Truth-in-billing rules aren’t top of mind for most telecom service providers, especially young and small organizations. But they should be. Overlooking them can invite a complaint and result in an FCC investigation that costs hundreds of thousands and even millions of dollars.
Although telecom bills are complex and sometimes confusing, consumers today are more informed and litigious than ever before. Additionally, there are online services advertising tools that help consumers discover billing errors and seek out noncompliance with FCC policies including Truth-in-Billing policies. Regardless of how small the mistake or oversight, such companies promise to find these errors and to win disputes with carriers, which could cost millions in fines and legal fees.
In 2016, Comcast was fined $2.3 million for improperly charging customers, and three long distance carriers were fined a total of $11 million for billing practice violations, including Truth-in-Billing violations. Each violation can result in a $40,000 forfeiture for each telephone bill (in violation) sent to consumers, regardless of intention or willfulness. Although the cases above were high-profile and reached the public, many such violations are handled privately. Only when truth-in-billing issues are egregious or tied to other violations like slamming (the act of switching a telephone subscriber’s preferred telephone company without authorization), or cramming (packing unauthorized, misleading or deceptive charges on consumers’ bills), are they made public, leading many investigations to go unnoticed and unreported.
With an increase in consumer complaints due to confusing and unclear information on telephone bills, and a willingness of companies to take advantage of such confusion, the FCC has taken action to ensure consumers are protected from telecommunications fraud. One such protection is Truth-in Billing, adopted in 1999 by the Federal Communications Commission (FCC) to prohibit unjust and unreasonable practices by telecommunications carries. Truth-in-Billing rules require companies to provide information to help improve consumer understanding of their telephone bills. For example, telecommunications carriers are required to:
- Provide brief, clear, non-misleading, plain language description of the service or services rendered to accompany each charge
- Identify the service provider associated with each charge
- Clearly and conspicuously identify any change in service provider
- Contain full and non-misleading descriptions of charges
- Identify those charges for which failure to pay will result in disconnection of the customer’s basic local phone service
- Provide a toll-free number for customers to call in order to lodge a complaint or obtain information
- Place charges from third parties that are not telephone companies in a distinct section of the bill, separate from telephone company charges, and
- Provide a separate subtotal for third-party charges in the separate bill section and on the payment page
In addition, telephone companies also must notify customers – on their websites and at the point of sale – of any options they offer to block charges from third parties that are not telephone companies.
Often, service providers do not realize they are violating the FCC’s Truth-in-Billing policies. When converting clients from QuickBooks to Precision Telecom’s TBS billing system, we often discover that they aren’t aware of Truth-in-Billing rules until we perform a sample bill run and clients see all the taxes and regulatory fees as line-item charges. A sample bill run can save companies from making innocent mistakes that put them at a great risk.
The most common mistakes seen include not showing a proper breakdown of taxes and fees and not identifying the regulated carrier. The latter is why you see “powered by XYZ Company” on invoices issued by unregistered resellers and/or agents. It is crucial that the bill be clear in addressing who is providing the regulated service.
Clearly and conspicuously identifying “deniable and “non-deniable” charges on a bill is also key.
“A deniable charge is one that if unpaid may result in the termination of the customer’s service,” explains Leon Nowalsky, a partner at Nowalsky & Gothard, a firm specializing in telecommunications law. “A non-deniable charge will not result in a termination. Although laws may differ by state, arguably, charges for equipment such as IP handsets would fall into the non-deniable category.”
In addition, if you charge an assessment such as a Telecom Relay Service (TRS) fee or Regulatory Recovery fee, for example, you must explain what that means. You also need to show how to calculate these fees on the first invoice and every quarter thereafter.
These are just a few examples of the ways in which simple mistakes can lead to serious FCC violations. However, at Precision Telecom, we have successfully used business tools and processes, such as sample bill runs through our TBS billing system, to help clients take charge of their billing practices. Watching out for simple and innocent mistakes, such as those described above, can help keep your company in compliance – and staying in compliance can save you time, stress, and millions of dollars.