issues and impacts of the proposed rules. Small and large telecommunication providers were asked to complete a questionnaire and comment on the economic impacts of the proposed rules. One small business and one large business responded.
The small telecommunication provider stated that the proposed rules would cause no significant change in the company's costs. The small telecommunication provider stated that the change is insignificant because most of the requirements of the proposed rules are requirements that the commission typically requires of prepaid telecommunication providers by order when it grants registration authority. The minimal cost of printing to provide consumer disclosure in a presale document or on a debit card will be the most significant impact of the proposed rule making.
The large telecommunication provider reported that the proposal would cause a significant economic impact. The large telecommunication company is a national telecommunications provider and would incur significant costs to modify its services to comply with the requirements of the proposed rule making. The proposed rules would impose specific procedures that are unique only to the state of Washington. The company reports that proposed rule language requiring the maintenance of call data for three years, presale or point of sale documentation, refund of unused balances, and performance standards would be unique to the state of Washington. The company's cost estimates for production and distribution of new debit cards that comply with the proposed rules is $500,000. This cost estimate does not include other significant administrative costs that the company contends would also be incurred, such as training, inventory management, tracking, and system changes.
The proposed rule will have a minimal impact on prepaid telecommunication providers. The majority of the requirements of the proposed rule making are requirements that the commission typically requires as conditions for registration. The proposed rule making will relieve some prepaid telecommunication providers of the requirement to post a surety bond, escrow, or trust account.
The additional disclosure requirements may be burdensome for the national telecommunication companies but will provide valuable information and security to the consumers that purchase its prepaid telecommunication services. The economic impact will be proportionate amongst small, medium, and large size companies to incorporate additional disclosure information. The proposal may impose a new requirement on some carriers because they were registered as telecommunications carriers before prepaid calling cards became a widely accepted means of marketing telecommunications services and thus before the commission began requiring consumer protections of new providers. To the extent that some companies are not now required to provide these consumer protections, they enjoy a competitive advantage over later entrants at the expense of consumer protections.
The technical performance standards and call detail retention requirements of the proposed rule making are reasonable and should not place an economic burden on prepaid telecommunication providers. Current commission rules require telecommunication providers to maintain similar levels of technical performance standards and call detail retention requirements. The proposed rules will clarify that prepaid telecommunication providers are held to the same standards as all other telecommunication providers.
A copy of the statement may be obtained by writing to Washington Utilities and Transportation Commission, Attention: Records Center, P.O. Box 47250, Olympia, WA 98504-7250, phone (360) 664-1260, fax (360) 586-1150.
RCW 34.05.328 does not apply to this rule adoption. The commission is not an agency to which RCW 34.05.328 applies.
Hearing Location: Commission Hearing Room, Second Floor, Chandler Plaza Building, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, on January 27, 1999, at 9:30 a.m.
Assistance for Persons with Disabilities: Contact Pat Valentine by January 20, 1999, TDD (360) 586-8203, or (360) 664-1133.
Submit Written Comments to: Carole Washburn, Secretary, P.O. Box 47250, Olympia, WA 98504 or e-mail to records@wutc.wa.gov, fax (360) 586-1150, by December 30, 1998. Please include Docket No. UT-971469 in your communication.
Date of Intended Adoption: January 27, 1999.
December 2, 1998
Terrence Stapleton
for Carole Washburn
Secretary
OTS-2552.2
NEW SECTION
WAC 480-120-052 Prepaid calling services. (1) Prepaid calling services - Defined. Prepaid calling services (PPCS) means any transaction in which a consumer pays for service prior to use and the prepaid account is depleted as a consumer uses the service. Prepaid calling services may require the use of an access number or authorization code. The transaction often includes an object the size of a credit card which displays relevant information about the service. These objects are defined as prepaid calling cards.
(2) Business office requirements for providers of prepaid calling services. A company offering prepaid calling services must provide consumers a without charges telephone number staffed by live personnel during regular business hours. The personnel must be sufficient to respond to all service related inquires and must be capable of answering general account related questions.
(3) Technical assistance requirements when providing prepaid calling services. A company offering prepaid calling services must provide consumers a without charge number staffed by live personnel twenty-four hours a day, seven days a week. The personnel must be sufficient to respond to all inquires and must be capable of assisting consumers with technical problems or questions related to their service.
(4) Billing requirements for prepaid calling services.
(a) Billing increments must be defined in the company's price list, or tariff and presale document. If a company uses an increment based on a time measurement, the increments must not exceed one minute. If the company bills usage in "unit" measurements, units must clearly be defined using both equivalent dollar amounts and time measurement. Unit billing increments can not exceed the equivalent one minute rate.
(b) Service may be rated only for the actual time a circuit is open that allows for conversation. Conversation time of less than a full billing increment shall not be rounded up beyond that full increment.
(c) Companies may not reduce the value of a PPCS account by more than the charges specified on the prepaid calling card; prepaid calling card packaging; visible display at the point of sale; rates specified in the presale document; or the rate authorized by the commission at the time of purchase. The PPCS may, however, be recharged by the consumer at a rate different from that specified in the initial presale agreement or the last recharge information so long as the rate and surcharges conform with the company's tariff or price list at the time of purchase. The consumer must be informed of the new rates at the time of recharge.
(d) Companies providing prepaid calling services must be capable of providing consumers, upon request, call detail reports at no charge.
(e) Companies providing prepaid calling services must maintain call data for a minimum of three years. The data must include the following:
(i) Dialing and signaling information that identifies the inbound access number called or the access identifier;
(ii) The number of the originating phone;
(iii) The date and time the call was originated;
(iv) The duration or termination time of the call;
(v) The called number; and
(vi) The personal identification number (PIN) and/or account number.
(5) Written disclosure requirements for prepaid calling services - Prepaid calling cards.
(a) Information required on prepaid calling cards. At a minimum the cards must contain the following information:
(i) The company's name as registered with the commission. A "doing business as" name may only be used if officially filed with the commission. The language must clearly indicate that the company is providing the prepaid telecommunication services.
(ii) The toll-free or without charge number to reach the company's business office;
(iii) The toll-free or without charge number to reach the company's technical assistance office, if different than the business office number;
(iv) The company's toll-free or without charge number used to access the company's service, if applicable;
(v) Authorization code, if required to access the service;
(vi) Expiration date, if applicable. If an expiration date is not disclosed on the card it will be considered live indefinitely; and
(vii) Cards must be voided or otherwise physically marked if they were produced as a "nonlive" card so that it is clear to the user that the card is only a sample and is not active. If the card is not disclosed as a nonoperative card, the card is considered live and the issuing company must honor it.
(viii) Statement which warns consumers to safeguard their cards, if consumers assume full liability for lost or stolen cards. If the company is unable to place this statement physically on the card, the information must be provided in the presale document.
(b) Prepaid calling card - Presale or point of sale documents. The following information must be legibly printed on the card, packaging, or display visible in a prominent area at the point of sale of the prepaid calling card in such a manner that the consumer may make an informed decision prior to purchase. If the information below is to be displayed at the point of sale the company must ensure by contract with its retailers or distributors that the information is provided to the consumer.
(i) Maximum charge per billing increment for prepaid calling card service. If a company charges varying rates for intrastate, interstate and international calls all applicable rates must be provided. The rates displayed must be no more than those approved in the tariff or price list of the company at the time of retail purchase;
(ii) Approved charges for all services, and surcharges, fees, and taxes, if applicable and the method of application;
(iii) Expiration policy, if applicable. If an expiration date is not disclosed the service will be considered live until the prepaid balance is depleted;
(iv) Recharge policy, if applicable. If an expiration date is not disclosed at the time service is recharged the service will be considered live indefinitely; and
(v) A statement that indicates if a consumer is unable to resolve a complaint with the company that the consumer has the right to contact the state regulatory agency which has oversight within the state where prepaid service originally purchased.
(c) When requested by a Washington state consumer, the company's business office and technical assistance office must provide the consumer the number for the Washington utilities and transportation commission.
(6) Written disclosure requirement for prepaid calling service - Other than prepaid calling cards.
(a) Presale agreement. The following information shall be provided in a presale document to an applicant prior to consumer prepayment and initiation of service:
(i) The company's name as registered with the commission. A "doing business as" name may only be used if officially filed with the commission. The language must clearly indicate that the company is providing the prepaid telecommunication services.
(ii) The toll-free or without charge number to reach the company's business office;
(iii) The toll-free or without charge number to reach the company's technical assistance office, if different than the business office number;
(iv) The company's toll-free or without charge number used to access the company's network, if applicable;
(v) Authorization code, if required to access the service;
(vi) Maximum charge per billing increment for prepaid calling service. If a company charges varying rates for intrastate, interstate and international calls all applicable rates must be provided. The rates displayed shall be no more than those approved in the tariff or price list of the company at the time of retail purchase;
(vii) Approved charges for all services, and surcharges, fees, and taxes if applicable, and the method of application;
(viii) Expiration date, if applicable;
(ix) Recharge policy, if applicable; and
(x) A statement that indicates if a consumer is unable to resolve a complaint with the company that the consumer has the right to contact the state regulatory agency which has oversight within the state where prepaid service originally purchased.
(b) When requested by a Washington state consumer, the company's business office and technical assistance office must provide the number for may be directed to the Washington utilities and transportation commission at 1-800-562-6150.
(7) Verbal disclosure requirements for prepaid calling services. Companies offering prepaid calling service must:
(a) Provide an announcement at the beginning of each call indicating the time remaining on the prepaid account or prepaid calling card;
(b) Provide an announcement when the prepaid account or prepaid calling card balance is about to be depleted. This announcement must be made at least one minute prior to depletion.
(8) Requirements for refund of unused balances. When a customer contends that a company has failed to provide service at rates provided in presale documentation or quoted at the time an account is recharged, or that the company has failed to meet technical standards, companies offering prepaid calling services must provide refunds for any unused service or provide equivalent credit in services offered. Refunds must equal the value remaining on the prepaid calling account or prepaid card. The customer is allowed to choose either the refund or equivalent service option.
(9) Performance standards for prepaid calling services. Each company shall ensure that:
(a) A minimum of ninety-nine percent of all call attempts are completed to the called party's number. Station busies and unanswered calls will be considered completed calls.
(b) A minimum of ninety-nine percent of all call attempts are completed to a company's business office number. Station busies and unanswered calls will not be counted as completed calls.
(c) A minimum of ninety-nine percent of all call attempts are completed to the company's technical assistance number. Station busies and unanswered calls will not be counted as completed calls.
(10) Requirements when a company ceases operations in the state of Washington. When a company ceases operations in the state, the company must:
(a) Provide the commission with thirty days advance notice in writing.
(b) At least twenty-one days before termination, provide written notice to customers at the address on file with the company, if applicable, indicating that service will be ending, and explain how customers may receive a refund on any unused service.
(c) Beginning at least fifteen days before termination, provide oral notice of termination at the beginning of each call originated in Washington, including the date of termination and a number to call for more information.
(d) Provide information to consumers via its customer service number outlining the procedure for obtaining refunds and continue to provide this information for sixty days from the date company ceases operations.
(e) Within twenty-four hours after ceasing operations, provide the commission and the company's bonding agent a list of all account numbers with unused balances. The list must include the following:
(i) The identification number used by the company on each account for billing/debit purposes;
(ii) The unused portion of any prepaid monthly fee on each account;
(iii) The unused time, stated in units or minutes as applicable on each account and the equivalent dollar amount.
(11) Compliance requirements for prepaid calling services. All presale and point of purchase documents displayed or offered to the public and all prepaid calling cards offered for sale in the state of Washington must be in compliance with this rule within ninety days of the effective date of this rule.
(12) Other regulatory requirements. Companies providing prepaid calling services must comply with all other laws and commission rules relating to provision of telecommunications services unless the company has filed for and received waiver from the commission.
(13) Penalties for provision of service by an unregistered telecommunications company. When a penalty is imposed upon finding that an unregistered company has provided prepaid calling services within the state of Washington, the commission may assess penalties of up to one hundred dollars per day per violation under RCW 80.04.405 and/or up to one thousand dollars per day per violation under RCW 80.04.380.
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NEW SECTION
WAC 480-120-058 Protection of customer prepayments. (1) A company that intends to collect customer prepayments must first demonstrate to the commission that it meets (a), (b), or (c) of this subsection.
(a) The company has a corporate debt rating, according to Standard & Poor's of BBB or higher, or according to Moody's of BAA of higher, with respect to outstanding debt obligation; or
(b) The company has a performance bond satisfactory to the commission sufficient to cover any customer prepayments; or
(c) The company has made provision for deposit of customer prepayments in a federally insured interest bearing trust account maintained by applicant solely for customer advances. The prepayments must be deposited in a bank, savings and loan association, mutual savings bank, or licensed escrow agent with access to such funds only for the purpose of refunding prepayments to customers. The funds must be maintained in an account within the state of Washington. In any order granting certification, the commission may require either bond or trust account or escrow as a condition.
(2) Reporting requirements for every bond or trust account.
(a) Each company collecting customer prepayments must submit to the commission a report within fifteen days after the end of each calendar quarter. The report must contain the following information specific to state of Washington operations:
(i) Total outstanding balance of customer prepayments at the beginning of the reporting period;
(ii) Dollar amount of prepaid services sold during the reporting period;
(iii) Depleted usage of prepaid services during the reporting period; and
(iv) Total outstanding prepaid service balances at the end of the reporting period.
(b) Nothing in this rule precludes commission staff from requesting current company financial or operating information at any time.
(c) A company may petition the commission for a reduction in reporting requirements. The commission may grant or deny the request by letter from the commission secretary.
(3) Calculation of trust or bond levels.
(a) The initial level of the bond or trust must comply with the provisions of subsection (1)(b) or (c) of this section.
(b) The company must adjust the subsequent level of the bond or trust based upon quarterly reports data and the company must notify the commission of that adjustment.
(4) A company may petition for and the commission may grant waiver of the bond/trust requirement either at the time of registration or at such later time as the company can demonstrate to the commission's satisfaction that it meets standards for waiver of the bond/trust requirement. The petitioning company must provide documentation to the commission in support of the petition. The commission may grant or deny the request by letter from the commission secretary. The commission will evaluate the following to determine whether a waiver of the bond/trust requirement will be granted:
(a) Certified financial statements establishing adequate financial resources sufficient to provide service to consumers of prepaid telecommunications service;
(b) Confirmation that the company has received approval for and has been providing comparable services satisfactorily in one or more other state jurisdictions. The documentation must consist of information from the regulatory agency in the other state and must demonstrate that the company has complied with that states' rules and regulations and has provided adequate levels of service for twelve consecutive months;
(c) Compliance, following registration with the commission, with Washington rules and provision of adequate levels of service for at least twelve consecutive months;
(d) Documentation that the company has established a bond rating as provided for in subsection (1)(a) of this section.
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