Cell phone users to get monthly overage alerts to avoid bill shock
Federal Communications Commission Chairman Julius Genachowski told a forum today that the commission on Thursday will begin the process of forcing cell phone companies to let customers know when monthly minutes for phone services are about to be exceeded, long before bills are sent.
Genachowski also said that the new requirement will be part of heightened scrutiny by the agency of cell phone consumer issues including "mystery" and early termination fees. Verizon Wireless last week under pressure from the agency announced it was returning $50 million in mystery fees.
"The FCC role here is to be a cop on the beat protecting and representing American consumers, giving them a voice in the process," Genachowski told a forum of the Center for American Progress. "I am working every day to make sure that consumers receive straight bills and straight answers when they question them."
The FCC earlier this year said it was looking at bill shock issues. The decision to move forward with rules for carriers is a heightening of its response.
Today's forum heard several horror stories from consumers about high bills. Genachowski blamed problems on bills growing complexity as consumers switch to smart phones which can surf the Web, text message, check e-mail and watch video as well as make phone calls.
A new FCC report showed bill shock on a pace to become the agency's third most numerous cell-phone-related complaint, behind only complaints about mystery charges, and cell phone termination fees.
The report said consumers complained they were unexpectedly charged when phones were in "airplane mode" (which turns off data service), when they took their phones overseas, or for mandatory data plans that were never discussed when new smart phones were bought.
Many consumers felt carriers should have alerted them they were incurring high charges, long before sending out sky high bills.
Genachowski promised the FCC's action will rectify that. The FCC intends to begin drawing rules that would require carriers to give notice, much as happens in Europe now. Exactly how the notices would work, who would get them when consumers are on family plans and whether cell phone companies have to offer an option to turn off text messaging when the number of messages exceeds the monthly plan remains to be determined.
Sen. Tom Udall, D-N.M., has proposed bill shock legislation that would require phone companies to notify consumers when they reach 80% of monthly plan allotments and then require they get a consumer's approval before a plan can exceed 100%.
In a statement Udall commended the FCC but also said the agency should require phone companies get consumers consent before charging rates above the monthly plan.
"Today, cell phones and mobile devices have become the standard for communicating -- not the exception. During these tough economic times, high poverty rates and depleted family budgets have become all too common, too. That is why explicit notification and consent guidelines are critical to preventing cell phone bill shock," Udall said..
Several cell phone companies have recently taken steps to offer consumers more advance warnings about plan overruns, but not all do so.
Today CTIA, the wireless association, questioned the need for FCC action.
"When there are concerns raised by consumers, the Better Business Bureau reports that 97.4% of them are resolved," said Chris Guttman-McCabe, VP-regulatory affairs in a statement. He said the FCC's own data shows that 92% of those who complained are "very" or "somewhat" satisfied. He also pointed to increasing number of subscribers using the services as proof subscribers are pleased.
"We agree with the FCC that the goal is to keep all customers happy, but we are concerned that prescriptive and costly rules that limit the creative offerings and competitive nature of the industry may threaten to offset these positive trends."