The FCC’s proposed “Bill Shock” plan—which would require cellphone companies to alert customers when they’re pushing monthly usage limits and are on the cusp of incurring additional charges—looks, on its surface, as though the government is lending consumers a helping hand. And it will help consumers, but it’s been a long time coming.
The FCC has long ignored the mobile industry’s financial wringing of its customers, and the “Bill Shock” plan is mostly a stunt to cover for the Commission’s historical tendency to ignore these kinds of problems.
The Details of “Bill Shock”
After U.S. Senator Tom Udall (D-NM) introduced the Cell Phone Bill Shock Act [PDF] late last month, he confronted the public with damning data that had been collected by the FCC itself. “According to the FCC’s survey of cellphone users, 30 million Americans—about one-in-six adult cell phone users—have experienced bill shock,” Udall said in a letter to FCC Chairman Julius Genachowski. “This survey also found that, in one-in-four cases, the additional charges were greater than $100.”
If passed, “Bill Shock” would require mobile carriers to send a voice or text alert as customers approach their monthly subscription plans’ usage limits. This includes going beyond talk-time minutes, text messages, data downloads, and the incurring of roaming charges, both overseas and in low-coverage areas in the U.S.
History of Ignoring Consumer Needs
“Bill Shock” is nothing new.
In August 2006, PC World investigated a series of lawsuits dealing with mystery cellphone fees. These fees were incurred when consumers accidentally used a Roadside Assistance feature that was not a part of their monthly subscription package. The targeted companies at that time were Cingular (now AT&T) and Verizon, the latter of which just settled a multi-million dollar lawsuit—many years too late—that had accused the nation’s biggest wireless provider with tacking unwarranted additional charges onto bills for services customers never agreed to.
The trend of wireless providers overcharging customers has continued:
- In 2004, the Better Business Bureau found that complaints about cellular companies—including billing procedures—had risen dramatically; from 205 complaints in 1997 to 18,323 in 2003.
- Also in 2004, California adopted Telecommunications Consumer Bill of Rights, which protects cellular customers from unfair practices. This adoption was a broad, well-publicized step forward for consumer rights, but the FCC barely blinked an eye.
- The Mobile Marketing Association updated its guidelines in 2007 advising firms to send warning messages to consumers every time a $25 threshold of text message fees is reached (emphasis on advising). This came after a Sprint customer was charged nearly $10,000 for text message overages. That was three years ago—shouldn’t the FCC have taken the hint?
- The Government Accountability Office (GAO) specifically asked the FCC to improve its oversight of wireless phone service in November 2009. In its report [PDF], the GAO found that one-in-three users of wireless phones and data networks had received unexpected charges on their bills. That was a year ago.
- The Federal Trade Commission found that in the early months of 2010, more than 3,000 consumers complained about wireless companies’ “bill cramming”—the addition of unfair charges onto a monthly statement—over the previous year. The FCC had even heard a deluge of complaints: in the first three months of 2010, the FCC received 2,142 inquiries about bill cramming, compared to 6,714 in all of 2009.
This data and these complaints, combined with evocations of both the Telephone Consumer Protection Act (TCPA) and state Consumer Fraud and Deceptive Business Practices Acts, have apparently been inadequate. The FCC did nothing.
Lately, the FCC has been actively investigating wireless carriers for unfair practices, such as its examination into Verizon’s doubling of early termination fees—but that was late last year; wireless providers have been pinching dollars from wallets since the industry came to fruition.
Given the data, given the innumerable complaints, and given steps for consumer empowerment taken by other organizations, the FCC should have listened—and acted—much earlier. Instead, the FCC has sat silent, coordinating its recent political movements as close to the November elections as possible.
The “Bill Shock” plan is a good one, but it’s abhorrently late. We deserve an FCC that will deliver speedier responses to long-endured financial trauma and regulatory dilemmas.