FCC ‘bill shock’ rules don’t go far enough for consumers

Federal regulators were on the right track when they unveiled proposed rules last week designed to keep unexpected charges from sending cellphone bills into the stratosphere.

But the Federal Communications Commission’s “bill shock” rules don’t go far enough. If the idea is to protect consumers from unwanted fees, the FCC should set the bar even higher for wireless companies such as AT&T, Verizon and T-Mobile.

A bill introduced in the U.S. Senate last month would do this. More on that in a moment.

First, let’s give the FCC some credit for at least taking steps to address a problem that’s caused hassles for many cellphone customers. This month Verizon said it would refund as much as $90 million to about 15 million customers who were mistakenly slapped with data fees.

About 30 million Americans — 1 in 6 wireless customers — have experienced bill shock at one time or another, according to a recent FCC survey.


Among the agency’s proposed rules to remedy the problem:

• Notification via voice or text alerts whenever a wireless customer approaches or reaches monthly limits.

• Notification when a customer is about to get hit with roaming charges while traveling.

• Better disclosure by service providers of tools available for managing a wireless account, such as online resources or smart-phone apps.

• The possibility of allowing consumers to cap usage, thus preventing additional costs.

“The magnitude of complaints we get demonstrates that the current tools available to consumers are insufficient,” FCC Chairman Julius Genachowski told me. “What we need to do is harness technology to empower consumers with more disclosure and transparency.”

Not surprisingly, the wireless industry doesn’t think any new rules are required, and will be lobbying to block or at least water down the FCC’s proposals.

“Our goal is to educate the FCC as to why a prescriptive set of rules may not be effective,” said Christopher Guttman-McCabe, vice president of regulatory affairs for CTIA — the Wireless Assn., an industry group.

The organization said in a July regulatory filing that wireless companies are constantly developing new ways to keep customers informed about voice and data usage. It warned that the FCC’s proposed rules could stifle innovation and competition in the wireless market.

I don’t know about that. My take is that if wireless companies could no longer count on ridiculous overcharges as a revenue stream, they’d have to compete all the harder on such things as quality of service and nifty features.

That’s why I like the bill introduced by Sen. Tom Udall (D-N.M.), which would go further than the FCC’s rules in ensuring that consumers are safeguarded from runaway charges.

The Cell Phone Bill Shock Act (S 3872) would require wireless providers to notify customers when they’ve reached 80% of a monthly limit or prepaid amount of voice or data usage.

It would also require carriers to ask permission from customers before allowing service to exceed monthly limits, thus placing the consumer squarely in control of his or her cellphone usage. If you don’t want to risk higher charges, don’t approve additional service.

“Consumers are getting hammered with bill shock,” Udall told me. “It’s absolutely unacceptable for someone to get hit with $1,000 or even $20,000 in bill shock.”

I agree. And since every single wireless company says it places customers first, I can’t imagine why the industry would settle for anything less.

Pay to pay

In response to my recent column on fees charged by banks and telecom companies for paying your bill by phone or online, plenty of readers submitted their own examples of pay-to-pay fees.

It’s astonishing how many businesses and government entities reach into people’s pockets for the privilege of paying a bill. In most cases, this is nothing more than a money grab for automated transactions that typically cost the provider only a few cents.

Typical of the fees cited by readers was one spotted by Santa Ana resident Brent Argo. He noted that the city charges a $3.54 “convenience fee” to have water bills deducted automatically from checking accounts.

When he asked about it, the city sent Argo an e-mail saying the fee “is an administrative fee to offset the cost of implementing the online program.”

Christine Duarte, Santa Ana’s treasury manager, told me the city doesn’t consider its $3.54 bill-paying fee especially high.

“There are other cities that charge a fee like this,” she said. “And there are businesses that charge this fee.”

All parents are familiar with this unpersuasive argument: Johnny took a cookie, so I took one too.

Argo, for one, had a ready response for such municipal money grubbing. “I just use a postage stamp and pocket the remaining $3,” he said.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to